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OFFON

TELEFÓNICA DEUTSCHLAND HOLDING AG

(O2D)
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PRESS RELEASE : Telefónica Deutschland Holding AG: Strong operational and financial momentum drives profitable growth - updating FY21 outlook to 'slightly positive' y-o-y growth

07/28/2021 | 01:31am EDT
DGAP-News: Telefónica Deutschland Holding AG / Key word(s): Half Year Results 
Telefónica Deutschland Holding AG: Strong operational and financial momentum drives profitable growth - updating FY21 
outlook to 'slightly positive' y-o-y growth 
2021-07-28 / 07:30 
The issuer is solely responsible for the content of this announcement. 
=---------------------------------------------------------------------------------------------------------------------- 
MUNICH, 28 July 2021 
Preliminary results for January to June 2021 
Strong operational and financial momentum drives profitable growth - updating FY21 outlook to 'slightly positive' y-o-y 
growth 
- Excellent trading momentum - Q2 21 postpaid net additions of +374k more than doubled y-o-y 
- Revenue growth accelerated to +5.7% y-o-y in Q2 21 driven by sustained MSR and fixed revenue momentum as well as 
non-recurrent special factors (underlying +3.5% y-o-y) 
- Strong OIBDA^[1] growth of +10.8% y-o-y in Q2 21 as a result of improved revenue quality, effective cost management 
and non-recurrent special factors (underlying +3.6% y-o-y) 
- C/S ratio of 14.8% in Q2 21 - executing 'investment for growth' programme according to plan with back-end loaded 
annual phasing 
- Updating FY21 revenue and OIBDA^1 outlook to 'slightly positive' y-o-y growth 
Second quarter 2021 operational & financial highlights 
In a continued yet rational market, Telefónica Deutschland delivered excellent trading momentum in the second quarter 
of the year with the continued traction of the O[2] Free portfolio. C-19 impacts have mostly annualized with pandemic 
related measures being gradually lifted over the course of the quarter driven by declining C-19 case numbers and 
increasing vaccination levels. All O[2] shops are open again since the beginning of June and travel restrictions 
limiting roaming activities experienced a gradual easing towards the start of the German school holiday season. 
The reopening of the German economy reinforced Telefónica Deutschland's good operational and financial performance. The 
company posted further progress in underlying trends reflecting the continued focus on profitable growth accompanied by 
marketing campaigns promoting the achieved network quality equalisation on the back of the company's strong network 
enhancements. The O[2] 5G network is now live in 80 cities with 2k antennas mainly on 3.6 GHz spectrum and contributed 
to strong overall results in the latest Opensignal network test and the Speedcheck report for available 5G speeds. 
After having been awarded a 'very good' rating in the connect magazine's mobile network test, Telefónica Deutschland 
also achieved a 'very good' rating in the connect magazine's fixed network test. 
Telefónica Deutschland and 1&1 have put their long-term partnership and future cooperation on a new contractual basis 
with the signing of a National Roaming Agreement (NRA) in May 2021. Telefónica Deutschland has secured valuable 
long-term revenue streams as the NRA has an initial contract period of 5 years, retroactively starting 1 July 2020, and 
can be extended twice; until mid-2029 and up to mid-2034 respectively. As part of the agreement, all remaining ongoing 
price reviews initiated by 1&1 will no longer be pursued. 
In May 2021, Telefónica Deutschland also published its Corporate Responsibility Report 2020 'Enabling sustainable 
digitalisation', focusing on the company's progress in aligning growth with the achievement of climate targets and 
social responsibility as well as the digital inclusion of people. Telefónica Deutschland's 'Responsible Business Plan 
2025' is setting the course and the steering-KPIs for underpinning the company's ambition of achieving net zero carbon 
emissions by no later than 2025. 
Operating performance 
Mobile business 
Mobile postpaid more than doubled y-o-y to +374k net additions in Q2 21 (+158k in Q2 20; +594k in H1 21 vs. +347k in H1 
20) on both, sustained traction of the O[2] Free portfolio reinforced by the gradual re-opening of O[2] shops and a 
solid contribution from partner brands. 
M2M ramped-up q-o-q to +82k net additions in Q2 21 (+78k in Q2 20; +124k in H1 21 vs. +116k in H1 20). 
Mobile prepaid posted +91k net additions in Q2 21 (-366k net disconnections in Q2 20; -18k in H1 21 vs. -773k in H1 20) 
supported by some revenue neutral SIM card reactivations while the market trend of prepaid to postpaid migration 
continued. 
Postpaid churn improved further on enhanced network quality driving customer experience. As a result, postpaid churn 
improved by +0.4 p.p. and +0.3 p.p. y-o-y to record lows of 1.0% in Q2 21 and 1.2% in H1 21, respectively. Churn in the 
O[2] brand was even lower and came down to historic lows of 0.8% in Q2 21 and 0.9% in H1 21 (both improved by +0.3 p.p. 
y-o-y). The implied annualised churn rate of the O[2] brand improved by +3.7 p.p. y-o-y to 10.6% in H1 21, providing a 
clear proof point for the excellent customer experience on the O[2 ]network. 
Telefónica Deutschland's mobile customer accesses grew to 45.0m (+3.4% y-o-y) as of 30 June 2021 driven by strong +5.6% 
y-o-y growth of the mobile postpaid base ex M2M which reached 24.2m accesses (53.8% of the company's total mobile 
access base, up +1.2 p.p. y-o-y) at the end of the first invest,emt of the year. M2M accesses were 1.5m as of 30 June 
2021, posting strong +17.2% y-o-y growth while the mobile prepaid base totalled 19.3m, down -0.3% y-o-y. 
The LTE customer base jumped to 30.8m accesses as of 30 June 2021, up +21.4% y-o-y, fuelled by the sustained demand for 
high-speed mobile data services and the start of the 3G switch-off. Consequently, LTE-penetration across the base 
increased +10.8 p.p. y-o-y to 70.8%. LTE penetration in postpaid climbed up to a significantly higher level of 81%. 
ARPU performance y-o-y registered a change in direction leveraging the annualisation of the C-19 impacts in Q2 21 and 
the gradual re-opening of the German and the global economy. Blended mobile ARPU was up +1.5% y-o-y to EUR 9.9 in H1 
21. Prepaid ARPU stood at EUR 6.1, up +4.1% y-o-y in H1 21 mainly because of fewer inactive SIM-cards. Postpaid ARPU in 
H1 21 mainly reflects first quarter C-19 impacts and was lower -0.8% y-o-y to EUR 13.4 while the successful O[2] Free 
portfolio further fuelled data growth (average usage of 10GB per month in O[2] postpaid) and drove the company's 
'ARPU-up' strategy. O[2] postpaid ARPU reversed its trend in Q2 21 and posted +0.6% y-o-y growth (-1.4% y-o-y and -0.4% 
y-o-y in Q1 and H1 21, respectively). 
Fixed business 
The fixed broadband customer base was up +0.4% y-o-y to 2.3m accesses at the end of H1 21 with the VDSL base posting 
strong growth of +5.1% y-o-y to 1.8m accesses (equal to 81% of fixed broadband customer base). In a market focused on 
high-speed fixed connectivity during lockdown and robust demand for fixed-mobile substitution (FMS) products, 
Telefónica Deutschland registered -1k net disconnections of fixed BB accesses in Q2 21 (-8k in H1 21) with net 
additions returning to y-o-y growth with the reopening of the O[2] shops in June. VDSL demand remained solid with +10k 
net additions in Q2 21 (+19k net additions in H1 21). 
Fixed churn remained at low levels of 0.9% (-0.1 p.p. y-o-y in H1 21). 
Fixed broadband ARPU continued its growth path reflecting the increasing share of VDSL customers and stood at EUR 24.2 
in Q2 21, posting +1.6% y-o-y growth (+1.2% to EUR 24.0 in H1 21). 
Financial performance 
Revenue growth accelerating to +5.7% y-o-y to EUR 1,893m in Q2 21 (+2.9% y-o-y to EUR 3,743m in H1 21) reflecting 
sustained MSR and fixed revenues momentum as well as non-recurrent special factors^[2] (underlying^[3] growth +3.5% 
y-o-y in Q2 21 and + 1.9% y-o-y in H1 21). 
Mobile service revenues^[4] (MSR) posted +7.4% y-o-y growth to EUR 1,370m in Q2 21 (EUR 2,678m in H1 21, +3.5% y-o-y) 
driven by strong own brand performance with O[2] postpaid ARPU returning to growth in Q2 and a solid partner 
performance as well as non-recurrent special factors^2 (underlying^3 growth +4.3% y-o-y in Q2 21 and +2.0% y-o-y in H1 
21). 
Handset revenues declined -1.2% y-o-y to EUR 318m in Q2 21 (+0.6% y-o-y to EUR 665m in H1 21) on somewhat more muted 
customer demand after a strong Q1 21 while high value handsets remained popular. 
Fixed revenues continued their growth path registering +3.5% y-o-y growth to EUR 200m in Q2 21 (+3.7% to EUR 400m in H1 
21), mainly driven by VDSL customer base growth. 
Other income totalled EUR 28m in Q2 21 and EUR 57m in H1 21 (EUR 31m in Q2 20 and EUR 56m in H1 20). 
Operating expenses included EUR -1m of restructuring expenses and were up +3.5% y-o-y to EUR 1,311m in Q2 21 (+1.2% 
y-o-y to EUR 2,644m in H1 21). 
- Supplies amounted to EUR 557m in Q2 21, down -1.8% y-o-y (-2.1% y-o-y to EUR 1,147m in H1 21) reflecting the MTR cut 
from EURc 0.9 to EURc 0.78 as of 1 Dec-20 as well as lower hardware cost of sales because of a different handset mix. 
Hardware cost of sales and connectivity-related cost of sales accounted for 53% and 43% of supplies, respectively in H1 
21. 
- Personnel expenses increased +1.7% y-o-y and totalled EUR 145m (including EUR -1m of restructuring expenses) in Q2 21 
(-2.4% y-o-y to EUR 285m in H1 21) reflecting inflation-based salary increases as of 1 Dec-20 partly compensated by 
received social security payments for employees of temporarily closed own shops at the beginning of the quarter whose 
salaries the company topped up to 100%. 
- Other operating expenses^[5]increased +9.4% y-o-y to EUR 609m in Q2 21 (+5.4% y-o-y to EUR 1,212m in H1 21) including 
restructuring expenses of EUR -1m in Q2 21 and -14m in H1 21 (EUR +0m in Q2 20 and EUR +1m in H1 20). The y-o-y 
performance reflects commercial activity, from Q1 phased marketing spend as well as 5G rollout costs partly compensated 
by continued efficiency gains. In the January to June period, commercial costs (66% of other Opex) were broadly stable 
y-o-y reflecting the mix of the before mentioned effects. Non-commercial costs accounted for 30% of other Opex. Group 

(MORE TO FOLLOW) Dow Jones Newswires

July 28, 2021 01:30 ET (05:30 GMT)

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Financials
Sales 2021 7 690 M 9 011 M 9 011 M
Net income 2021 -3,19 M -3,74 M -3,74 M
Net Debt 2021 3 326 M 3 897 M 3 897 M
P/E ratio 2021 -590x
Yield 2021 7,38%
Capitalization 7 231 M 8 467 M 8 473 M
EV / Sales 2021 1,37x
EV / Sales 2022 1,37x
Nbr of Employees 7 852
Free-Float 30,8%
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Number of Analysts 21
Last Close Price 2,43 €
Average target price 2,71 €
Spread / Average Target 11,4%
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Managers and Directors
Markus Haas CEO & Chief Operating Officer
Markus Rolle Chief Financial Officer
Peter D. Löscher Chairman-Supervisory Board
Mallik Rao Chief Technology Officer
Patricia Cobián González Member-Supervisory Board
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