Deutsche Telekom presented its growth plans for the coming years. Global economies of scale and the systematic use of artificial intelligence (AI) will play a key role, as will a data-driven business model. Specifically, based on financial figures for 2023, the Group expects average annual growth of approximately 4 percent in net sales and service revenue through 2027. Adjusted EBITDA AL is expected grow on average 4 to 6 percent per year. Growth will come from activities on both sides of the Atlantic: for the group outside the United States, Deutsche Telekom expects average annual service revenue growth of 2.5 to 3 percent and Adjusted AL EBITDA between 3 and 4 percent.
At the same time, adjusted earnings per share are expected to increase on average by more than 11 percent per year, reaching around 2.50 euros in 2027. AL free cash flow is expected to reach around 21 billion euros by there.
“We are taking the next step,” said Tim Höttges, CEO of Deutsche Telekom. “In recent years, our strategy has made us the undisputed number one in Europe. We have met or exceeded almost all of our goals and are now worth more than all of our peers on our national continent combined. We will strengthen this position in the future, for example by further intensifying the use of artificial intelligence.”
During its Capital Markets Day in Bonn, the Group confirmed the remuneration of its shareholders; Going forward, 40 to 60 percent of recurring adjusted earnings per share will continue to be distributed as dividends. For the 2024 financial year, Deutsche Telekom announced the payment of a dividend of 90 cents per share, to be paid in 2025. This payment is subject to approval by the competent authorities. Added to this are share buybacks amounting to 2 billion euros which should be carried out in 2025.
By 2027, Deutsche Telekom expects to generate a total of more than 15 billion euros, in addition to investments in the business and dividend payments. This flexibility will give Deutsche Telekom the ability to either increase its stake in T-Mobile US or repurchase additional shares, while facilitating general strategic flexibility. The Group’s investments (excluding the United States), excluding expenses related to mobile spectrum, are expected to represent approximately 21% of service revenues in 2027.
Deutsche Telekom plans to be even more data-driven and automated than before and to step up its use of AI. For example, customer support processes should be simplified, better channeled and accelerated through automated identification and documentation and AI-driven information requests. In Germany, the number of complaints has already fallen by around two thirds compared to 2020. The call volume will be further reduced thanks to the development of app-based self-service offerings and customer-assisted messaging services. AI. The Group intends to continue its digitalization and its focus on software.
Deutsche Telekom continues to invest heavily in fiber. In Germany, the Group plans to add approximately 2.5 million new homes served per year by 2027. This would bring the total number of homes served to approximately 17.5 million. At the same time, the participation rate is expected to increase to more than 20 percent, from around 14 percent currently. In 2027, the number of new FTTH customers is expected to reach around one million, compared to 450,000 expected this year. European national companies are expected to add around 1 million households served per year. By 2027, the total number of housing units served is expected to reach approximately 13.5 million.
Deutsche Telekom also continues to expand its mobile network. By 2027, 5G network coverage in Germany is expected to reach around 99 percent. It is expected that around 90 percent of sites will have download speeds above 1 Gbps. 5G network coverage in European national companies is expected to increase from 78 percent currently to 95 percent in 2027. Deutsche Telekom wants to further strengthen its leading position in terms of mobile network quality and transmission speed. It plans to increase its revenue by further increasing its market share and through a portfolio including fixed network substitution, 5G campus solutions and network slicing.
With Magenta Moments, Deutsche Telekom is leveraging the position it has gained in recent years in Germany and Europe, with around 3.2 million active users at the end of 2023. This figure is expected to increase by 50 to 100 percent by 2027 With additional products and services ranging from payment services for telephone insurance services and payment service platforms to AI solutions for consumers, the Group aims to exploit additional revenue potential of approximately 1. .5 billion euros.
In the global B2B sector – i.e. with professional customers such as T-Systems – the company plans to accelerate its revenue and profit development. After an average turnover growth of 1.9 percent between 2020 and 2024, growth in this area is expected to reach 3 percent, with a corresponding increase in profitability. The main drivers are the increase in the share of contracts awarded by enterprise customers, stronger growth in the public sector and cross-selling, as well as portfolio expansion in the areas of cloud, security, IoT and AI. T-Systems is an integral part of and helps differentiate itself from the competition for customers.
The Group also continues to pursue ambitious objectives on ESG (Environmental, Social, Governance) subjects. Carbon emissions (Scope 1-3) are expected to decrease by 55% by 2030 compared to 2020 and reach net zero emissions across the entire value chain by 2040. Deutsche Telekom was the first heavyweight of the DAX 40 to have a science-based network. zero climate objective confirmed by the Science Based Targets initiative (SBTi). In its transition plan, the Group has planned specific measures for this purpose. This includes promoting the circularity of terminal equipment and technologies, for example through longer lifespans as well as the reuse and recycling of materials. Regarding the social dimension, the Group will extend its commitment to digital inclusion so that, by the end of 2027, more than 80 million people around the world will benefit from these measures.
Efficiency improvements across the board will support profit growth over the coming years. The relevant measure for this is indirect costs as a percentage of service revenue (Group excluding US). Deutsche Telekom wants to reduce this figure by 3 to 5 percentage points by 2027. The main levers for this are automation, including the use of AI in customer service, automation of the operation of networks and data centers, improving the efficiency of FTTH deployment in Germany, implementing a shared operating model in Europe and reducing shared functions, and improving efficiency through the use of AI. This particularly applies to expenses related to real estate and its use.
