Timotheus Höttges holds his company close to his heart. At the annual press conference at the company headquarters in Bonn, the CEO of Deutsche Telekom appeared in a black turtleneck sweater with a T logo on the chest. The manager has been leading the company and its 200,000 employees for ten years, and since the 61-year-old’s contract expires at the end of 2026, there won’t be much time left. Höttges begins this Friday’s press conference with a review: When he became boss, the market value was behind rivals Vodafone and Telefónica, the company was cumbersome, and was viewed by critics as a “dusty bureaucratic shop” and a “billion-dollar grave for small investors.”
Today, however, the former state monopoly is worth more on the stock market than its major European rivals combined. Since then, the number of customers worldwide has increased by half to 300 million, and the company has invested more than 170 billion euros since 2014, especially in the networks, says the manager with satisfaction. However, there is a great danger that Höttges’ remaining time at the top of the company will be more arduous and less successful than these ten years. Because challenges await both in the important market of the USA and in Germany.
The However, last year brought quite solid results: Although sales fell slightly to 112 billion euros due to exchange rate effects, the adjusted operating result grew by four percent to 40.5 billion euros. For the current year, Höttges expects profits to continue to rise: “We have the confidence to go one step further.” The bottom line was that almost 18 billion euros remained in profit – the value was massively increased because the group sold the majority of its radio tower business, i.e. cell phone masts, in Austria and Germany. Without this effect, profits would have fallen by almost 13 percent. The shareholders should benefit from the windfall; the dividend will rise by ten percent to 0.77 euros per share. The company was also able to reduce its mountain of debt somewhat. Overall, shareholders seem to have expected better figures, as the share price fell on Friday.
In the mobile phone business in Germany, the Bonn-based company did better than its competitors at the end of last year. Telekom gained 289,000 contract customers from October to December, while the O2 provider Telefónica only gained 284,000 and Vodafone Germany only 95,000. However, the American subsidiary T-Mobile US contributes more than half of the profits anyway. The DAX group holds a little more than half of the shares in the company. When Höttges took over as CEO, there was discussion about selling off this shareholding. The manager decided against it, which in retrospect turned out to be absolutely right.
The group now has its own construction company
In the USA, consumers pay significantly more for their cell phone contracts than in Europe; the market is very lucrative. Höttges says that the success of the local subsidiary “helps us so that we can manage the record investments in Germany” and the other European markets. This is an advantage for Telekom over European rivals. In the fragmented European markets, many providers find it difficult to recoup their investments; there is “extremely brutal competition”.
But competition is also getting tougher in the United States, with local rival Dish now working with the powerful Internet company Amazon. At the same time, the people of Bonn must continue to invest heavily in the German home market – for example in fiber optic expansion for fast internet at home. Construction costs have risen here and construction companies have little free capacity. To remedy the situation, Telekom even founded its own civil engineering company.
At the turn of the year, Bonn was able to offer such particularly fast and reliable connections to 7.9 million households, an increase of 2.6 million within twelve months. The ten million mark is expected to be exceeded this year. However, so far only one in eight households has booked the more expensive fiber optic connections; the rest have stuck with the cheaper copper lines. Höttges admits that the group needs to “improve marketing”; the goal is for 30 to 40 percent of households to actually use the new fiber optic option in the coming years.
1&1 is building a fourth cell phone network
The German mobile communications market will remain highly competitive. There is now a fourth network operator there, 1&1. Billionaire Ralph Dommermuth’s company will build its own cell phone masts in the coming years and will otherwise be able to use the 5G network of its rival Vodafone Germany – at very advantageous conditions. An important decision from the Federal Network Agency is coming soon. At the end of 2025, the usage rights for certain mobile frequencies, which are currently held by Telekom, O2 and Vodafone Germany, will expire. 1&1 requires that these be sold again in an auction so that the newcomer can also have a chance. That could be expensive. However, the network agency struck in a position paper proposes to simply extend the usage rights of the three companies, combined with requirements to close dead spots. The authority is suggesting an extension of five years, Höttges is even in favor of eight years.
In addition, the manager will soon have to deal with difficult collective bargaining. They start in March. During the last collective bargaining round two years ago, the company and the Verdi union agreed on wage increases below the inflation rate. This time the workers will demand a decent bonus. This could significantly increase the costs of the company with 79,000 employees in Germany. Höttges says that the management has a “very, very good relationship” with the trade unionists. It sounds a bit like an incantation.