Deutsche Telekom slashes dividend, puts focus on German LTE deployment

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Deutsche Telekom (DT) will invest heavily in Germany and the United States in a bid to revamp its financial performance, according to DT CEO Rene Obermann. Key to this turnaround is a commitment to push forward with LTE deployment in Germany and news that its T-Mobile USA subsidiary will have access to the iPhone starting next year.

Deutsche Telekom CEO Rene Obermann

Obermann

However, this push for growth will come at a cost to shareholders as the company announced a cut in dividends of almost 30 per cent, according to Reuters. Investments by DT will increase by more than an annual €1 billion to €9.5 billion in 2015 from an estimated €8.3 billion this year.

Speaking at the operator's annual investor conference, Obermann said that he will look for innovation within the mobile sector of the business. "There will be four targets: M2M, cloud services, RCS and mobile payments that I want to see rolled out across our mobile footprint, and become successful," he said.

Obermann and other DT executives made particular mention of the importance of LTE to the future success of its operations in Germany. "The biggest growth in revenues will come from mobile Internet usage, achieving around £10 billion by 2015," Obermann said. "The market [for mobile Internet] is just taking off, and we'll either achieve this revenue target or over-perform."

Of note, Obermann made only a passing reference to EE, its UK joint venture with France Telecom, saying it was on track and that DT's valuation (between 2010 and 2012) had increased by €1.7 billion. He indicated that its involvement in EE could be reviewed in the future.

DT's CEO for Germany, Niek Jan van Damme, stressed during his presentation that high-speed broadband quality (mobile and fixed) was a key differentiator in the market. "We will invest heavily in LTE and fibre with the aim of leading the B2B market by 2014," he said.

"We returned to the No. 1 revenue position in the German mobile market in the third quarter of this year, and were only out performed by France Telecom when compared with other mobile operators in Europe," he added.

Jan van Damme also expressed a commitment that the company would be the No. 1 operator in Germany by 2015 in mobile services revenue, with a market share of around 35 per cent.

Jan van Damme said that the company will reach this position by focusing heavily on LTE, and that the company will increase LTE coverage from 38 per cent this year to 65 per cent in 2013. The company also revealed plans to offer T-Mobile subscribers (and not customers of its MVNO partners or via cut-price resellers) a premium LTE service with download speeds up to 150 Mbps using its 1800 MHz spectrum. By 2015, Jan van Damme forecasted that LTE handsets will be in use by nearly 70 per cent of his customers.

For more:
- see this Reuters article
- see this Deutsche Telekom Capital Day presentation

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