Highlights in the first quarter of 2017
BOARD OF MANAGEMENT
As of January 1, 2017, the Deutsche Telekom AG Group Board of Management was extended to include the additional Board department Technology and Innovation, headed by Claudia Nemat. Srinivasan (Srini) Gopalan joined the Board of Management as of January 1, 2017 as the member responsible for Europe. The Supervisory Board of Deutsche Telekom AG approved this decision in its meeting on June 30, 2016. The number of Board of Management members has thus been increased from seven to eight.
We completed the sale of our hosting service provider Strato to United Internet for a purchase price of EUR 0.6 billion effective midnight March 31, 2017, following approval from the responsible authorities.
At the start of January 2017, we issued U.S. dollar bonds with a total volume of USD 3.5 billion. We also placed euro bonds of EUR 3.5 billion in January 2017 under our debt issuance program. All bonds were issued by Deutsche Telekom International Finance B.V. with the guarantee of Deutsche Telekom AG.
In March 2017, T-Mobile US placed high-yield notes with a total volume of USD 1.5 billion in a public offering.
The issuances form part of our general corporate financing and did not increase the level of our net debt.
FINANCING RELATIONSHIP WITH T-MOBILE US
In order to optimize the financing terms and conditions for our subsidiary T-Mobile US and thus also those for the Group, on January 25, 2017 we provided T-Mobile US with secured loans totaling USD 4 billion, which were paid out to T-Mobile US on January 31, 2017. T-Mobile US used around USD 2 billion of this to repay a secured loan prematurely to third parties.
In March 2017, T-Mobile US contracted intragroup bonds with Deutsche Telekom AG for a total of USD 3.5 billion. Of this amount, USD 2.5 billion was used for early repayment of bonds held by Deutsche Telekom AG. The intragroup bonds were paid out in the amount of USD 3.0 billion in April; the remainder will be paid out in September.
In the first quarter of 2017, T-Mobile US prematurely canceled USD 8.25 billion in senior notes held by external investors. USD 1.5 billion was repaid by the beginning of March, and the remainder was repaid by the end of April.
INVESTMENTS IN NETWORKS
Project launch of “LTE everywhere.” In March 2017, we launched a further step in the network build-out with the large-scale roll-out of LTE 900 in Germany. This frequency range is especially suited to carrying the mobile signal deeper into buildings and homes. At the same time, this frequency will enable us to offer LTE by the end of 2019 everywhere where mobile telephony is already possible today. In addition, we are fitting out every cell site in Germany with RAN (Single Radio Access Network) technology. The conversion of the technology and the use of LTE 900 are additional elements with which we are preparing our network for 5G, the communications standard of the future.
Network build-out for Narrowband IoT in eight countries. In moving towards 5G, we have cleared the way for the Internet of Things with narrowband radio technology (Narrowband IoT). The network is being upgraded to support sensors used for various purposes, for instance, to display vacant parking spaces or to indicate how full the local trash cans are. We will be starting to roll out the network technology required for these narrowband applications in the next few weeks in Germany and the Netherlands. In Greece, Poland, Hungary, Austria, Slovakia and Croatia, we plan to extend the already existing Narrowband IoT network coverage to more cities over the course of the coming year.
Fiber-optic build-out campaign for 100 business parks. We will be launching a special program in Germany to support business parks in the first half of 2017. In an initial step, 100 business parks in Germany will be connected to the fiber-optic network, giving SMEs in these business parks access to high-speed broadband connections. In technological terms, the upgrade will be implemented either using vectoring and FTTC or FTTH.
Partnership between BT and T-Systems improves global reach for international customers. At the start of March, BT and T-Systems announced a partnership that will enable T-Systems to access countless BT network services in the future to connect the sites of their customers around the world. Going forward, T-Systems and BT will be able to connect their networks with each other to even better meet the needs of individual customers. T-Systems will thus increase its international reach in the future by more than 60 percent and be able to offer its international customers around the world seamless connectivity of global network services such as MPLS (Multi Protocol Label Switching).
NEW PRODUCTS, RATE PLANS, AND SERVICES
“Feel connected all over Europe” was our motto at the 2017 Mobile World Congress in Barcelona. This year, our trade fair booth focused on the future communications standard 5G. We demonstrated augmented reality and robotic applications to show that 5G is much more than just high-speed Internet. In addition, we provided a glimpse of the connected Europe of the future, showcasing augmented reality and position tracking using a Carrera model racecourse, including smart parking and predictive maintenance solutions for the Internet of Things, and giving a hands-on experience of the secure Europe-wide Pan-Net.
At CeBIT, we set the tone with “Digitization. Simply. Make it happen.” At our trade fair booth, we demonstrated specific success stories and solutions for new digital business models and secure networks centering around the key trends, i.e., the Internet of Things (IoT), drones, 5G, cloud services, virtual reality, smart city, and everything from the new world of artificial intelligence. In addition, we unveiled new IoT starter kits for companies and demonstrated the opportunities of Narrowband IoT, the new network for IoT mass applications, which will go live in Germany in the second quarter of 2017.
IoT solution – Maintenance 2.0. We are bringing to market new IoT bundles for easy entry to the Internet of Things. The new bundles offer predictive maintenance with 360° service. They let companies put their own predictive maintenance packages together for their specific needs. In addition to the hardware, these end-to-end solutions also include connectivity over the mobile network. Data is stored, processed, analyzed and graphically edited in a highly-secure German data center. The individual IoT bundles support automated maintenance processes, from analysis of damage and wear and tear to initiating a visit by a service technician.
In January 2017, T-Mobile US introduced Un-carrier Next, where monthly wireless service fees and sales taxes are included in the advertised monthly recurring charge for T-Mobile ONE. T-Mobile US also unveiled Kickback on T-Mobile ONE, where participating customers who use 2 GB or less of data in a month, will get up to a USD 10 credit on their next month’s bill per qualifying line. In addition, the Un-contract for T-Mobile ONE with the first-ever price guarantee on an unlimited 4G LTE plan was introduced which allows current T-Mobile ONE customers to keep their price for service until they decide to change it.
The illustration below shows the main awards received in the first quarter of 2017. For details on more awards, please go to www.telekom.com/media.