7 Dec 2012
German telecoms giant Deutsche Telekom (DT) has unveiled plans to spend around EUR30 billion (USD39 billion) over the next three years as it steps up investment in broadband networks and products in order to improve its competitive position in the long term. Around EUR6 billion will be invested in developing broadband using fibre-to-the-curb (FTTC) and vectoring (which will boost maximum VDSL download speeds to 100Mbps) in its domestic market, in addition to the ongoing rollout of Long Term Evolution (LTE) technology, under which 85% of the population will be covered with data transmission rates of up to 150Mbps by 2016. On top of that, a hybrid solution is planned for launch that combines LTE and vectoring to increase bandwidth to up to 200Mbps download and 90Mbps upload. The increased capital expenditure is intended to help compensate for the decline in revenues from traditional fixed network and mobile telephony as well as text messaging. In the US, capital expenditure of around USD4.7 billion has been planned for 2013 and around USD3 billion in each of the two subsequent years, compared with USD2.7 billion per year on average from 2010 to 2012. Around USD4 billion has been earmarked for network modernisation and the nationwide rollout of LTE. T-Mobile USA has also entered into an agreement with Apple to bring its products to market next year. ‘Hesitation now means playing catch-up later. We are investing in the future – with resolve and a clear strategy,’ said Rene Obermann, DT chairman. ‘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.’
DT has announced a free cash flow guidance of around EUR5 billion for 2013, from which a dividend of EUR0.5 is to be paid out both next year and in 2014, compared to the EUR0.7 pledged for this year. The company forecasts adjusted EBITDA of around EUR17.4 billion for 2013. Once the deal to combine its US unit with Texas-based MetroPCS is closed in the first half of 2013 as planned, this figure – on a pro-forma basis assuming the inclusion of MetroPCS from the beginning of the year – will increase to EUR18.4 billion. DT said net revenue and adjusted EBITDA are scheduled to grow again from 2014, with free cash flow of around EUR6 billion expected for 2015.