Deutsche Telekom AG

Good afternoon and welcome to Deutsche Telekom's First Quarter 2025 Conference Call. As you can see with me today is our CEO, Tim Höttges; and our CFO, Christian Illek.

As usual, Tim will first go through a few highlights, followed by Christian, who will talk about the quarterly performance and our group financials. After this, we have time for Q&A.

Before I hand over to Tim, please pay attention to our usual disclaimer, which you will find in the presentation. And please also note that this conference will be recorded and uploaded to the Internet.

And now it is my pleasure to handover to Tim.

Thank you, Hannes and welcome everybody to our first quarter 2025 results call here. And if you have seen already the numbers, we are off to a solid start into the year, both strategically and financially.

Overall, we are on track for our 2025 target and for the midterm targets as well, as we have presented them on our Capital Markets Day in 2024. We are confirming our guidance for DT ex-U.S.

business and pass on T-Mobile's first quarter upgrade to an overall upgrade for our year in targets. Let me kick off with my group perspective and then Christian will go into the details.

Look, the growth momentum is very well intact and remained strong. And we have 3.5% organic service revenue growth.

We have 5.3% organic EBITDA growth. We have 50% growth in free cash flow and we have 11% growth in adjusted earnings per share.

So all KPIs are on a positive note with regard to the financials. Our business outside of the U.S.

posted a 2.5% growth in service revenues and a 3.8% EBITDA growth. During the quarter, we completed three transactions.

LUMOS, our fiber-join venture with Equity, Vista and Bliss, both activities in the out-of-home media advertising area. In mid-April, our stake in T-Mobile U.S.

was back to 51.8%. As usual, let's take a closer look to our financials and the organic developments here.

All segments contributed to growth. T-Mobile grew its adjusted core EBITDA by 8.4%, which translates into organic IFRS growth of 6.1%.

Europe grew by stunning 7.2%, Germany by 2.2%, and T-Systems by 1.3%. Moving to the networks.

In the last 12 months, we passed 3.2 million additional European homes with fiber to the home. We now reached nearly 21 million households.

We continue to deliver a near two-thirds of the whole German fiber built out here in our home market. We have now reached agreements with the MDU's covering almost 6 million households to provide their in-house wiring.

Our mobile network remains leading across the footprint. In Germany, our market leading network modernization program is well underway.

This provides the foundation for our new unlimited tariff portfolio. And by the way, we will extend our bandwidth with 500 megabits per second to one gig in the mobile network very soon with the name of projects.

Our U.S. network was recently named the world's best in the large land category.

One month ago, T-Mobile announced a nationwide launch of 5G advanced. This further strengthens our network leadership in the United States.

And during the quarter, we also announced the better launch of the T-Satellite project where we are seeing strong customer interest. At last year's capital market day, we talked a lot about AI and digitization.

And we leverage AI to accelerate our digital transformation and what I lead and see globally we are one of the leading companies with regard to the AI implementation already. We outlined a comprehensive approach across the full value chain at Capital Markets Day and to drive better customer experience, but as well to drive tangible efficiencies within the organization where we estimate the financial benefit of around €800 million in cost savings by 2027.

By the way, in the future we will provide you because of its relevant always with an overview about the AI and the digital transformation of our company. So it's good to see that we make our strong progress in this area here and you can see on Page 7, the relevant areas.

Let me pick up a few highlights. Across Europe, we have implemented ask T as T is an AI based employee knowledge tool, which for instance helps field service employees to access all relevant information much more efficiently.

There are many AI related initiatives in the network, for instance, the AI supports the efficiency of our fiber rollout in multiple ways like 75% of all routers are remotely managed. On the mobile side, we achieved increased network autonomy through AI based run monitoring and remediation.

And when it comes to IT, we are seeing significant speed and efficiency gains with our coding assistant. There are also multiple initiatives in sales and service where we are already seeing tangible benefits.

For instance, our AI based Chabot can solve 50% of customer issues without human interventions and there are plenty of other use cases in implementation as well. And finally, on the product side, almost 12 million European customers have already signed up for our Magenta Moment Rewards Program.

We are productizing AI for both our B2C and our B2B customers in multiple ways, some mentioned on this page. This chart shows our progress in Europe.

Over in the U.S., T-Mobile is making us well progress with the ambition with regard to the digitization. And as T-Mobile highlighted during their results call, the share of upgrades done digitally has doubled this quarter versus last.

It has already reached over 50% of all upgrades in this quarter. I find this very impressive.

Our customer growth continues, both in the U.S. and in Europe.

Starting with mobile in the U.S., we had the strongest first quarter for postpaid customer net adds ever and we reiterated our full year guidance. Outside of the U.S., we had a slower quarter in some of our European operations.

Our German mobile net adds were steady year-over-year. On the fixed line, the KPIs looked different.

Our broadband customer growth slowed driven by Germany and our TV customer growth was also slower. That said, near half of the year-on-year slowdown was due to the planned decommissioning of our satellite TV platform in Hungary.

Let me pause here for some reflection. It is no secret that the competition in our largest market has stepped up in recent months and it remains elevated.

This shows in some of our numbers, but not all. How do we look at these developments?

What is our strategy here? The answer is that we keep playing to our strength.

We remain focused on our flywheel, we will always build the best networks and create a superior customer experience, and we want to increase leveraging digital and AI and automation to reduce our costs. In the U.S., we work to extend our 5G network lead while we leverage our differentiated growth opportunities.

As mentioned earlier, we are making strong progress on the digital side. Amidst elevated promotions T-Mobile's post-paid phone churn has increased, but we also had record gross ads in all the segments.

In Germany, mobile competition has progressively stepped up since the Vodafone Ainsenais decision two years ago, in B2C and in B2B. Here again, we want to play to our strength.

Our industry-leading network modernization gives us the capability to drive unlimited without sacrifice in the customer experience. This is what we are doing with our new tariff portfolio.

The German broadband market is quite mature. Here we are seeing ongoing churn towards over builders plus now a Vodafone that is commercially very aggressive.

Here again, our answer is to build and monetize superior networks. Fiber is the end game for the German broadband.

Our fiber footprint is growing by 2.5 million households per year and we are ramping up fiber connections. And finally, in all our markets we supplement our core portfolio with targeted proposition for the more value-oriented segments.

In the U.S., through our extended prepaid portfolio, and in Germany, through our specific flanker brand Kongsta, which is now actively even selling fixed line services. Moving on to ESG.

We continue our efforts to contain our energy consumption and emissions in line with our stated targets. We conducted campaigns against hate speech and for increased awareness of climate change.

Let's now move to our guidance update on the next page. Our guidance remains based on last year's average exchange ratio of 1.08 and it is the sum of the guidance for DT ex-U.S.

and for T-Mobile U.S. adjusted by the U.S.

GAAP IFRS bridge. T-Mobile has updated its guidance on 24th April.

T-Mobile raised both its 2025 EBITDA and free cash flow guidance by 100 million at the midpoint. The new guidance includes the contribution from recently completed acquisition of Vista, Bliss, and Lumos.

We are passing this on in the group guidance today. As a consequence, we now project group EBITDA of around 45 billion and free cash low of around 20 billion for the whole of 2025.

All other guidance remains unchanged. Let me now hand it over to Christian for a deeper dive into the quarter.

Thanks Tim and welcome also from my side. As usual, I am going to provide you with a quarterly segment overview and then move to selected financials.

And also, we stick with the sequence so we are going to start with the mobile U.S. business and all numbers will reflect U.S.

GAAP. So, the service revenue growth remained very strong in the U.S.

with 0.2% growth and that was very much driven by the post-paid service revenue growth which accounted for 7.6% growth. With those results, T-Mobile U.S.

raised its guidance on at par [ph] growth to at least an increase of 3.5% in 2025. So the basis for this strong EBITDA growth which accounted for 8.4% is obviously the service revenue growth.

Free cash flow was up in the U.S. by 31% and the EPS was up by 29%.

T-Mobile's customer growth is very solid despite some what they call target rate optimizations and that obviously is a reflection of an increase in churn. We expect the churn also driven by some price adjustments to be temporary and it will moderate out over the course of the year.

I think it is important to mention and Tim said it already gross ads were up on all major categories. Post-paid phone ads were slightly below last year's numbers while high-speed internet net adds were a bit higher.

So overall the 1.3 million net additions were the highest number they ever achieved in the first quarter in any given year. T-Mobile reiterated its full year guidance on net adds of 5.5 million to 6 million post-paid net adds and they remain confident to actually deliver those guidance numbers by the end of the year.

So let's move over to Germany. So Germany showed now 34 quarters of consecutive EBITDA growth but let's go through the P&L and start with the plan number which is revenue.

So headline revenues were down this quarter and this is due to two effects. One is it is driven by lower handset revenues and secondly it is driven by lower revenues from the fiber constructions for our JVs.

They're both not included in service revenues and they're both very low margin. At the same time, service revenue accelerated from prior quarter to 1.4%.

The 2.2% EBITDA growth, which we see in this quarter, is obviously impacted by the higher personnel cost, which are coming from last year's wage agreement, but also from higher energy costs, and this is very much related to increases in the energy grid. So while Q1 was a little slower, we're committed to basically deliver the full-year guidance and the midterm guidance for the German business.

So let's move over to Page 15 to take a look at the service revenues. As I said earlier, on service revenues overall grew by 1.4%, with a very strong growth in mobile service revenue with 3.1% year-over-year, that obviously is a reflection of the strong subscriber growth.

We had no termination rate cuts, and we had some favorable phasing in the first quarter. So don't expect this to continue over the course of the year, but we remain committed to the 2% to 2.5% guidance number, which we have given you.

The fixed line service revenue is still negatively impacted by the federal spending. You know that our new government has just taken over the office, and we expect that going forward we will see some increased spending on infrastructure but also on sovereignty.

And I think we should be well positioned here, given our strong position in the public sector, but it will take several quarters in order to see the reality basically being reflected in the P&L. So all considered, if I'm taking a look at the first quarter, I would say mobile service revenue was a bit higher than what we expect for the remainder of the year as service -- fixed line service revenues were a bit lower.

So, going to Page 16, and taking a look to the overall fixed revenues, which you can see here. They were obviously a little bit negatively impacted, but you also see that the broadband growth still is in the quarter of our 3% to 4% guidance, and also access revenues are growing by 2.1%.

The driver, the key driver, and we said this earlier on for the broadband growth is upselling into higher speeds, and we've seen an ARPA increase of 3% on an annual basis, and we continue to focus on the upselling of higher speeds as we are trying to achieve our guidance numbers. Moving to the fixed line KPIs, you see that we had a monetization, which is actually pretty positive on selling higher speeds.

You also see that we had a pretty good increase on the FTTH net adds, which grew by 36%. But on broadband net adds, we have to report that for many, many quarters, we see the first reduction of 7,000Ks.

Obviously, we're not standing still here. Tim mentioned this.

We have a program running, which is focusing on monetizing MDUs on a faster basis. Obviously, addressing the churn management, and also we are included, concert to basically become a go-to-market channel for broadband services.

So, this is one of the, either the main activities, how we want to respond to that negative subscriber growth. We are on track with the 2.5 million homes passed for this year.

As I mentioned earlier on, we're pretty satisfied with the continuation of the FTTH net adds, which grew by 36% in the given quarter. On TV, you see that our growth had moderated relative to the first quarter in 2024, to a solid 30,000-70,000 triple-pay customers.

And on top, we also had 50,000 over-the-top customers. But bear in mind, last year, we had an extra, I would say, tailwind from the retirement of the rental privilege.

Moving to mobile, and you see strong commercials. So, on a year-on-year basis, I think we're on the same kind of level with 270,000 net adds.

You also see that the churn rate is actually pretty stable, despite elevated competition. And we're actually pretty happy with the result.

But bear in mind, don't take the 3.1% and expect this for the upcoming quarters. Let's move over to the European segment.

Another good quarter, let me repeat again, organic revenue growth 3.7%, EBITDA grew organically by 7.2%, remained very strong but also keep in mind the inflationary effects, both on pricing, but also on costs, will moderate as we progress into the year. Moving to the customer growth in the European segment, the mobile growth was a bit weaker.

This is basically due to very aggressive promotional environments in Austria and Croatia, and we entered a campaign in Q1 in Poland, which impacted the net ad numbers. Broadband was fairly stable, and the dip in the TV net adds can be explained by the decommissioning, a plant decommissioning of the legacy satellite platform, which basically accounted for 28,000 customers.

Let's move over to T-Systems. T-Systems is continuously on a positive track.

It's now nine consecutive quarters with EBITDA growth. We're particularly pleased with the order entry, which grew 70% on a quarterly basis, but on a 12-month basis 12.5%.

This is really good news. We're seeing that some sectors, especially the automotive sector is under pressure, but we were able to mitigate this, especially through growth in the health segment and the road charging segment and the defense segment.

So digital sovereignty is becoming increasingly important here in the German market, so is national security. We hope this is going to be a growth driver in the future.

So let's take a look at the group financials on Page 22. And it's the usual ones, which we are addressing.

So the EPS was up on a recurring basis by 11%. If you take the nonrecurring items out of this, it's actually a 13% growth, which we're seeing here.

Free cash flow was up by 52%, and we're going to see the bridge later on. Let me point out three things: a low basis on Q1 2024.

We had kind of lower spend in CAPEX, which will obviously reverse over the course of the year, and you know that we're spending more than last year, and we had some positive working capital effects in the first quarter, which led to this very strong growth number of 52%. So on Page 23, you see the bridge on free cash flow, as I mentioned, very much driven the growth from cash flow from operations.

But there is this tailwind of CAPEX and also working capital, which led to this very strong growth figure. On the other hand, you see also the net profit bridge driven by the adjusted EBITDA, and we had some negative effects on depreciation, also driven by the dollar financial results, which is our refinancing and stronger dollar and obviously, a higher distribution to minorities given the strong results in the U.S.

Let's move to the next chart. Here, you see basically our leverage.

The leverage has declined by 4 billion, almost 4 billion on a quarterly basis from Q4 2024 to Q1 2025. This is obviously driven by two major drivers.

One is the free cash flow which we generated. The second one is we had some favorable effects from the dollar.

The dollar was end of Q4 by 104 -- sorry, it was end of Q1 by 108 that obviously helped us in bringing the leverage down. And you see that the leverage ratios are pretty well in the comfort zone.

So we're now at 263 including leases and 2.18, excluding leases. So we're happy with those results.

So let me complete the review on the main takeaways. Obviously, what you see on the right-hand side, we are completely committed to deliver the 2.5% adjusted EPS by the end of the cycle of the current CMD.

We had a solid start in the year. You heard about Tim talking about intense competition in several countries we're operating in.

We're not standing still here. We have counter plants, especially in Germany in the execution in those competitive markets.

We will use networks and AI to drive down costs significantly. We are committed to deliver the 2025 numbers, but also the midterm commitments.

And as you heard, we're progressively increasing our stake in T-Mobile U.S. Now we're close to 52%.

The buyback is ongoing. And with that, I end my operational review and hand it over to Hannes.

Okay. Thank you very much, and we can start with the Q&A.

[Operator Instructions]. I think the first question will be from Mathieu Robilliard at Barclays.

Please.

Yes, hi everyone. Can you hear me well?

Yes.

Great, thank you. Thank you for the presentation.

Look, I had two questions. The first one is around the U.S., second one on Germany.

In the U.S., you just closed the Lumos acquisition. And I don't know if you can add additional detailed color about how you project the business there, marketing strategy, and etcetera.

And linked to that, if we look at your kind of fixed strategy, you have a bit of fiber, you will have more, you have SW on the other hand, are there other technologies that could interest you, I mean cable could be a way to expand your coverage quickly and satellite also redistributing products from other operators could be another way to increase your footprint on the fixed business, so really wanted to understand how you thought about the different technologies there? And then I had a question about Germany and specifically on broadband, no surprised.

So clearly, as you flagged, net adds are not going the same direction than before, but you have good ARPU growth. But if we project ourselves a bit at this stage, you still have a growing customer base because of previous net adds.

If we continue on that trend, then you're going to lose 1% of growth there. On the other hand, you have quite a lot of price competition, so I wonder how much can you continue to increase ARPA if your revenue -- if your volumes decline, how does that play out in terms of the revenue growth of that?

Hopefully, that's clear, thanks.

So let me start with the German question first. Look, we said at the beginning of this year that obviously, we're shifting from volume growth to ARPA growth and you see this reflected in the execution.

Obviously, we're not happy with the negative 7K. This is why we have an operational kind of bounce back plan, let me put it this way, where we're trying to address, obviously, short term, the churn.

We've seen elevated churn. We have pretty good gross adds in the German market, but we're seeing elevated churn.

And then, obviously, we're trying to basically complement the first brand with Kongsta on the broadband execution. And the third one, which is obviously a more I would say, midterm oriented is execution and acceleration in MDUs.

And we had that discussion in numerous calls. How do you address the MDUs, how do you basically monetize the MDUs, that has become a strong focus.

So what we expect for the year is a stable base in broadband customers. So we don't expect a significant increase.

So for this year, we have to focus on the ARPA increase. We're happy that it's working, right.

But we also have to fix the volume challenge, which we have seen in the first quarter, but this is not a short-term measure. That will take some time.

Hopefully, that answers your question.

It does. And you believe you can still continue to increase ARPU, not necessarily price increases, but you would have enough?

Yes. It's the more for more strategy, which we're applying and you see this with the number of customers who are basically subscribing to excesses, which are beyond 100 megabits per second.

You saw that chart which we have there. This is how we basically want to monetize the ARPA increase.

With regard to the U.S. question, look, we are excited about commercial launch of TIFIA later this quarter after more than two years of piloting it.

And Lumos passed 475,000 homes at close. Going forward, I think the customer experience and retail business is fully owned by us.

And we also share in 50% of the joint venture economics. So therefore, this looks like a very promising IRR as well.

And we are expecting Lumos to be accretive to service revenues but neutral to EBITDA in this year. So this is, let's say, our current look at it.

When we close Metronet, we will provide more color on both transactions. But our targeted footprint is 12 million to 15 million U.S.

homes by 2030. And so far, this is the status of the situation.

With regard to your technology question, look, our -- in terms of technology, we remain very open, but selective. That is the current view on it.

Fiber remains our core due to its long-term scalability. Fixed wireless is another very important component, and we have extended the footprint for our fixed wireless service as well.

These are the two technologies which we are especially driving rural areas while technologies like cable or satellites are currently not on our focus. So therefore, this is not something which we have in mind.

So this is based on the high-speed internet and based on a T-Fiber proposition going forward.

Thanks Tim. So with that we move on I think next is Josh at Exane BNP Paribas.

Josh, can we have your question, please?

Hi guys, thanks for the questions and hopefully you can hear me as well. The first is just a follow-up on the broadband side.

And if I think about the pricing structure, you've talked a lot about this upsell ambition. Do you think the current pricing structure at Deutsche Telekom and the competitor brands are in the right place to support that, I'm thinking in particular that in the past, some of the entry-level fiber prices of DT have been cheaper than on the DSL side, that always made sense to try to encourage this technology shift on the customer base, but I'd like your view on if there's an argument now that we should see front book and maybe even back book price increases to monetize a very significant fiber investments you're making into the German market?

And then secondly, if I move to the mobile side, we saw your new family plan tariffs come out in March, a big focus on unlimited data and discounts on multiple SIM cards. How should we think about that strategy, which adding a lot of line, seems to be more of a volume gain than a value game.

And we relate that back to the value over volume message, which [indiscernible]? Thanks very much.

Look, let me start with the first question. By the way, look, I was very clear in my statement that there is a lot of let's say dynamic in this mobile market these days in Germany.

But you cannot say it is affecting everything is the same. There are different segments in this market but there's a B2B, there's a B2C session here, and we have to look to this different marketing.

Our churn rate is very low. And we have a very loyal customer base despite, let's say, some promotional offers and new ideas, which are taking place in this.

And the basis for that one is that customers and the Net Promoter Score is in the 40s, that customers are very happy with their customer experience and very happy with the network. So therefore, they are not so easily, let's say, to be moved out of the ecosystem.

That is why we are staying and sticking to our focus on quality. This is for us.

And that is why we are focusing on the Nemo project and doubling our speed. We have capacity, and we have quality and that is something which is a driver of a good reputation.

And there is a big segment in this market, which is very much focusing on this topic in firsthand. Now, it is totally correct that especially our Ret [ph] friends, I do not understand their strategy.

I think they are much more going to volume and they will witness over time that they have then a problem with EBITDA. And then they will have a problem with their CAPEX envelope, and then they will fall back again on their network proposition.

And I can tell you, this is the moment where we will gain and win again market share. So therefore, I will not follow or whatever run after some promotions offer they're doing.

There's a battle going on between Telefónica, Ainsenais and Vodafone on these customers moving from A to B. You know my opinion about this kind of wholesale deal and this is now the price which we are paying.

I mentioned that at the moment after it took place two years ago, and now we see the results out of it. But that is not affecting us at that point in time.

There's a lot of things going on between that. And if some of the players are saying the mobile market is not growing, our mobile market is growing by 3.1% this quarter.

So therefore, we are sticking to this quality area. There's another area which is changing in the mobile German market, which is the MVNO market.

I think this old traditional MVNO environment is somewhat saturated. Talking about, let's say, the resellers of retail organizations and I can tell you, in this market, there are new players coming who are going over the top players or Internet providers with new MVNO office.

Now Definitely, there is a dynamic here. But even this is a segment, it's not the whole market.

So therefore, we have to look at it and to try and to understand what is going on in this MVNO environment, how this world is changing. But even the MVNO market is attracting a specific segment and not all customers.

And even here, I think we have a role to play and we will consider what's going on there. But we will not do arbitragers or support crazy deals.

We have been very disciplined in the past, and we stay to this discipline. It has not changed and it will not change.

Why should it? We were right in our approach, focusing on value ARPU, which gives us financial means to reinvest it into a superior quality.

And this is, let's say, what we want to stick to. But nevertheless, we have to much carefully the dynamics in this market.

And if you ask me what is our measures to react on this one? I think before we react on the price level, we have new tariffs in the market with our unlimited and with our family offers.

I don't see a big problem on the back book which you mentioned. Maybe we have to look on to the handset prices in this market, whether we are competitive enough in this environment.

But this, again, these are technical elements which we will have to look out throughout the year. This is the situation as it is today.

So look, on the broadband pricing, so far it works. So we don't see a need to now react on it.

And always bear in mind the retail pricing is obviously also driven by wholesale pricing. So therefore, it's not only having an impact on the retail side, also on the big wholesale business.

So, so far we're happy with the upselling. And as Tim said, we're not getting hectic.

We are basically sticking to our value and quality-oriented strategy rather than to take the volume fight. And we'll see how long it's going to last with the other guys to continue with this, yes or no.

So the short answer on your first answer is yes.

And maybe just to add, Vodafone was promoting the 1 gigabit -- or offering the 1 gigabit at 45 until the end of March. So specifically on this one, they have moved back to the list price, which is Euro is higher.

Still promoted aggressively for the first initial months, but as far as the rate plan is concerned, as a reversal to a relevant and good price. And of course, the fiber wholesale prices are substantially higher than the DSL wholesale prices.

So there's a lot of runway in terms of upselling in the market. [Multiple Speakers].

To be very clear, because we are aware what's going on in the market, and we are watching that carefully but we are not nervous at all on this subject because our prerequisites are very well intact. We will double down on the capacity on the bandwidth in our network in mobile.

We have new unlimited tariffs in the market, which are the first results are very encouraging, and we are competitive. Our Kongsta brand is super successful and is attracting the low-end market.

We are not in a dependence of some king maker, who is a wholesale partner who will destroy our business model going forward in our ARPAs. We have under the former regime of -- we have solved almost the entire back book problem.

So therefore, we do not have, let's say, kind of deterioration to fear in our back book. We have financial means in our group.

So let's see how long Vodafone's breadth is working on this attempt here. And therefore, on the customer perception, we have a net promoter of course 40 basis points.

So therefore, I think we are well intact. We keep [indiscernible] in the way how we are dealing with this.

Or as Hannes is always saying keep calm and carry on.

Okay after that we move on to I think next is Adam at HSBC. Please Adam, can we have your questions.

Thank you. At the risk of risking that keeping calm and carry on.

I'm going to stay in the same area. I do appreciate your comments on value over volume that you're making.

But last quarter, you said you needed your fair share of net adds and that was only two months ago. And now you're saying that net adds will -- the base -- the broadband base will be flat through the full year.

So it does feel like something has changed. Maybe I'm wrong, but would I'd like to hit a little bit more on why you changed that approach?

And then just a slightly related question. I was wondering if you could talk a little bit more about what you're seeing in the fixed line market with respect to the over builders because you called that out in your prepared comments as well, I wondered if that's stepped up a little bit since the beginning of the year?

Thank you.

Look, Adam, let me just comment on the fair share, which is 40%. And I think let me refresh also the memory of every one of us.

We had quarters where we had a fair share of -- where we had actually a net add of beyond 100%, right. And we never withdrew from that 40% fair share.

So if we're overachieving we're basically said, okay, this is kind of what we're trying to aspire. And currently, unfortunately, we are underachieving it.

It remains the same. And since 2017 or 2018, we have actually increased our broadband market share given the strong performance, which we had.

So obviously, we must have over performed to the 40%. So I think there's volatility around this 40%.

I think the 40% is a good ambition, but we will not hit it always. And if we over exceed, we don't change it.

That would be my answer on the fair share question.

Look, but the 40% commitment and my 40% target is unchanged and I'm very, very focused on this. Now that said, let's go to the next question.

Building two third of the market with fiber these days, you can imagine that there is no big change in the over builder development in our markets. Because we have a very strong position here.

It has not significantly changed in these areas over the recent quarters. So therefore, I would not see any kind of changes to previous quarters here.

Currently, we see a steady growth of the network over builders. We accelerated our build-out and now account for, as I said, two third of the markets and therefore, I don't see any kind of issues coming here from that angle.

We want to add something here with the multi drilling units or whatever.

But it is -- yes, there is churn to towards the over pillars, obviously right. [Multiple Speakers].

Okay, which is what your question was. So therefore let's move on to Akhil at J.P.

Morgan.

Hey, good afternoon. Thanks for taking the questions.

The first I'll stick with Germany, if that's okay. And Tim, I just wanted to follow up on your comments again on this whole value versus volume.

And a comment that you may have heard yourselves from your competitors on the whole topic of value versus volume, is that it doesn't necessarily look like externally that it is always value, and it is more volume when the multi-SIM is €10 on the marginal SIM and when you've gone to unlimited data on your S plan, which you now give unlimited data to in a convergent bundle you can now also get limited data for €40. So I guess what I'm really trying to understand is when I think about the marginal pricing you're offering the market, do you think it's fair to say maybe that is a bit overly aggressive and maybe it's not fully considered the value versus volume or do we think we're misinterpreting that and you'd look at it somewhat differently?

So that's the first question. And then the second one is a bit of a difficult big picture one, but would love to get your comments on it.

We've seen an increasing metric from various different bodies around this whole Pan-European initiative. Whether that was the drive report last year, whether it's from the Competition [ph] Commission or even more recently post the Trump tariffs, this whole agenda about Europe needing to have champions that are more relevant globally.

And the reason I mentioned it is because we've had a CEO change at Telefónica, and he's running a strategy review and has been quite explicit in saying that's one of his big drives is to be increasingly Pan-European and trying to push for a bigger footprint across Europe. So I guess I'd love to get your take on how you think about this theme.

Do you think it's relevant, do you think there are changes here that mean that this is also some that could be something you'd focus on, and I guess in answering that, I'd love to understand, not just on Telcos, but is it relevant, Christian mentioned the data sovereignty, is it relevant from a sort of adjacency standpoint as well, so just in general how relevant is Spain? Thanks.

Okay. So Akhil, let me start with the value versus volume.

Obviously, there's two sides to the story. The one is which accounts for two thirds of our business is the broadband business and the fixed line business.

And clearly, we don't want to destroy the pricing structure in the broadband business. And therefore, we're focusing on the upselling, as I mentioned earlier on.

I think on the mobile side, it's slightly different. You're right, the family plans are ARPU-dilutive.

That's very clear, but they are ARPA accretive and this is how we basically look at this, and this is why we're saying we're still happy with the volume gain, which we're gaining here and which obviously led to a mobile service revenue. But on a SIM card basis, there is obviously a sympathy for your argument that we're fairly aggressive in the second or third card.

But so far, it's working, right. Take a look at the numbers of Telefónica, take a look at the numbers of the other guys in Dusseldorf so we are growing our mobile service revenue.

And therefore, we don't see a need to change the strategy despite the fact that it's ARPU dilutive. But again, if you combine the volume and the volume impact, it's accretive to the mobile service revenue growth.

Akhil, we are certainly all following this debate very closely. And the idea of stronger Pan-European players is definitely gaining traction.

No question, especially with the push for digital serenity and resilience in our environment here. However, the regulatory fragmentation remains a significant challenge for the implementation or moving into this direction, I think there are no plans because the supportive policy framework is not existing yet.

And therefore, I haven't seen even know how to create real value for our shareholders out of that. So therefore, we have to understand what they mean by this political statements at that point in time.

Look, we are always looking and focusing on what's going on there in this market. Do we have a concrete projects or any kind of activities with regard to the classical connectivity business at that point in time.

No, if there's intra-market consolidation possible, and there were the Spanish attempt from three to two, and this would be supportive. Intra-market consolidation is always a gain for customers and a gain for our shareholders.

So this is definitely something which we would like to see more of it. So therefore, we are focusing to remain our strong national presence, which we have in the market.

And that is, let's say, the position at that point in time. I haven't seen, let's say, a European-wide approach on this one.

But you totally observe it correctly, political leaders are trying to create something more European, a digital European single market. And that might then change even the dynamics on the portfolio side.

But it's too early to talk about that.

Thanks guys and thanks Akhil. And with that, we move over to Polo at UBS.

Please.

Hi, thanks for the presentation and taking the questions. I have two.

The first question is just about the new German coalition government. They've outlined fiscal stimulus in terms of potentially cutting the corporate tax rate to 25% from 30% as well as an allowance for an accelerated depreciation.

Separate to that, there's also the €500 billion German infrastructure fund. So how should we think about the benefits for Deutsche Telekom and in terms of timing, can some of these benefits impact numbers in 2025?

My second question is just specifically on German MDUs because in your remarks, you flagged that you had passed 5.7 million MDUs with fiber. But can I clarify if you will be the exclusive fiber infrastructure in these MDUs or will there be two fiber networks with Deutsche Telekom on one side and cable on the other?

Thanks.

Polo, on the financial impact of the plan of the coalition, first, it has to pass the parliament which it hasn't so far. I think the short-term benefit will be, obviously, on the aggressive depreciation of 30%, which they have in their plan.

And we don't expect a big impact in this year because, again, as I said, it has to pass the parliament. And the corporate income tax is supposed to be lowered on a percent basis starting from 28 onwards.

So it's outside the CMV package. So we don't expect anything from the corporate income tax side.

But on the aggressive depreciation, obviously, that is a tailwind to free cash flow. And then we have to think about whenever this has passed the parliament and the 30% stick because there's also a debate is quite costly, whether we may lower this, yes or no, you don't know what's going to happen with the federal states.

Then we have obviously some tailwinds, which we either generate to further invest or to put it to the free cash flow.

But overall, we are looking very positively into what's happening here from the German stimulus and from the sovereignty discussion, big opportunities. Now it's on us to make something out of this.

We see already developments on the defense, we see already the developments on the cloud. We see already developments on the security side.

We see where we're growing very nicely. We are seeing already benefits on the digitization of the governmental services.

So therefore, all hands on deck, we have changed the governance in our organization. We have a new team here.

We are trying to support the new government and the new leaders here. So therefore, there is I'm triple plus positive on the developments.

And I hope that we gain something out of that for our U.S. shareholders as well.

Now with regard to the second question, by the way, in Germany, there are some MDUs who don't have in-house cabling, so then you build a new one. If there is an MDU, which has cable, everybody has access to the cable infrastructure there.

So that is, let's say, regulatory-wise. So you will not see that somewhat can limit it or can protect its infrastructure access today.

We have now deals with 5.7 million households where we have the access to the last mile here into the apartments. So this is regulated and organized in a good way.

So therefore, where infrastructure is available, we will use it. If there's no infrastructure, we will build it.

And if there are multiple infrastructure, they will be shared.

Great, thank you Tim. And with that, we move over to Carl at Citi.

Hi, that's great. Two questions, please.

Firstly, just in terms of the IT business phasing. I was just wondering in terms of the forward outlook and visibility there of the government spending coming back and basically the speed of order book conversion that you expect?

And then secondly, following up on what you were saying in terms of MVNOs in Germany, I thought I'd just flip and ask this kind of a similar question in the U.S. in terms of your level of appetite for hosting some of the larger cable MVNOs in the U.S.

when they come up for renewal? Thank you.

Great question. The -- look, by the way, it's interesting, these MVNOs in Germany.

And by the way, I'm surprised that nobody has asked the Revolut question, yes, and their offers on an unlimited flat rate here. I would ask the question, who was stupid to enable that deal because €12.50, but you have the answer already.

So therefore, this is something which we have to look at. And it will destroy something in the market.

I hope that we will not be affected with our proposition here. So far, we were on the top of the market always less vulnerable on this kind of things, but do I applaud to this kind of new developments?

No. Now we are very disciplined on MVNOs.

You know that. And please give us some credit over the last 12 years or 15 years.

I cannot recall when we made a stupid MVNO deal. If it is an arbitrage to our core business, we will not go for that one.

If it's a segment which where we are weak, if there is a segment where we do not have access to and we take some ethical groups or think about, let's say, some business segments or anybody, anything like this where we do not get with our brand and with our sales organization into a proportionate growth. In these areas, we can consider MVNOs, because they will help us to get the fair share in this.

But overall, big MVNOs for the U.S. and with a big arbitrage is equal to our retail business, I think we have a policy and a discipline in that group and the likelihood is low.

Let me try to answer the IT phasing question. And look, what we're expecting for the remainder of the year is that the overall fixed line service revenue will improve relative to what you've seen right now.

But to be honest, to answer the question, it's a bitter speculation, and this is why we said several quarters because, first, the government is still in formation. Secondly, we have a new ministry, the digital ministry, which is also responsible of kind of deep [indiscernible] the whole public sector.

So this is still in formation. Third one is it has to pass some of the federal state budgets as well in order to become a big project.

And if you're talking to kind of the sales organizations who are dealing with this public sector constituents, they are talking about several quarters, whatever the several quarters means, but we're optimistic that we're seeing at least some of this positively in the second half of this year. So we expect that the fixed line service revenue will improve over time over the course of the year.

When the big projects are coming, I can't tell you right now, but we'll let you know immediately once we won one.

Okay, very good. Think sometimes takes their time.

With that, we move on to Andrew at Goldman, please.

Yes, good afternoon everyone. I had a question on the U.S.

and then a question on capital allocation. So obviously, a lot of people were quite nervous on the U.S.

growth outlook and then some share price volatility around TMS’s first quarter with results. It'd be great just to get your reflection on our big picture views on whether the growth outlook of the market has changed in the U.S.

or whether TMS’s growth outlook within the market has meaningfully changed. Any comments around that would be really helpful?

And maybe specifically, what's your early take on the success of the targeted rate changes as you put it that you're making or the transition a bit more towards value over volume in the U.S.? And then on the capital allocation side of things, there's been a period of share price volatility as I mentioned earlier, for both DT and TMS.

Just wondered how your preference has shifted between the TMS state build versus DT buyback versus where you were a month ago running towards, I think, a DT buyback at the time? Thank you.

Okay. Let me start with the U.S.

market and you know where we see -- the postpaid phone market slowed in the first quarter 2025, but it's too early to draw strong conclusions for the overall market development. We continue to think that we are less exposed to the overall market growth due to our differentiated growth vectors.

And in fact, like we grew gross adds across all postpaid categories in the first quarter. And we had the highest postpaid ARPA growth in eight years.

We saw a temporary uptick in churn impacted by the mentioned price increases on the legacy plans. And by the way, we even expect to continue this temporarily in the Q2 as the rate plan optimization hits the bill cycles.

So therefore, this is normal. And by the way, this was a calculation we had in mind when we when we triggered that.

And by the way, we discussed it as well with you guys. This churn impact is completely in line with the expectation, and it was contemplated in our highest ever Q1 net adds guidance for the year.

So therefore, look, we are not that nervous about the development on the growth in the U.S. The opposite is the case.

Our team is bullish and committed.

Okay. On the capital allocation question, Andrew.

Look, obviously, you know that we have filed selling into the share buyback back in April or was -- sorry, it was March and that this is going to start earliest in June -- on June 14. And that obviously was based on a simulation on our shareholding in the U.S., and that was around 52%.

Obviously, the share price was very strong over the past month. So we had a little more shareholding in there, but still 52% is a solid majority which we're owning there.

So -- and the second one was, it was under the impression that we were out of the comfort zone, when it comes to the leverage. Obviously, this has -- that pressure has come down given the weakness of the dollar and you've seen that in the Q1 numbers.

And if you run a simulation and you take the M&A out for a second because we don't know whether that's going to close in Q2 or in Q3. If it's not closing in Q2 then I'm also confident, based on our simulations that we still stick into the corridor.

So if we're selling into the share buyback, I wouldn't expect that we're going to increase the share buyback on the DT level in this year. We're happy with that one.

But obviously, it creates optionality for the future. And this is how we would look into this, right.

So don't expect any decision short term. But obviously, we have some, let's say, dry powder, which we then can decide on as we usually do in the Q3 numbers on how to basically utilize those.

That would be my answer on your question.

Okay. So next is David, but I understand, David, do you -- are you still -- do you still want to ask you a question?

I'm here. Actually, Andrew has just asked it.

So in the spirit of collaboration with my colleagues, I shall give my space up. Thank you so much.

Hey, thanks. That's much appreciated and very generous.

And you get a next stop on next time. And that, I guess, with that, we move on to Ottavio at Bernstein, please.

Hi, good afternoon. A couple of questions from me.

I will be quick on EBITDA. You've been growing below the midterm guidance.

Of course, there is a volatility during the year. But you attribute the -- some pressure to the high personnel cost.

Now if I remember well, the union agreements had a 6% salary increase in fourth quarter last year, and that will accumulate with a 3% increase over the summer this year. So if anything else, probably personnel cost pressure would increase.

So what is the room you have, considering that the revenues from the PA will probably take several quarters to crystallize, are you going to offset that pressure to go back into the -- around the midterm guidance? And the second one is very quick.

On the -- there's been a positive on the wholesale access revenues. You're actually trending above the midterm guidance.

You got around 2% versus stable. So there is a debate about volume versus price on the B2C.

What's going on there, it's just that they're basically migrating customers towards a higher speed or actually they're taking more wholesale lines?

Okay. So whoever.

Okay. On the EBITDA question on the personnel cost, Ottavio, it's fairly simple.

First, we want to utilize the initiatives to basically free up capacity in the personnel -- total number of personnel, which we need. And this is especially true in the service department, but also in the technology department.

And obviously, depending also on what's going to happen in the -- with the next wage agreement, obviously, we don't expect the same kind of degree of wage increase. We have to be very focused on reducing OPEX by automating and using AI in our systems so that we can free up personnel in our German operation.

That's the way how we are working against this. And can assure you that the German team is on a plan, which is actually calling for acceleration along those direction.

Look, on the wholesale access revenues, it's a good observation. And I think the growth is a mix of both.

We are seeing, on the one side, healthy migration towards higher speed tiers. That is definitely something including the fiber topic, which lists the ARPU in the wholesale contract.

And there has been also a moderate price increase. Remember, we talked about that one, which is now paying into the strong quarter.

So this is another effect. Now this price increase will not continue also for a long period of time.

So therefore, this is now -- we are now benefiting from it, but it shows again our focus on value. Interesting wise, if you took the whole fiber market or the fixed line market, two third of the whole growth is coming from value and only one third coming from volumes.

So we are not driving volume to an excess, we are very much focused on the value on this service here. And the same is true for our wholesale business.

Okay, so with that we move on to James, who surely asked a question on MDUs, not only joking, but go ahead.

It's a fair challenge. I'll say that's my second question.

So yes, I have two questions, please. So the first one, I'm just interested in the kind of concept of just overall market growth in Germany across all of the players because it looks on the kind of broadband side, obviously, penetration is maturing.

It's harder for all of the players to get KPI growth. But when I look at the mobile contract market, all of the players in Germany continue to report very solid contract net add growth.

And that's obviously a key driver of your mobile service revenues. But it looks to me as if the kind of human penetration of contract SIMs in Germany is now close to 100%.

So when you think about the whole market, how do you think about what the total addressable market is, how much more growth is there out there for all of the players in Germany on the contract postpaid side? And then secondly, as I didn't want to let you down, so on the MDU side, specifically, I think Christian, in your remarks, you were mentioning that on the broadband KPI side, you were going to start taking more specific actions in MDUs to improve growth.

Could you be a bit more concrete, please, on actually what some of those actions are? And then, Tim, did I hear you correctly in your response earlier that if another operator builds fiber in the MDU, you would then be willing to hold by most that network?

Look, by the way, on the mobile side, look, your observation is totally right that we have already a penetration around 100%. But first, many consumers hold multi-SIM products.

They have a tablet. They have variables, they have a car.

They're expanding their footprint to multi-SIMs here. Then we have a migration on pre to post.

So there are customers coming who were on the prepaid side now coming into the post area, which is helping us to drive ARPU growth. So the premium plans are more attractive.

And you know that we are even not attacking Vodafone or Telefónica, our attempt is much more that we want to reduce the amount of MVNO and second cards in this market to bring them under the Telekom umbrella here. So this is driving growth into our areas as well.

And then on top of that, we have seen even in at least over the last quarters, even attempts from everybody to increase their value for money or the -- sorry, the more-for-more logic to gain higher prices out of the segments by bundling it in an intelligent way. So therefore, the penetration is now going into more into the services which we are selling, than rather into additional SIM cards.

And therefore, nobody is counting SIM cards at that point in time. And then your statistics might even belong that some of the carriers are including their IoT cuts into the numbers as well.

So look, we still see increasing demand on both side volume and on value. And we see -- and we want to drive more penetration into our premium plans into the Magenta envelope, which is another topic.

And then the MVNO market is, let's say, the area where we want to fund ourselves.

So on the MDU question, I don't want to make the competition smart about what we're doing. But let me kind of flesh out what we're doing.

First of all, out of this 7 million MDA footprint, we have quite a chunk of MDUs, which are already connected where we basically have to monetize. And the -- and the way how we want to do this is obviously giving kind of a, let's say, platform incentive, especially if more than one household is subscribing to that fiber.

So that's going to be the first point. Wherever we can commercialize and monetize this that we're going to push some extra effort on this one.

And the second one is obviously going into these owner associations with more people, and we have a lot of people in the German organization to actually persuade them that fiber is the end game. This is kind of what you shoot for.

We have an incentive structure, which incentivizes fiber over copper. I would flesh out these two things what we want to do on MDUs.

And obviously, it is a capacity game, which we're playing here, and we're trying to use our size in order to get more traction on the MDUs game.

And to your question, yes, we are willing to hold by as we are actually not -- our main priority is that somebody builds the fiber in the building. And so we can monetize the fiber that passes the building.

We -- in order to expedite this, as Tim has previously mentioned, we have contracts with Housing Association, I cover 5.7 million German homes, and that's steadily growing by more than 1 million per annum. And that's a very significant part, as you know, of the German housing association market.

So we are definitely front-footed in this. But if somebody else wants to buy it, we don't rule out whole buy in principle.

Okay. So with that, let's move on to Steve with Redburn, please.

Thanks for taking the questions. Yes, couple, just going back to wholesale, if I [Question Inaudible]?

Steve, you broke up, but I think we can answer the question. I mean the wholesale trends are very steady, frankly.

So the volume trends are very steady. The upsell trends are very steady and the pricing is an overlay, and that will come to an end by the end of this year because that's part of -- was part of the commitment contracts that we negotiated in 2021.

Do you have another question you were really hard to understand. Sorry, the line was bad.

And maybe you could send me the second question by -- if you have a second question by e-mail, and we can cover it like that. In the meantime, I did actually get two questions by e-mail.

One is from Emmet at Morgan Stanley. He says headcount in Germany is down 4% year-on-year to 57,000.

Can you talk about how we should expect that number to evolve in future quarters and years, given age profile, restructuring, fiber rollout, need to attract more employees in AI digitization. No question on data centers, I'm surprised, but Tim is working on it.

But anyway, I don't know who wants to take this question.

Without giving any details, Emmet, a slight acceleration relative to the 4%. That's the plan.

Okay. That's a short answer.

And -- but it's very consistent, of course, with the trends that we have seen, and it's a long-term, let's say run rate that we are not expecting to materially change, frankly. And if anything, maybe a slight acceleration.

And then Robert Grindle at Deutsche Bank also submitted a question by e-mail. And his question is that Hungary also has -- appears to have moved to monetize its towers or at least announce the carve-out and are we still keen to monetize European towers overall or will a country by country approach be followed?

Look, the answer is ready to go. Today, no need to do anything at that point in time.

We are evaluating opportunities here on the towers. And as you know, we have carved out our tower business in Hungary, in Greece.

That is -- and then we have in Croatia, Czech Slovakia carved out in 2023 already. So therefore, this is something where we haven't taken a decision yet, but we have the opportunity to do so.

It's our cookie jar.

Okay. And then I have a bit of feedback from Emmet, he says short answer, but [indiscernible].

So I think that's a really good way of ending this call. And we hope we will stay like this.

Anyway, and we thank you now for participating in this call. And should you have any further questions, of course, please contact us at the Investor Relations department, and we look forward to hear you and speak to you again soon.

Thank you.

Thank you. Bye.