Business activities and organization
Business activities. With 165 million mobile customers, around 29 million fixed-network and around 19 million broadband lines, we are one of the leading integrated telecommunications companies worldwide. We offer our customers fixed-network/broadband, mobile communications, Internet, and Internet-based TV products and services for consumers, and ICT solutions for business and corporate customers. We have an international focus and are represented in more than 50 countries. For information on our footprint, please visit www.telekom.com/worldwide In the 2016 financial year, we generated around 66 percent of net revenue, i. e., EUR 48.4 billion, outside Germany. Overall, we employ some 218,300 people (December 31, 2016).
The fixed-network business encompasses all voice and data communications activities based on fixed-network and broadband technology. This includes the sale of terminal equipment and other hardware, as well as the sale of services to resellers. Our mobile communications business offers mobile voice and data services to consumers and business customers. When marketing these services, we also sell mobile handsets and other hardware. In addition, we also sell mobile services to resellers and to companies that buy network services and market them independently to third parties (mobile virtual network operator, or MVNOs). Drawing on a global infrastructure of data centers and networks, our corporate customer arm, T-Systems, operates information and communication technology (ICT) systems for multinational corporations and public-sector institutions.
We believe that economic, social, and ecological aspects can be reconciled, and place sustainability at the heart of all we do. A range of sector-specific and general conditions are crucial to the success of business activities. These include qualified staff and excellent working conditions within our own Group but also at our suppliers, as well as first-rate quality at reasonable costs – with regard to data protection and security, customer service, network build-out, and in materials procurement. It is also important to consider the potential consequences of climate change for our business activities: for example, to construct our network infrastructure in such a way that it is protected from severe weather conditions, changes in temperatures, and higher wind speeds. We also help our customers to reduce their carbon footprint with innovative products and services. Furthermore, we are cutting back our own energy consumption. Also beyond our core business, we do everything we can to ensure that our actions are socially acceptable. For us, this means conducting ourselves in a way that is ethical and compliant with the law and informing and involving our stakeholders in a transparent way. 12
Our responsible corporate governance and business success are based on our shared corporate values and Guiding Principles, which are as follows:
- Customer delight and simplicity drive our action
- Respect and integrity guide our behavior
- Team together – Team apart
- Best place to perform and grow
- I am T – count on me
We want to be a sustainably growing company that delights its customers, creates value for its investors, and in which employees enjoy their work.
Organization. Our financial reporting conforms with our Group strategy and is based on the following organizational structure. Our Group is broken down into four operating segments whose business activities are assigned in three segments by region and in one segment by customer and product.
The following graphic provides an overview of the organizational structure of our Group, which we will explain in detail.
Our Germany operating segment comprises all fixed-network and mobile activities for consumers and business customers in Germany. In addition, it provides wholesale telecommunications services for the Group’s other operating segments.
Our United States operating segment combines all mobile activities in the U. S. market.
Our Europe operating segment comprises all fixed-network and mobile operations of the national companies in Greece, Romania, Hungary, Poland, the Czech Republic, Croatia, the Netherlands, Slovakia, Austria, Albania, the F.Y.R.O. Macedonia, and Montenegro. In addition to consumer business, most of our national companies also offer information and communication technology (ICT) solutions to business customers. On January 1, 2016, we bundled the business customer operations at Magyar Telekom under our Europe operating segment; previously they had been assigned to the Systems Solutions operating segment. The units International Carrier Sales & Solutions (ICSS), Group Technology, and Global Network Factory (GNF) also belong to our Europe operating segment: ICSS primarily provides wholesale telecommunications services for the operating segments in our Group. Group Technology ensures efficient and customized provision of technologies, platforms, and services for mobile and fixed-network communications. GNF designs and operates a global network for providing wholesale customers with voice and data communication. Deutsche Telekom Pan-Net, established in 2015, also belongs to the Europe operating segment. It operates and manages the shared pan-European network and is responsible for developing and providing services for our European national companies.
Drawing on a global infrastructure of data centers and networks, our Systems Solutions operating segment operates ICT systems for multinational corporations and public sector institutions. In this way, T-Systems provides customers all over the world with integrated solutions for the digital age. But the operating segment also offers ICT solutions tailored to the needs of small and medium-sized enterprises. The offering primarily includes services from the cloud, M2M, and security solutions, complementary, standardized mobile and fixed-network products, as well as solutions for virtual collaboration and IT platforms. They form the basis for the digital business models of our corporate customers. The Systems Solutions operating segment comprises two business areas: Market Unit and Telekom IT. Telekom IT focuses on the Group’s internal national IT projects. The Market Unit mainly comprises business with external customers and since October 2015 has been divided into three divisions: the IT Division, the TC Division (Telecommunications), and the Digital Division. These roles and responsibilities are more closely aligned to address the needs of our customers and enable us to grow as we improve efficiency and profitability.
Group Headquarters & Group Services comprises all Group units that cannot be allocated directly to one of the operating segments. As the organization that sets the direction and provides momentum, it defines strategic aims for the Group, ensures they are met, and becomes directly involved in selected Group projects. Group Services acts as service provider for the Group; in addition to typical services such as financial accounting, human resources services, and operational procurement, Group Services also includes Vivento, our personnel service provider. On the one hand, it is in charge of securing external employment opportunities for employees and mainly civil servants, predominantly in the public sector. On the other, Vivento also seeks to strategically place them internally, with the aim of retaining professional expertise within the Group, so as to reduce the use of external staff. Further units are Group Supply Services (GSUS) for our real estate management, and MobilitySolutions, which is a full-service provider for fleet management and mobility services. Our central innovation unit Group Innovation+ is working to develop new business areas and products in close dialog with our operating segments. For more information, please refer to Note 31 “Segment reporting” in the notes to the consolidated financial statements.
Changes in the organizational structure from January 1, 2017. We have created the new Board of Management department Technology and Innovation, in which we have pooled our Group’s overarching network, innovation, and IT tasks. As a result, organizational changes took effect at the beginning of 2017: We have transferred the Innovations, Telekom IT, and Technology units of our Germany, Europe and Systems Solutions operating segments into a separate Board department. As of January 1, 2017, we will report on the Technology and Innovation Board department under the Group Headquarters & Group Services segment.
In addition, as of January 1, 2017, we will be reporting on the new Group Development operating segment. The objective of Group Development is to actively manage and increase the value of selected subsidiaries or equity investments of the Group. For this purpose, the following units and subsidiaries have been assigned to this operating segment: T-Mobile Netherlands from the Europe operating segment, Deutsche Funkturm (DFMG) from the Germany operating segment, and Deutsche Telekom Capital Partners (DTCP), our stakes in BT, Scout24 AG, Ströer SE & Co. KGaA, and the held-for-sale company Strato AG from the Group Headquarters & Group Services segment. The Group functions of Mergers & Acquisitions and Strategic Portfolio Management have also been assigned to Group Development. Our approach of integrated, value-driven management aims to give our subsidiaries and equity investments the level of entrepreneurial freedom they need and thus to promote their strategic further development. The management teams maintain an intensive dialog with the segment management and the relevant supervisory and advisory boards.
Our integrated planning and management process will take account of this new structure from 2017. For more information, please refer to the section “Forecast”.