Deutsche Telekom (DT) raised its core earnings guidance for 2022 after what it described as a relatively strong first quarter (Q1) in the face of adverse developments, including the war in Ukraine and rising inflation.
The group now expects to post adjusted EBITDAaL of more than €36.6 billion (US$38 billion) in 2022, up from the previous guidance of around €36.5 billion ($37.9 billion).
This is largely attributable to what DT described as a stronger-than-expected business performance in the US, where adjusted EBITDAaL of around $26.6 billion is now forecast, up from $26.4 billion.
Free cash flow after leases, which was expected to amount to around €10 billion ($10.4 billion), is now anticipated to exceed €10 billion ($10.4 billion).
DT Group CFO Christian Illek noted that the global situation "has not become any more straightforward in the first few months of 2022, on the contrary."
"But we cannot stand still in this situation. Our job as management is to offer prospects and stability for our employees but also for other companies and other societies that depend on us," Illek observed.
Net revenue increased by 6.2% to €28 billion ($29.1 billion) in Q1 2022. DT noted that the US revenue growth in the United States of 9.5% was mainly attributable to exchange rate effects. In organic terms, revenue increased by 1.5% year-on-year.
In Germany, revenue grew slightly by 0.9%, although in Europe it was down by 0.9%. T-Systems remained a drag on group figures, with revenue in systems solutions falling by 1.9%. However, DT noted that this was in line with expectations.
Adjusted group EBITDAaL grew by 6.8% to €9.9 billion ($10.3 billion), while the net profit increased by €3 billion ($3.1 billion) to €3.9 billion ($4.1 billion). The latter figure was boosted by special factors, such as the sale of T-Mobile Netherlands.
Net debt rose to €135.95 billion ($141.1 billion) by the end of the quarter, in part because of changes to the arrangements with Crown Castle that saw an increase in right-of-use assets and lease liabilities.
Illek said the integration of Sprint in the US is progressing faster than planned.
"The vast majority of Sprint customers have already been migrated to the T-Mobile US network," he said.
"Almost all of the mobile traffic of Sprint customers now runs over the T-Mobile network. And the plan is to complete the integration of all Sprint's network sites into the T-Mobile network or to decommission them. And we believe that integration costs in the second half of the year will be lower than in the first six months."
T-Mobile US gained 1.4 million customers in the first three months of the year, and the total customer case stood at 109.5 million by the end of March.
Srini Gopalan, CEO of Telekom Deutschland, provided an overview of the German business, noting that this was the 22nd consecutive quarter in which DT increased its earnings in Germany.
In terms of network deployment progress in Germany, Gopalan said the operator remains on track with its fiber-to-the-home (FTTH) network.
"That goes for our build-out target of 2 million households this year, as well as our planning for 2024. Today, we already offer 3.6 million fiber optic lines throughout Germany ... and we and our partners are set to have more than 10 million homes passed by 2024," he said.
Gopalan also noted that the GlasfaserPlus joint venture with IFM "has gained momentum" with 5 million FTTH connections expected to be built by 2028. This appears to be an increase from the original target of 4 million.
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— Anne Morris, contributing editor, special to Light Reading