Annual Report 2020 02
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TELEFÓNICA DEUTSCHLAND HOLDING AG Reporting year 2020 TELEFÓNICA MAGAZINE DEUTSCHLAND HOLDING AG Magazine 2020 01 / Investor Relations 01 / 02 Financial calendar and contact 1 2021 19 January TELEFÓNICA DEUTSCHLAND HOLDING AG Strategy Update for the Capital Market INVESTOR RELATIONS 24 February Phone Q4 2020 – Preliminary results +49 (0)89 2442 1010 28 April E-Mail Q1 2021 – Quarterly statement Institutional investors: [email protected] 20 May Annual General Meeting Private shareholders: [email protected] 28 July Q2 2021 – Preliminary results Website telefonica.de/investor-relations 27 October Q3 2021 – Quarterly statement (Subject to change) Magazine 2020 03 / Foreword by the Management Board Dear Shareholders, Dear Ladies and Gentlemen, We look back on a year that changed the world to an extent that no an increase in voice and data volumes. Our customers could rely on one could have imagined at the beginning of the year. The COVID-19 highly reliable connectivity at all times. At the same time, Telefónica pandemic has presented us all with unusual challenges, while at the Deutschland is preparing itself well for the future with 5G and has set same time giving digitalization an enormous boost. ambitious expansion targets. On the 30th anniversary of the German unification, the fifth generation of mobile communication was Telefónica Deutschland took immediate responsibility in the crisis and launched on the O2 network, and by 2025 at the latest, we want to initiated comprehensive measures to meet the expectations of our offer our customers nationwide coverage. At the same time, Telefónica millions of customers, to secure our network operations and to protect Deutschland is a reliable partner when it comes to intelligent, secure our employees during these unprecedented times. and wireless real-time networking via 5G campus networks, for example in the “Factory 56” of Mercedes-Benz Cars in Sindelfingen. At the same time, Telefónica Deutschland assumed social responsi- bility through a variety of initiatives also benefitting our customers. With more than 11,000 new LTE elements in the O2 network, our These included the provision of mobility analyses for the Robert Koch 4G expansion campaign laid the foundation for fast Internet to be Institute, the passing on of the temporary VAT reduction, free app increasingly available in rural areas, despite temporary disruptions due access for a limited period (e.g. O2TV for 3 months), a series of live- to the pandemic. By the end of 2020, an additional 7 million people streamed O2 concerts or the partnership with “Germany Against had been provided with 4G and, with 98 percent household coverage Corona”. For senior citizens, we stepped up digital training offers during in Germany now, Telefónica Deutschland successfully met the the crisis. From the start of the COVID-19 pandemic in Germany, the nationwide 4G coverage requirement of the Federal Network Agency. surfing speed of Telefónica Deutschland customers was increased At the same time, the O2 network achieved another breakthrough significantly to 384 Kbit/s after consumption of the included high- in network quality. In the test of the trade magazine ‘connect’1, speed data volume – also for partner brands. Part of the company’s the O2 network was awarded the rating “very good” for the first time in premises in the “O2 Tower” in Munich was also used by the crisis team the company’s history, putting it on a par with competition. of the Bavarian Red Cross as temporary headquarters. But it was not just the network that scored points; our core brand O2 In the interests of health and safety, the majority of our employees also received several awards for its products and services, including a continue to work predominantly from their home offices, which has “very good” rating in the store test2 conducted by ‘connect’ magazine been working well from the outset thanks to the flexibility of our and in the service apps test3. employees and our robust IT systems. As part of the roll-out of our ‘5 Bold Moves’, we have already aligned our collaboration to the new The innovative O2 Free portfolio with its Unlimited portfolio with normal of tomorrow’s increasingly digital world of working, focusing different surfing speeds and classic volume-based rates underscores more than ever on digital ways of working, individual flexibility and Telefónica Deutschland’s claim to be the leading provider in the Ger- maximum productivity. man mobile communications market. Furthermore, with the expanded O2 myHome fixed network products launched in November 2020, Our O2 network successfully passed the pandemic stress test and Telefónica Deutschland not only provides the German broadband successfully coped with the COVID-19-related changes in usage with market with a wide and unique technology mix of VDSL, cable, fiber 03 / 04 From left: The Executive Board: Markus Rolle (Chief Financial Officer), Valentina Daiber (Chief Officer for Legal and Corporate Affairs), Wolfgang Metze (Chief Consumer Officer), Markus Haas (Chief Executive Officer, Chairman of the Management Board Telefónica Deutschland Holding AG), Nicole Gerhardt (Chief Human Resources Officer), Mallik Rao (Chief Technology and Information Officer) and Alfons Lösing (Chief Partner and Wholesale Officer) and the 4G/5G-based O2 HomeSpot, but also has the largest fixed Deutschland in May 2021. Compared to our previous medium-term network footprint in the German market. dividend forecast, this represents an increase that also reflects the successful monetization of the business operations of a large part of its As a result, Telefónica Deutschland has coped well with the crisis rooftop sites. The first tranche of around 6,000 sites has already been year 2020, with the momentum of our core business fully intact in a transferred to Telxius in September 2020, with the remaining sites to dynamic and still rational environment. The solid customer develop- be transferred in summer 2021. In addition to the dividend participa- ment in 2020 with a net increase of 448 thousand mobile lines and 55 tion for you, our shareholders, another part of the proceeds will flow, as thousand fixed line customers was driven by the strong traction of the announced, into the investment company founded by Telefónica Infra O2 Free portfolio, historically low churn rates and the increase of the and the Allianz Group for the expansion of fiber optic connections in Net Promoter Score as a result of the continuous quality improve- Germany. Telefónica Deutschland will invest up to 100 million euros in ments of the O2 network and all products and services. the company over a period of six years in return for a ten percent equi- ty stake, thus benefiting from this attractive future field not only as an Nevertheless, Telefónica Deutschland’s business performance was not investor but also by marketing broadband offers on this network. completely immune to the impact of the COVID-19 pandemic. Follo- wing the easing of the hard lockdown in spring 2020, new customer Telefónica Deutschland is taking responsibility for the sustainable digi- acquisition and momentum in the prepaid business recovered swiftly. talization of the economy and society. We have set ourselves the goal Roaming business, on the other hand, remained impacted by the on- of becoming climate-neutral by 2025 – full five years earlier than origi- going travel restrictions for the remainder of the year. We successfully nally planned. To this end, we will significantly increase the energy ef- achieved our pre-COVID-19 set outlook targets for the 2020 financial ficiency of the O2 network in the course of the 5G roll-out and network year, despite these financial drags and another hard lockdown at the modernization and use 100 percent green energy in all business areas. end of the year. We also aim to reduce business travel by around 70 percent as part of the new normal of the increasingly digital world of working. With this Strengthened by its robust mobile and fixed network infrastructure, ambitious climate strategy, Telefónica Deutschland supports the Paris Telefónica Deutschland will continue to generate further revenue Climate Agreement and contributes to the “1.5 degree target”. streams in 2021. We continue to have our sights clearly set on our goals: On the one hand, we want to win additional customers in rural As you can see, our company has a clear strategy and is successfully areas and secure our market leadership in cities. Attractive convergent implementing it. We would like to thank our customers, employees, offers comprising mobile and fixed-network components target to business partners and you, our Shareholders, for the trust you have achieve this goal. Secondly, we want to further increase customer placed in us. loyalty and generate additional revenues through this. In addition, Telefónica Deutschland aims to achieve a fair market share in the business customer segment, where we have been underrepresented Yours sincerely to date. The Executive Board The basis for this development remains the growth-oriented investment program announced in December 2019. It secures additional revenue streams and long-term margin growth for Telefónica Deutschland. It is also the prerequisite for an attractive free cash flow profile in a 1 https://www.connect.de/vergleich/mobilfunk-netztest-2021-bestes-handy-netz- competitive market environment and thus for continued attractive deutschland-3201325.html – Network test 2021: Very good (852 points); total score: three times very good (926, 876 and 852 points). shareholder remuneration. In this context, we announced on 19 January 2 https://www.connect.de/vergleich/mobilfunk-shops-test-2020-service-kundenberatung- 2021 that we intend to propose a dividend of 0.18 euros per share for 3201031-8854.html 3 https://www.connect.de/vergleich/service-app-test-2020-mobilfunk-netzbetreiber- the financial year 2020 to the Annual General Meeting of Telefónica deutschland-oesterreich-schweiz-3201171-8891.html Magazine 2020 05 / Vision and Strategy A high-performance network and reliable IT – A high-performance network and a reliable IT architecture form the basis of business success.