high speed internet
Telekom is speeding up fiber optic expansion
Telekom CEO Tim Höttges (l) and CFO Christian Illek presenting the annual figures for 2021. Photo: Federico Gambarini/dpa
© dpa-infocom GmbH
Up until now, Deutsche Telekom has primarily relied on the use of conventional copper wire lines. Glass fiber right into the house was a rather rare occurrence. But that is gradually changing.
Deutsche Telekom is accelerating its fiber optic expansion. The goal of being able to supply around 10 million households in Germany with the super-fast Internet lines by the end of 2024 will be “significantly exceeded,” said CEO Tim Höttges in Bonn.
To this end, a joint venture called FaserPlus, which Telekom founded together with Australian investors, is now taking the stage. The Australians bring in urgently needed capital for the expensive expansion.
By the end of 2028, the new joint venture is intended to make pure fiber optic connections available to 4 million German households in rural areas. Construction work is scheduled to start this year. Part of it should be ready by the end of 2024 – including this part, Telekom would be significantly more than the 10 million households previously targeted.
The lines are “Fiber to the Home” (FTTH), i.e. fiber optics to the home or office – and not just to the junction box on the side of the road. This type of transmission is significantly faster and more stable than so-called VDSL connections via telephone copper cable, which Telekom also relies on.
Höttges: The need for high-speed internet will increase
Telekom’s fiber-optic network is currently so extensive that 3.4 million households could have high-speed Internet. However, only some of these households are already doing so and have signed contracts – other homeowners now have fiber optics in front of their door but are not yet using this high-speed access.
Höttges is convinced that the need for high-speed Internet will increase in the future. Customers are currently “not yet ready to pay 10 euros more for a gigabit connection, for example”. The utilization of the fiber optic network is only 20 percent. “That’s not enough,” said the manager. “But we will still build – even with the risk that the capital costs cannot be earned back for the time being.” At some point, however, the time will come when the customer wants fiber optic speed, for example for very high-resolution films and other data-intensive applications – “and then Deutsche Telekom will be there”.
Against the background of weak fiber optic utilization, cooperation with other companies makes particular sense: Competitors gain access to the Telekom network and can sell their customers fiber optic contracts, for which Telekom receives rental income. The provider 1&1 has recently been able to sell Internet contracts for the Telekom fiber optic network, and Telekom is still in talks with Vodafone and Telefónica about a similar cooperation – these companies may soon also come to the Magenta fiber optic network and ensure additional capacity.
Growth course continued in 2021
Group CEO Höttges and CFO Christian Illek also presented the Telekom annual figures for 2021. They looked good. The Magenta Group was able to continue on its strong growth path, primarily thanks to its American earnings pearl, T-Mobile US. Total sales increased by 7.7 percent compared to 2020 to 108.8 billion euros. Around two-thirds of this was attributable to the USA, where sales rose particularly strongly with an increase of 11.7 percent. The merger with the mobile communications provider Sprint is paying off, summed up Höttges. In Germany, the Bonn-based company only posted an increase in sales of 1.6 percent to 23.8 billion euros.
Profits also went up. However, consolidated net income increased by only 0.4 percent to 4.2 billion euros. This small plus was due, among other things, to integration costs after the Sprint takeover, for example for merging IT systems.