Office space to be reduced by half Deutsche Telekom better than expected in its home market

Bonn · Changes in the Telecommunications Act strengthen consumer rights, contracts that are automatically renewed can be terminated more quickly. Deutsche Telekom is feeling the effects of this in terms of broadband connections. But overall, the Bonn-based company is doing well. In a further development, the company announced that it would reduce office space by half.

  The Telekom logo on the roof of the corporate headquarters.

The Telekom logo on the roof of the corporate headquarters.

Foto: dpa/Oliver Berg

Deutsche Telekom has raised its annual targets anew. Things have been going surprisingly well recently on the domestic market, where Deutsche Telekom has been able to improve its revenue performance and win new contract customers. Competitors have suffered because of the more consumer-friendly cancellation rights.

After subtracting the terminations, 194,000 new contract customers were added under its own brand in the second quarter, which is more than in the same quarter last year, the DAX-listed company announced in Bonn on Thursday.

However, Deutsche Telekom is also feeling the effects of the changes to the Telecommunications Act (TKG): with around 45,000 new broadband lines, the number has more than halved compared with the previous year. Automatically extended contracts can now be terminated after one month following the end of the minimum term, rather than after one year.

The new termination rules have not left competitors unaffected either: Telefonica Deutschland reported a significant increase in new contract customers. By contrast, its British competitor Vodafone achieved only a minimal increase in Germany, and United Internet subsidiary 1&1 also struggled.

Meanwhile, Deutsche Telekom's consolidated revenue for the months April to June climbed by almost six percent to around EUR 28 billion. However, with adjustments for exchange rate effects and portfolio changes, revenue was stagnant.

Earnings before interest, taxes, depreciation, and amortization including leasing costs (Ebitda AL) adjusted for special factors amounted to around EUR 9.9 billion - an increase of five percent compared with the prior-year period. On balance, net profit decreased by around 22 percent to just under EUR 1.5 billion, also due to the costs resulting from the merger of the T-Mobile US subsidiary with Sprint and a settlement following a hacker attack.

For the full year, Deutsche Telekom now aims to achieve somewhat more in terms of operating profit than before. Earnings before interest, taxes, depreciation and amortization, including leasing costs, adjusted for special factors, are expected to increase to around EUR 37 billion in the current year, it said. Previously, the Group had targeted more than EUR 36.6 billion following an initial increase. In 2021, Telekom achieved an adjusted operating profit of 36.5 billion euros. Previously, the important subsidiary T-Mobile US had already increased its targets.

Deutsche Telekom to reduce office space by half

In a further development, Deutsche Telekom said it will sell up to 50 percent of its office space in the coming years. "Bonn is also affected by this," Telekom CEO Timotheus Höttges said in Bonn on Thursday when asked. The CEO did not provide any details on the time frame. "We were oversized in the past because employees were on site with customers." Now employees go about their work in a hybrid way. The fact that work space is being reduced, however, should not indicate how important a location is, he said.

Currently, Telekom is already giving up almost half of the office workplaces it has rented so far in Darmstadt. It is not yet clear which locations Telekom will give up in Bonn, said company spokesman Philipp Schindera. That depends, for example, on when rental agreements expire.

Höttges explained that the trend toward mobile working means that more employees will share desks in the future, meaning less space will be needed. However, he added that giving up office space was also intended to help save electricity. Here, Deutsche Telekom is fulfilling its social responsibility to make a contribution to the fight against climate change. In the second quarter, the company's electricity consumption was reduced by 14 percent compared with the same period last year.

By 2025, Telekom aims to be emissions-neutral in its own business activities and energy purchasing. "In Germany, we have cut consumption of office electricity and heat by half since 2010, from 965 gigawatt hours at the time," said Höttges. He added that the reduction in heating requirements in the technical areas had contributed to this.

(Orig. text: dpa, Claudia Mahnke / Translation: Carol Kloeppel)

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