DTEGY - Deutsche Telekom AG (DTEGY) Q4 2023 Earnings Call Transcript

2024-02-23 13:22:11 ET

Deutsche Telekom AG. (HCHDF)

Q4 2023 Earnings Conference Call

February 23, 2024, 08:00 AM ET

Company Participants

Hannes Wittig - Head-Investor Relations

Timotheus Höttges - Chief Executive Officer

Christian Illek - Chief Financial Officer

Conference Call Participants

Andrew Lee - Goldman Sachs

Robert Grindle - Deutsche Bank

Mathieu Robilliard - Barclays

David Wright - Bank of America

Polo Tang - UBS

Usman Ghazi - Berenberg

Ottavio Adorisio - Societe Generale

James Ratzer - New Street

Joshua Mills - Exane

Georgios Ierodiaconou - Citi

Emmet Kelly - Morgan Stanley

Presentation

Operator

Good afternoon and welcome to Deutsche Telekom’s Full Year 2023 Conference Call. As you can see, with me today are our CEO, Tim Höttges; and our CFO, Christian Illek.

As usual, Tim will first go through a few highlights for the year as a whole, followed by Christian, who will talk about the quarterly performance and the group financials in greater detail. After this, we have time for Q&A. Before I hand over to Tim, please pay attention to our usual disclaimer, which you find in the presentation. And please also note that this conference will be recorded and uploaded to the Internet. And now it's my pleasure to hand over to Tim.

Timotheus Höttges

And welcome, everybody. So where do we stand at the end of 2023? I think obvious our strategy is working. Our flywheel, as we always stated, is working pretty nice. Over the last 10 years, I've invested €170 billion. So that's quite an amount. And we now have 300 million customers on this infrastructure. We have leading networks. I think all networks are stating this on both sides of the Atlantic and a result of a focused and farsighted capital allocation strategy, which worked pretty well for us. We continue to invest into future growth, for sure, with our fiber investments, our new €2 billion tech fund, with Open RAN technologies, with generative AI, all of this becoming stronger in regard to the leading Deutsche Telekom. Magenta has become the most valuable brand in Europe, and it has become the most valuable Global Telekom brand. I think a very nice achievement.

Our customer satisfaction scores are moving up as well. In all areas, and by the way, there's not a single market except Romania, where we are not leading from a net promoter score. I think as well, a good outcome. Customer growth continues at a high level. I think that's the stunning part of the fourth quarter here. The great customer growth on both sides of the Atlantic. We're seeing as well good customer growth in the B2B area and mobile contract growth in Germany. I think a great number, despite the fact that we had strong competition here in this overall situation. Our customer service made huge progress as well. First time resolution rate in Germany has now achieved 70%. Our complaint rate, by the way, came down since 2016 by 90%, from 5.4 million down to 300,000 last year.

T-Mobile in the U.S. has launched a dividend program on top of its buyback. And DT itself has launched a €2 billion share buyback program on top of the dividend. Our total shareholder return was 20% in 2023. For the last 10 years, it was 174%. That brings me to our financials for 2023. The numbers, I'm quickly going over them. Our service revenue grew by 3.6% organically EBITDA almost 7%. By the way, if you look hindsight, we are growing now since a couple of years with something that makes a vicinity of 4% on the service revenues and 7% on EBITDA. And the guidance going forward is in the same magnitude. So this is a good indication. Four and seven, I like that number, especially when you know where the industry is coming from and where are we.

Our free cash flow grew by 41% to over €16 billion well in line what we laid out. Europe is now on 6%. Germany on more than 7 years of consecutive quarterly organic EBITDA growth. I think this investment in our infrastructure and in leading services is paying off. We delivered again against our 2023 guidance which we have raised throughout the year. Our 2024 guidance means that strong growth will continue this year and that we are looking good for our 21 capital markets targets and we will discuss that later on in more detail.

Capital allocation remained focused. We regained our majority in T-Mobile last year despite the dilution from the true-up. Well prepared. We completed our tower joint venture and we reduced our net debt by €10 billion in the last 12 months. And T-Mobile launched a new share of the remuneration program up to $19 billion and for the first time this includes a dividend as well....

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