Deutsche Telekom ((DTEGY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Deutsche Telekom’s recent earnings call painted a picture of robust financial health and strategic progress, despite some challenges in its home market. The company reported record-breaking financial metrics, including significant growth in EBITDA, free cash flow, and adjusted earnings. However, it also acknowledged hurdles in the German broadband market and heightened competition in the mobile sector. Despite these challenges, the sentiment towards future growth remains optimistic, with guidance aligned to previous targets.
Record Financial Performance
Deutsche Telekom celebrated a landmark year with the highest EBITDA, free cash flow, and adjusted earnings in its history for FY2024. The company achieved an impressive 3.7% organic service revenue growth, 6% EBITDA growth, and a remarkable 19% increase in free cash flow. These metrics underscore the company’s strong financial footing and operational efficiency.
T-Mobile US Performance
T-Mobile US, a key subsidiary of Deutsche Telekom, reported robust results with a 10.1% core EBITDA growth in Q4. The company set an ambitious guidance for 2025, projecting 5.5 to 6 million postpaid net additions, marking the highest ever guidance from the US team. This performance highlights T-Mobile US’s significant contribution to Deutsche Telekom’s overall success.
Fiber Expansion
In a strategic move to enhance its infrastructure, Deutsche Telekom expanded its fiber network significantly. Over the past year, the company connected 3.3 million additional European homes, bringing the total to over 20 million homes within its European footprint. This expansion is a testament to Deutsche Telekom’s commitment to improving connectivity and service quality.
Leadership Stability
The company reinforced its leadership stability with Tim Hottges extending his contract until 2028 and Srini Gopalan being appointed as COO of T-Mobile US. Gopalan’s expertise in fiber and international experience is expected to bolster the company’s strategic initiatives and operational excellence.
Total Shareholder Return
Deutsche Telekom delivered a total shareholder return of 38% last year, with its shares reaching a new 24-year high. This performance reflects the company’s strong financial health and its ability to deliver value to shareholders consistently.
German Broadband Market Challenges
Despite its successes, Deutsche Telekom faced challenges in the German broadband market, with lower than expected broadband net additions. This was attributed to slower market growth and increased competition, particularly from Vodafone’s retention efforts.
Mobile Competition in Germany
The German mobile market remains highly competitive, with Deutsche Telekom noting aggressive promotional activities from competitors. This competitive environment poses challenges but also drives innovation and customer-centric strategies.
IT Revenue Delay
Deutsche Telekom experienced a delay in expected IT revenues from the public sector in Germany, impacting Q4 service revenue growth. This delay highlights the complexities and uncertainties in the public sector IT market.
Forward-Looking Guidance
Looking ahead, Deutsche Telekom remains optimistic, with guidance for 2025 reflecting continued growth. The company anticipates around EUR 44.9 billion in EBITDA, EUR 19.9 billion in free cash flow, and an adjusted earnings per share of EUR 2, representing a 9% increase. These forecasts underscore the company’s strategic focus on fiber, mobile technology leadership, and customer service.
In conclusion, Deutsche Telekom’s earnings call highlighted a year of record achievements and strategic advancements, despite facing challenges in its domestic market. The company’s robust financial performance, strategic fiber expansion, and leadership stability position it well for future growth. Investors can remain optimistic about Deutsche Telekom’s trajectory, as it continues to deliver strong shareholder returns and pursue ambitious growth targets.