Thursday, December 6, 2012

Deutsche Telekom Boosts CAPEX to Accelerate Network Transformation

 Deutsche Telekom will increase its capital expenditures over the three years to around EUR 9 to 10 billion per year.  The focus is on Germany, where DT will accelerate the building out of its LTE network as well as rolling out optical fiber and vectoring technology in the fixed network. On top of that, a hybrid solution is planned for launch that combines LTE and vectoring, thereby increasing bandwidths. In the U.S., T-Mobile USA will roll-out its national LTE network.

T-Mobile USA reached an agreement with Apple to offer the iPhone for the first time.

"Hesitation now means playing catch-up later. We are investing in the future – with resolve and a clear strategy," said RenĂ© Obermann, Chairman of the Board of Management of Deutsche Telekom, speaking at the company's Capital Markets Day in Bonn.  "The investment plans we have presented today will lay the foundation for future growth. And it is the people in Germany in particular who will benefit more than ever from the modern infrastructure."

Some key points

  • The acceleration of the LTE build-out will bring coverage to 85 percent of the population covered by 2016 with data transmission rates of up to 150 Mbps.
  • The build-out of the optical fiber network (FTTC) to cover around 65 percent of the population within the same time frame.
  • Deployment of the new vectoring technology, provided a corresponding regulatory framework is in place, will increase VDSL data transmission rates to up to 100 Mbps.
  • Hybrid-box technology will feed traffic in both directions via vectoring and LTE. This will make download speeds of up to 200 Mbps possible and upload speeds of up to 90 Mbps.
  • Investments in Germany from 2014 through 2016 are to increase to EUR 4.1 to 4.5 billion, respectively, compared with an average of EUR 3.6 billion in the preceding three years.
  • In the United States, capital expenditure of around USD 4.7 billion has been planned for 2013 and around USD 3 billion in each of the two subsequent years compared with USD 2.7 billion per year on average from 2010 to 2012.
  • DT issued free cash flow guidance for 2013 of around EUR 5 billion from which a dividend of 50 euro cents is to be paid out both in 2013 and in the following year. Free cash flow of around EUR 6 billion is targeted for 2015.
  • Adjusted EBITDA is forecast to be around EUR 17.4 billion for 2013. 

In addition, T-Systems' newly launched Telekom IT unit, which pools all of the Group's internal IT activities in Germany, is expected to reduce the Group's IT costs by EUR 1 billion by 2015. In external business, T-Systems is focusing even more squarely on cloud-based solutions.

See also