Deutsche Telekom steady in Q1 despite pandemic

Deutsche Telekom (DT), the largest shareholder of T-Mobile US, reported a strong start to the 2020 financial year despite the COVID-19 crisis.

The company, which is based out of Bonn, Germany, posted a 2.3% increase in revenue, reaching $21.5 billion in the first quarter. Adjusted EBITDA AL rose by 10.2%.

“Deutsche Telekom is an anchor of stability in a global crisis,” said CEO Tim Höttges in a statement. “Our networks are working reliably as digital lifelines for society.”

With many stores closed, lower roaming revenues and IT projects getting canceled or postponed, the DT group expects the pandemic to have a limited impact on revenue.

However, voice telephony revenue is on the increase and churn is falling across the board. Taking those types of trends into account, the company says the impact on adjusted EBITDA AL is likely to be comparatively low. The group isn’t changing its guidance for the current fiscal year.

5G in Germany

During the earnings call, Höttges provided a bit of an update on DT’s 5G progress in Germany. The company will refarm some of its 3G spectrum and use 2.1 GHz spectrum for 5G – an “excellent” band for 5G because it offers both speed and good propagation. The plan is to switch on 5G in at least half of Germany this year.

DT also plans to serve 20 cities with 3.6 GHz, and going forward, it will leverage other spectrum, including 700 MHz frequencies, giving it a mix of low, mid and high band, which Höttges said is significantly better than its competition. Compared with Vodafone, DT will have four times more 5G coverage by the end of the year, he said, according to a Seeking Alpha transcript.

He promised that more details will come this summer about the 5G rollout, including pricing, handsets and specific cities.

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DT is lobbying hard for an open RAN approach in part because it makes it more independent from a commercial and security perspective. While there were two initiatives in the telecom industry in the past, with O-RAN and open RAN – which were not the same – “they are now all aligned,” with the big telcos working on these initiatives going forward, he said.  

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With the merger of T-Mobile US and Sprint now complete, DT owns 43.6% of the company and SoftBank owns 24.7%.