For information on changes in the organizational structure, please refer to the section “Group organization, strategy, and management” and to the disclosures under segment reporting in the interim consolidated financial statements.
|June 30, 2018||Mar. 31, 2018||Change
June 30, 2018/
Mar. 31, 2018
|Dec. 31, 2017||Change
June 30, 2018/
Dec. 31, 2017
|June 30, 2017||Change
June 30, 2018/
June 30, 2017
|Fixed-network lines a||18,989||19,149||(0.8)||19,239||(1.3)||19,477||(2.5)|
|Of which: retail IP-based||13,629||12,843||6.1||11,996||13.6||10,351||31.7|
|Retail broadband lines b||13,437||13,357||0.6||13,209||1.7||13,035||3.1|
|Of which: optical fiber||6,559||6,232||5.2||5,803||13.0||5,033||30.3|
|Television (IPTV, satellite)||3,240||3,193||1.5||3,139||3.2||3,024||7.1|
|Unbundled local loop lines (ULLs)||5,587||5,846||(4.4)||6,138||(9.0)||6,723||(16.9)|
|Wholesale broadband lines||6,277||5,993||4.7||5,638||11.3||4,980||26.0|
|Of which: optical fiber||4,432||4,135||7.2||3,783||17.2||3,169||39.9|
|a The baseline as of January 1, 2018 increased (by 62 thousand) due to the inclusion of new products launched in the Business Customer portfolio. Prior-year comparatives were not adjusted.
b The baseline as of January 1, 2018 increased (by 53 thousand) due to the inclusion of new products launched in the Business Customer portfolio. Prior-year comparatives were not adjusted.
In Germany we continue to be market leader both in terms of fixed-network and mobile revenues. This success is attributable to our high-performance networks. We offer best customer experience with multi-award-winning network quality – in the fixed network and in mobile communications – and with a broad product portfolio. Growing demand for our integrated product MagentaEins drove up the number of new customers by 265 thousand compared with the end of 2017, bringing the total number of customers added in the first half of 2018 since the product was launched to 3.9 million.
Compared with year-end 2017, we lost a total of 102 thousand mobile communications customers in the first half of 2018, primarily due to seasonal business fluctuations at one of our service providers (resellers). High demand for mobile rate plans with included data volumes resulted in an increase in the number of branded contract customers under the Telekom and congstar brands. We also recorded growth in the number of prepay customers.
We continued to see strong demand for our fiber-optic products. As of the end of the first half of 2018, the number of lines had increased to 11.0 million overall. In other words, we connected another 1.4 million lines to our fiber-optic network in Germany in the first six months of 2018. With the progress in fiber-optic rollout and innovative vectoring technology, we also successfully drove forward the marketing of higher bandwidths.
Compared with year-end 2017, we won a total of 197 thousand branded contract customers under the Telekom and congstar brands and at Telekom Deutschland Multibrand GmbH. The number of mobile contract customers with service providers decreased, primarily due to seasonal business fluctuations at one of our service providers. The number of prepay customers increased by 820 thousand.
Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of competitors, we are pursuing new paths in marketing, focusing on integrated offers and on TV and fiber-optic lines. For example, if we take into account the new products launched for business customers since the start of 2018, the number of broadband lines in our portfolio rose by 228 thousand between year-end 2017 and the end of the first half of 2018, while the number of TV customers increased by 101 thousand. The number of lines in our traditional fixed-network portfolio decreased by 312 thousand.
Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on IP technology and rate plan-specific bandwidths. MagentaZuhause Hybrid bundles fixed-network and mobile technology in a single router. To date, 408 thousand customers, primarily based in rural areas, have selected this innovative product.
At the end of the first half of 2018, fiber-optic lines accounted for 37.4 percent of all lines – 5.3 percentage points higher than at the end of 2017. This accelerated growth was driven largely by high demand for our contingent model. The number of unbundled local loop lines decreased by 551 thousand or 9.0 percent compared with the end of the prior year. This is due first to the move to higher-quality fiber-optic lines, and second to retail customers switching to cable operators. In addition, wholesale customers are migrating their retail customers to their own fiber-optic lines. The total number of wholesale lines stood at 11.9 million at the end of the second quarter of 2018.
DEVELOPMENT OF OPERATIONS
|millions of €|
|Q1 2018||Q2 2018||Q2 2017||Change %||H1 2018||H1 2017||Change %||FY 2017|
|Business Customers a||1,491||1,492||1,473||1.3||2,983||2,937||1.6||6,017|
|Profit from operations|
|Depreciation, amortization and impairment losses||(980)||(988)||(953)||(3.7)||(1,968)||(1,888)||(4.2)||(3,828)|
|Special factors affecting EBITDA||(167)||(185)||(105)||(76.2)||(352)||(154)||n. a.||(308)|
(ADJUSTED FOR SPECIAL FACTORS)
|EBITDA margin (adjusted for special factors)||%||39.1||39.9||38.8||39.5||38.5||38.4|
|a As of July 1, 2017, a share of revenue previously recognized under “Other” was assigned to Business Customers on account of a reorganization. Prior-year comparatives were not adjusted.|
Total revenue decreased by 1.1 percent compared with the first half of the prior year. Adjusted for the effects of the IFRS 15 accounting standard, the application of which is mandatory from January 1, 2018, total revenue developed on a par with the prior year. In mobile business, revenue declined by 2.7 percent year-on-year; excluding the effects of IFRS 15, revenue increased slightly compared with the prior-year period. Higher IT and broadband revenues had a positive impact on fixed-network revenue. This was sufficient to almost completely offset the decline in fixed-network revenues compared with the first half of 2017.
Revenue from Consumers declined by 2.8 percent year-on-year; adjusted for the effects of IFRS 15, the decline was only marginal. Volume-related revenue decreases continued to affect traditional fixed-network business. By contrast, revenue from broadband business increased by 3.3 percent.
Revenue from Business Customers grew by 1.6 percent; this growth was even stronger once adjusted for the effects of IFRS 15. Mobile revenues increased by 3.6 percent and IT revenues by 21.5 percent compared with the first half of the prior year. In the fixed network, by contrast, a decline was recorded in traditional voice telephony, due largely to the increasing number of customers moving to flat-rate plans.
Revenue from Wholesale business in the first six months of 2018 remained on a par with the prior-year period. Adjusted for the effects of IFRS 15, revenue would have grown substantially.
EBITDA, adjusted EBITDA
EBITDA amounted to EUR 3.9 billion in the first half of 2018, a year-on-year decrease of 3.3 percent due mainly to higher special factors for expenses in connection with our staff restructuring. EBITDA adjusted for special factors totaled EUR 4.2 billion at the end of the first half of 2018, up 1.6 percent compared with the same period of last year. This year-on-year increase was attributable largely to the lower headcount, lower revenue-dependent costs, and the successful implementation of our efficiency and digitalization initiatives. The adjusted EBITDA margin was up from 38.5 percent in the first half of 2017 to 39.5 percent in the first half of 2018.
Profit from operations decreased by 10.0 percent compared with the first half of the prior year to EUR 1.9 billion. Depreciation, amortization and impairment losses increased on account of sustained high investments in our network infrastructure.
Cash capex increased by 2.5 percent compared with the first half of 2017. As part of our integrated network strategy, we again made significant investments in the broadband and fiber-optic rollout, our IP transformation, and our mobile infrastructure.