Deutsche Telekom AG (DTE) Earnings Call Transcript & Summary

Welcome. Welcome to the 2021 Deutsche Telekom Capital Markets Day. Here we go again. We gave you 3 years to recover from our last Capital Markets Day, but now we could not spare you any longer. There's just too much goodness we must share with you. Welcome to you all. Welcome to our first fully virtual Capital Markets Day. Sadly, we are not all together in Bonn. To be sure, the Deutsche Telekom management team is here. They're actually over there. Can we have a picture of them? Can we show them, please? Can you wave, guys? Okay. Here they are. You will hear from all of them. Thank you. There will be no barbecue this time. No wine. No heavy digging machinery. Sorry. How can we make up for it? Well, we got 8 powerful presentations, cool slides, your favorite color, magenta and black background, topped up with slick videos and a replay function. And not to forget, many compelling messages. You know if we do something, we do it properly. So what's the order of play? We start with our CEO. He will present you our group strategy and capital allocation. Our guidance is for the usual 4 years, but our thinking goes further. Next will be Srini and Dominique, who will talk about leading in networks, in customer experience, in digitization, about acceleration. Finally, for today, Mike and team will outline their plans for T-Mobile US. This will bring us to the end of the first day. Tomorrow, We will have presentations from Claudia Nemat on IT and technology; from Adel Al-Saleh on T-Systems; from Thorsten Langheim on group development; and finally, from Christian Illek, who will put it all together in terms of numbers. Here are a couple of technical points. Please take a look at our usual disclaimer that is contained in the presentation. [Operator Instructions] Okay. And now I'm excited to present our first speaker, our CEO, our unstoppable leader, Tim Höttges.

Welcome, everybody. Where are you? And hope you're doing well during these difficult times. It's a little bit like results day at school today, but as well about the question about, what kind of job do we have in the future? And this is what I'm going to talk about. And it's a pleasure that you are spending the time with us today. I have to admit it's an easy one because it's my fourth Capital Markets Day. And looking in hindsight, I'm very happy about, let's say, how we performed over the last 3 years and looking at the results we have achieved. And this is due to an outstanding team in this industry, I think to an outstanding strategy of very focused approach of delivering of what we have promised, and even sticking out to the others in this industry and outperforming them as well from a capital market perspective. That leads me already to my first slide, which is the full monty of all the messages in a nutshell. And for the ones who don't have time or want to do their sports in the afternoon or who want to, let's say, hang out with other companies, here we go, just digest this slide. With this, you got it all. This is, by the way, how we are looking into the future. And that is built on 2 pillars. The one is the organic pillar. It's the way how we operate in our telecommunications industries. But the second pillar is at least as the same importance, which is the way how the -- how we think, how we allocate money and the way how we are organizing the portfolio which we are running. And this all is resulting in the commitments which we are giving for the future. Now this is what we're doing already for quite some times. And this is our so-called flying wheel. And the flying wheel is very simple. On the one side, we always invest more than our competition. This is the idea: a little bit better, a little bit higher from a quality perspective, which, on the other side, gives us the opportunity to gain more customers. Gaining more customers on the infrastructure will help us to create higher efficiency, which means the productivity of our network is higher than the ones from our competition. And the high efficiency, plus more customers is -- as a consequence, resulting in more profitability and higher financials. And the higher financials made us able to go into further investments, which is helping us to outperform the competition. To give you just a number, since I'm CEO, I've invested EUR 85 billion without spectrum into this flying wheel. This is, by the way, EUR 37 billion more than what Vodafone invested, EUR 37 billion more than what Orange invested and EUR 27 billion more than what Telefonica has invested. And this is, by the way, at the end of the day, this is the consequence why we are doing better than the others. Going forward, we are accelerating. And if you would ask me today, what is the headline of our capital market strategy? It's acceleration. It's acceleration. We have a sound foundation, and now we accelerate on the KPIs. There is a revenue CAGR of 1% to 2%. Looks like the other one, which we had previous one, but behind it is a revenue growth, a service revenue growth of 3% to 4% commitment, which we foresee. Our profitability is going to increase by 3% to 5%. So this is more than what we were able to deliver on last time. So we are very confident that we can accelerate on the profitability of that company. The last time, we were talking about EUR 8 billion free cash flow for this group as our ambition level. Now we are handing out a commitment of EUR 18 billion as the minimum which we foresee for our 2024 ambitions. And on top of that, we even want to be leading -- more leading on the capital returns, which we are delivering on our network. So you know that the ROCE is one of our core KPIs. It always were. It was Deutsche Telekom, by the way, bringing it into the telecommunication industries. And now we are achieving, and we are aiming for 6.5% return on capital employed as a minimum for the foreseeable future at Deutsche Telekom's infrastructure. This is the organic growth and the flying wheel which we foresee. On top of that, the capital allocation is for us very important. It always was. If we cannot live with only the organic growth, we have to find ways to generate value outside or within the portfolio. The first thing what we are doing is we invest more to be leading in 5G across the globe, the trans-Atlantic position which we hold. And we're going to be the #1 in fiber investment in the European footprint. This is something where Dominique and Srini will talk about. On top of that, network is nice, but monetization is the must if you invest this amount of billions into the infrastructure. The second topic is focus on structurally healthy markets. For us, a very important thing. If we do not find a market which is structurally in order, if we find a market which is over-regulated, over-competitive, we are even willing to leave that market. We did that already in the past. Think about Albania. Think about Romania and other markets. But this is a clear commitment that we do not fight an impossible game. So therefore, we are trying to focus on fixing a structural issue. And if we can't, we are even willing to exit markets. On top of that, maybe the biggest news for today, we are clearly committing to get the majority in the U.S. within the time frame of which we have laid out. Our voting proxies will expires in 2024. But until then, we will make sure that we have a clear ownership of 50% and above in the U.S. environment. The U.S. is part of our story, is part of our footprint. We are the trans-Atlantic leader in the telco markets. On top of that, we commit to deleverage the company into the investment-grade commitments, which we have always laid out in the last capital markets. This is due to the merger and the integration costs, that we are out of it in the U.S. right now, but we will come back into this corridor soon. And that is another commitment which we are giving. And on top of that, we have waited, and we have looked. We have improved the profitability of our Dutch business. We have restructured the market. We found partners with Tele2. We have integrated the Simple business. Now is the time, after this super value accretion, to think about what is the best way to monetize our asset in the Netherlands. That doesn't mean we have to do that to the other stuff. It's an add-on which we seek to optimize our overall portfolio. But we will move into the market with this asset right now, checking out what is the best way on the Dutch side. And we have improved our profitability on the tower side as well. We have taken the European towers out of the business as well. And we will work on monetizing towers as well in the upcoming future. And we will talk about that later on how we're going to do that, what kind of scenarios we foresee and why it's now the right timing. It's a kingmaker asset which we have on hand. And I think -- we think, with the current multiples, the current valuations we see in the markets, now is the right time to understand what we can do with this asset in the best manner. These 2 pillars result into outstanding profitability. And to be very clear, Our focus is not anymore to compare ourselves with Vodafone, Orange or Telefonica. They're anyhow focusing on free cash flow and other compares. Our industry, fast-moving consumer goods. This is areas like Henkel and others who are delivering constant earnings per share increases in their business. And that's the peer group which we want to -- where we want to benchmark ourselves. And therefore, we have changed our logic from a free cash flow logic, a full consolidated free cash flow number, which doesn't give you an indication about what we are able to contribute to the community. But we are now focusing on the earnings per share as the main KPI. And we will increase our earnings per share from EUR 1.10 to above EUR 1.75 in the upcoming 3 years. This is then the basis for the dividend accretion you will get from Deutsche Telekom. And the basis of that one is that we are willing to contribute between 40% and 60% of the adjusted earnings per shares into your direction. This is, by the way, if you benchmark yourself with other industries, I think that's a very fair value contribution. And on top of that, it gives us a leeway to further increase the dividends of Deutsche Telekom in the upcoming years. That said, we know that you need a floor. You need a kind of interest rate for the huge investments you have taken with us on that journey. And therefore, we guarantee a floor of EUR 0.60 as a minimum. This is the story lining of our Capital Markets Day today. Now quickly going into a review. And I know you know our numbers, but we are proud about what we have achieved. And therefore, this is not an accident. I think it was the consequence of our very focused strategy. We didn't change our strategy over the last years. We amended it here and there. But in principle, we kept pace on one direction, and that made us strong. We didn't deviate. We didn't expand it outside of our footprint. We didn't make adventures into the over-the-top business models, nor we did it into the content world. We really focused on our network technology as the centerpiece of what we had. We focused on the convergence, which was for us, really a big gain of revenue in the past. And we're very much focusing on the IP migration and the digitization of our service so far. This, based into outstanding service capabilities, plus a business class, which is -- where we enable our customers to digitize their service around the connectivity piece. Reducing the cost, we overachieved our costs, our commitment from the last Capital Markets Day. And we simplified, digitized and accelerated our services within the company. Now these are in a nutshell the numbers. We grow on both sides of the Atlantic, 3% on a CAGR in Europe, 9% on an organic CAGR in the U.S. So all the business are in growth mode. We invested a lot in sustainable growth momentum. And you see that René Obermann, he was investing in Germany, EUR 3.3 billion to EUR 3.6 billion. We changed that immediately. And we have invested around EUR 5 billion, EUR 5.5 billion in the vicinity of -- in the area of Germany alone, 7.5% on the European space. And we have constantly grown this to gain an advantage towards our competition. And on top of that, we had the U.S. investments into a leading mobile infrastructure. These 2 years are reflecting the merger integration. Prospectively, this will shrink, but the integration cost is worth doing. Our free cash flow, at the same time, were even able to grow from EUR 5.5 billion to EUR 6.3 billion, including the merger costs here, or EUR 8 billion if you look forward to our guidance which we have laid out. So a great story going forward, but now we go from EUR 8 billion to EUR 18 billion. With this, we were able to perform better on infrastructure than our competition. And this is the outcome of it. We gain market share in every region where we're operating. We've grown in Germany by 2.4% on mobile postpaid customers; 1.8% in the European [ averaging ]; 29% in the U.S.; and in the Netherlands, by 25%. So wherever we were able to invest, we were able to gain new customer momentum with -- which was the basis for the growth we were able to show. The story is well aware to everybody here in this audience. We have more than 100 million customers on branded services. We have a market cap of EUR 165 billion. By the way, we increased our value 7x over the last 4 years, EUR 68.4 billion of revenues, and an outstanding position, especially of the mid-band spectrum. And the value creation is, I think, the biggest value creation ever seen in a merger in the telecommunication history at Deutsche Telekom. Going forward, I think there is more to understand what is driving us. And the first thing is cleaning the garage. And I'd like to start, and you maybe have already forgotten that. We had a EUR 9.6 billion arbitration risk coming from the Toll Collect, something we inherited from the history. We were able to settle that for a cost of EUR 550 million. Done. We divested Telekom Albania And we even divested our fixed line business in Romania. Markets where we believe structurally, we had no way to win prospectively. We have created new growth areas with the fixed mobile integration of our Liberty business in Austria, a EUR 1.8 billion cash acquisition. But we are ahead of the synergies. We are ahead of our market shares in this region. So I can call this merger already a success today. Turnaround in the Netherlands, an outstanding story. We are faced by integrating our partner Tele2 with a shared deal into our business. Consolidating Simple over the last years, creating a new Un-carrier momentum in the market with a market share gain never seen before. This builds -- this has more than doubled its position since the difficult times when we started. And we carefully separated our tower business, not only in Germany, but as well in the European operations. And we built a company which has 55,000 towers and is, by definition, the second biggest tower company in Europe. We are the kingmaker because everybody is putting his chess figures on the game, but nobody has so far consolidated in these industries. With us, somebody can really create the winner. And on top of that, we have managed the Dutch portfolio together with Cellnex, which gives us a leeway to create money outside of the balance sheet for infrastructure investments for Europe. We said, no. And maybe saying no is more important to all the good stories which I just described. Because to stay focused, what's very important? And there were a lot of, let's say, kind of things which sounded attractive. Verizon went into their adventure with Yahoo! and the like. AT&T went into the adventure with media -- with Warner Media and alike. Telefonica went into a EUR 3 billion investment for football rights for 3 years, and so on and so on. We said no to all of this outside business opportunities where most of the people lost billions. We stayed focused on our connectivity plus strategy. And I think this is what we call put your money where your mouth is than rather trying to build empires. Now this is the consequence of all of this. Revenue grow from EUR 75 billion to more than EUR 109 billion of today. This is a CAGR organically of 3%, but it's overall a growth of 10%. We grew our EBITDA by 14%, organically by 6%. And we grew our cash flow by organically 14%, 10% overall. These are all targets -- these are all achievements which were higher than our originally committed targets which we laid out at our last Capital Markets Day. And thank you for that, guys. You gave us a higher multiple. You contributed more trust into us over the past. We highly appreciate that. And we know that our multiples is a little bit higher than to the others. We have created 45 -- 40.5% more value while Telefonica, Orange and Vodafone, they all lost market cap during this season. So this is, I think, for me, the biggest outcome. And if you look to the numbers, I was just reading them up before I came down here. Since I'm a CEO, we have created 84% accretion, which is a total value of EUR 46 billion, while, at the same time, Vodafone lost 13.4% and Telefonica lost 50.6%. So I think when it comes to results day, I feel pretty okay. But the problem with the results day is nothing is guaranteed. And the more results you have, the bigger the risk is you fail. So therefore, I think we have to move on with the changes we are doing. And this is already part of the journey which we have started. Our teams are working agile now. We are much more digital than we ever were. 30% of our workforce of today is already working in an agile environment. 300 scrum masters and product owners running these projects. We became very diverse and international all the time. I'm not talking about our board, which has 40% women ratio. My board here, around my team, which is executive, where we have not only 30% women ratio, but even we have 4 nationalities. We are quite diverse in the way how we're organizing ourselves. More than 25% of all the new hires in Germany are international people. So this company really became an international footprint, trying to create best breed of the world. Remember, last time I said, we want to be like FC Bayern Munich. We want to have, let's say, a very solid German foundation about our German engineering piece. But we want to allocate a lot of international people, the best players of the world into our team to play Champions League. Catching the youngsters. We have started new advertising campaigns with Billie Eilish and others, because the customer of today might not be the customer of the future. And there will be a next generation coming who should appreciate our brand the same way as the others are doing. We have created a big footprint around sustainability and about ethical standards. And we have a very strong stand in the political arena, especially in Europe, where we are hurt with the needs. And I think this is very important, and we go into that one even beyond -- more. And the last one is for me the most important piece. It's something you never see. You always see the CEO, you see Christian, you see some of the board members, and you think you understand the company. Sorry, guys. You don't. You only understand the company if you're going down to Earth, going down into the operations of these people, if you're going down to the service people who are going out to the customers on a single day, if you go into our shops, if you go down into the organizational piece. These are the drivers of the change and the transformation of our company. And we were able to change the thinking, the way how they act, the way how they constantly perform into one direction significantly over the last years. 85% of our employees say, we like to work for Deutsche Telekom. More than 80% of the people say, we recommend Deutsche Telekom as an employer. More than 80% think our brand is something unique. And we have just a lot of grassroot initiatives in these companies. 200 brand ambassadors. They're just sitting there and always communicating about Magenta, talking about T and talking about our products. Think about if 200,000 people constantly are proud about what they're doing. Think about the momentum they can create with other customers. This gives confident to customers if the employees believe in what we are doing. We have green pioneers all over the companies who are caring about sustainability on the shop floor. And we have a lot of agile activities. Think about design thinking, I never asked for design thinking with the company. But suddenly, it grew like mushrooms everywhere, design thinking teams on creating a new way for developing products and services. So this is, I think, even stronger than all, let's say, the strategic elements which I just described. Now this is the outcome. These were the commitments. This is, let's say, what we achieved. Please have a look to this one. And I can tell you, they are almost all green. I put 2 on yellow, because the merger costs and the dividend commitment which we have given were a little bit higher. But we said if we are digesting this super merger with Sprint, we couldn't plan that. It was unforeseeable whether we deliver on it. We had to cut it to the EUR 0.60, by the way, which is more than the EUR 0.50 we said originally, but this is at least the only thing where I think we have not delivered or overdelivered over the promises of our last Capital Markets Day. This brings me to a totally different topic. If you are grabbing scent and trying to keep it in your hand, it will disappear. You cannot hold it. It will get less and less and less. So you constantly have to grab and grab and grab new scent. This industry is changing dramatically. As an industry, telcos are at the center of the tsunami. The industry is expecting that our industry is accelerating as well. And on top of that, this landscape is changing dramatically when it comes to the players which are new in the field of telecommunication service. Just think about the over-the-top players. Just think about the service providers who are changing their business models. And I want to spend a little bit more time not talking about the next horizon one issue. I just want to talk with you a little bit what is our vision for 2030. How does Deutsche Telekom might look like in 2030? How can Deutsche Telekom be successful in 2030, knowing that this is still a long way to go? But we have to prepare the future now if we don't want to miss it on a long-term perspective. And I think we are more and more talking about the next quarter. But we should always keep in mind why are we doing things. And therefore, let me deep dive a little bit into a long-term perspective. [Presentation]

So talking about 2030, one is for sure clear. Connectivity is a human right. Connectivity is expected everywhere. And therefore, Deutsche Telekom's business is at a centerpiece of this expectation. Now I cannot give you all, let's say, elements of what we foresee as trends in this environment. And therefore, I'm trying to reduce it to 5 major trends which we have to anticipate if we think about a successful telecom business in the future. And I like to separate it into the B2C, the B2B area, into the ESG and the purpose issue around the network and about the services which we have to deliver in this regard. Now the first paradigm is we will go from a pure connectivity provider, even in a siloed way, into somebody who is enabling different customer use cases with different connectivity pieces. On the B2B side, we will go from dedicated services, like MPLS, like voice, into more software-driven enterprise solutions with embedded connectivity. In the ESG world, we will face customers choosing, let's say, products and brands with their feet from a kind of ESG as a hygiene factor to companies who are able to differentiate with ESG criterias. We will deliver, and we will see network of networks. So there will be the monolithic incumbent who's providing all kind of connectivities today. He will in the future be an orchestrator of infrastructures even from third parties. And what we see, we would see a softwarization of the networks in the way how they are organized. They will be disaggregated. They will be cloud-based, cloud-native. And micro-services will enable different use cases in these environments. And the prerequisites have to be organized. It will not be any count a vertical silo as a telco operator is working today. Let's go a little bit deeper into this storyline. Connectivity everywhere is something which is obvious to us, especially after this corona crisis. And we will have a mobile world. And we will have a kind of stationary world in our offices and in our living environments. There will be all kind of devices which has to get connected to the infrastructure. And there will be at home all the kind of connectivities, a lot of data flow in the home environment which has to get organized in the kind of service way. Data streams, customer ID, this all has to be organized in a way that is working, functioning and is affordable for the clients. A mesh router, for instance, is already a centerpiece for your home living where all the different devices might get easily get connected. On top of that, there will be new forms of connectivity. We call that embedded connectivity. The principle is always the same, always best connected. So wherever you are, independent, whether Deutsche Telekom is there with their own infrastructure, yes or no, we have to make sure that customers are always best connected. We buy it, we use it, we integrate it, and it should be always super secure. If it's not secure, we get the blame for that one. And it has to be modular, because customers don't want to buy the super, super, super product. They want to buy a tailored product which is fitting to the needs of the specific use case they are organizing. Take the consumer IoT world. You do not want to buy a global connectivity for voice if you just need an IoT device. Think about mobile gaming. You need low latencies. In specific, you do not need the full-fledged service or take the 8K conference systems, which we are all witnessing during this times, more or less 4K today. But 8K conferences will have a huge data demand in a stationary use case. And we have to tailor the infrastructure in the way that we can monetize this different service in a kind of context-aware way, but as well in a kind of dynamic way, because customers don't want to have the service forever for a 24-months contract. They want to have it when they're using the infrastructure. This always best connectivity means tailored connectivity. And that is something which we foresee in the future: services everywhere and embedded connectivity, context-aware and dynamic. On the B2B front, we will go away from the classical siloed approach. We deliver a voice service for B2B customers. We deliver a data service. We have messaging services. This connectivity piece will get embedded into UC or enterprise communication and collaboration tools. We call that ECC. So you will buy maybe your Microsoft package with an embedded connectivity already in the future. And this requires a lot of changes in the way how we organize, but even if we sell connectivity in the communication piece. Security today is a firewall which is covering connectivity on an end-to-end basis in the network. In the future, we see that zero-trust networks, secure access service edge networks will deliver every application in a different security functionality. This is a big expectation towards telcos to organize that all different elements of a data use in the business environment is protected in a special way. And what we're going to see in the mobile space in specific is we will see dedicated network slices. Interesting-wise, nobody is talking about the network slicing, but 5G was always -- the biggest advantage of it, apart from the bandwidth, was always the capability of slicing in a dynamic way parts of that infrastructure. And we foresee that for the different use cases in IoT, in the B2B space, that we are able to deliver sliced infrastructure for these customers going forward. This creates new opportunities of growth for telecom operators if you differentiate, not between 1 or 2 products, but between a variety of use cases in this telecommunication space. The third one is ESG. And by the way, we have started with ESG maybe a little bit late. I have to admit. But as we learned how important it gets for our customers. Today, already 46% of customers, we know they're looking how purposeful and how reliable and how consequent a company is acting in their societal behavior. And therefore, companies will definitely be chosen, we -- by the way, how they adapt to the social norms going forward. There will be significant issue coming from the CO2 emission reduction, which our industry is creating, and by the way, is able to reduce. Low-carbon economy, the question about our value chains and supply chains is something which is very important. And the telecom operators are the ones who are helping all other industries to be more efficient. Think about an autonomous car. By the way, 1 terabyte of data within 8 hours of an autonomous car is being generated over the infrastructure. We have to manage that. Think about car sharing. Think about the capability of collaboration tools, less travel. Think about the cloud of the -- especially the midsized companies who are not in the cloud environment already today. These companies can save significant CO2 emission by just using telecommunication services. So the telecom operator is the biggest enabler for the CO2 emission in the digital world. And the factor which is to calculate for that one is 1:7 CO2 reduction through telecommunication service in the upcoming future. So we are at the center of this ESG movement if we are driving it right and if we are driving it in a way that we are accepted. The fourth development is the network. And the network -- and I have to maybe disappoint you. Don't believe that the consolidation and the consolidation is bringing this industry to less networks. We foresee significantly more networks in the future. We foresee a much higher complexity in the network and the ownerships of these networks going forward than it is today. So there will be a multifold of different infrastructure who is providing this new connectivity which is required from the customers on all angles. There will be a physical infrastructure which is coming from satellites. It will come from multiregional FiberCos like CityFibre or KKR here in Germany. There will be the local FiberCos who are providing infrastructure, take the NetColognes or others. There will be alternative networks like Amazon mesh network. However, there will be Sidewalk. Take G Orion, another Wi-Fi network, mesh infrastructures, which are providing connectivities, special in dense areas. There will be campus networks which are existing in the shop floor of big manufacturing plants or parts or other equations. So spectrum being used for a dedicated infrastructures. And there will be even some kind of wholesale businesses who are providing specific services in the IoT case or TowerCos who are providing just infrastructure, passive infrastructure in the ecosystem. Now think for a moment. Now you can compete and trying, okay, we are better than Starlink on the satellite side or we compete. But is this the right approach? We doubt that. We believe that the advantage lays in a kind of network orchestration layer. We believe what is happening in the content world is happening in the network world as well. So the one who is able to orchestrate different technologies, infrastructures they might not own but provide it to the end customers, these are the ones who are succeeding prospectively. So the network orchestrator is the one who is winning in this field. But this sounds easy, but from a technical perspective, it's very complicated. How can you organize a satellite into a mobile network or into a fixed line infrastructure? How can you bill it? How can you organize the quality of service? All the things I laid out further. So we have to see who is first on building the network of networks, who is first to enable this software layer? We have a super advantage because we have accomplished our IP migration. So these services already are able to be steered in the software world. But there are new infrastructures which we will not own, which we have to embrace and integrate into our ecosystem. With this, we have a bigger reach. With this, we have a bigger market. And with the bigger market, we have a bigger potential to sell our products towards the customer. And on top of that, the question is, how we embrace communication service like Cisco, like Apple, like Microsoft, into our infrastructure? We do not want to develop that on our own. We want to build strategic partnerships. But we have to build the APIs, the interfaces to these services in the right manner. The telco industry will go from a monolithic incumbent to a orchestrator, to a network of networks. And my last thing is the software layer which is enabling the surfaces -- services. And Claudia will talk about that in more detail because we are already on that journey. You have, again, this infrastructure, which I laid out on the previous chart. And I said there is this element of the orchestration which we have and which we have to organize in a cloud-native, in a kind of software-driven environment. But on top of that, we need tools who are making this service intelligent, unified data and analytic engine services, product services and development. Take the home OS environment, which is easily connected to the different infrastructures. Embedded security, as I have laid it out, and platform-based services, which are needed to build customers to identify customers, to authorize customers and the like. This is the world which we have to build. We have to build telco as a platform service. This is the next evolution after the IP migration. And that is something which I'm expecting from the NetCos to do this in a consolidated and a synergistic way that we can scale. On top of that, micro-services and APIs enable the customer use cases, because we will not develop the use cases our own. Some, maybe. But most of them are developed in the ecosystem of the over-the-tops. This is why they called over-the-top. And this is something where we have to make sure that it's easy to connect. It's another form of the Steckerleiste. Maybe some of you remind the story, the plug-in which we had already in earlier strategies. So this is our 2030 view. This is, let's say, a thing which we should think about. We should not do some step after another. We should have an orientation. We should have a lighthouse in which this industry might go and where we position ourselves already today. And that is our strategy today. This is what we foresee as paradigms for 2030. And this is what we do now to get there. So the headlines of all presentations of my colleagues are around: from connectivity to customer experience by making and turning customers into friends, creating experience around products and services, which are unique. From dedicated to software-driven enterprise solutions, we want to become the digital enabler for our B2B customers on their needs which they have in collaboration, in communication, in IoT and in the cloud space. People society, from ESG as hygiene factor to ESG as a differentiator. GreenMagenta and GoodMagenta, our ethical expectations. Networks, from monolithic incumbent to a network of orchestrator. We build, orchestrate and differentiate. This is already something where our architectural logic is working on. And digitization, from vertical solutions to telco as a platform to a cloud-native API environmental. The prerequisite for this is we digitize and digitize and digitize everything what we have. So wherever we can digitize, we should do that because this will enable a cloud-native API-based architecture which we foresee for the long-term future. So coming into the commitments, and coming into the next years, the next 3 years, what we want to achieve. And we will have deep dives on each of these topics. So let me quickly go through that. We want to play our differentiation in the convergence piece in Europe. We are strong at that. And we foresee that the FMC penetration in our customer base has a big opportunity to gain more momentum. Best connectivity experience, embracing other technologies, seamless interplay between them, and innovations beyond the core for the services is one thing. Best mobile experience. We always want to have the best infrastructure on mobile. And differentiated service, we want to increase, as an example, our first call contact resolution from 55% to more than 62% in Germany. And by the way, we are not talking about idle times. We're not talking about call handling times. We are not talking about deadline compliant. We just talk about the way, solve the issue for the customers. And we're doing that already today, still in with pride from the U.S., which is called the tech team of experts, which is now embedded and implemented across all the operations we are running. A personalized, off-line and digital service, first time right, and very much about Heimvernetzung, the connectivity at home, which will enable a seamless and interruptible-free service. Our commitment, 10 million households in FMC. Our commitment, industry-leading growth in branded postpaid customers. We want to win market share in this regard. Extended all-time high customer satisfaction, we want to increase our customer satisfaction, our Net Promoter Scores, beyond the level which we have already achieved in all areas where we're operating. And re-innovate the brand under the idea of digital optimism, believing into a future which is getting better through our services. Coming to the B2B. On the B2B, we see 2 big paradigm shifts short-term. The first one is the SD-WAN development from MPLS dedicated lines to an SD-WAN service, which is more flexible, more affordable for our clients and customers. And we see a growth of 36% in this environment. And we see this enterprise communication and collaboration where we see huge tailwind where end customers are spending a lot. The hybrid way of working is the way of the future, and the ECC is the tool which is enabling this. This is what we are working on: enterprise networks, IoT and security solutions, cloud and digital. And our commitment going forward is we're going to see a CAGR growth of 2% in the B2B's CAGR. I'm very irritated when I see all my telecommunication players around me always talk about negatives. They're all shrinking in that environment. We are growing. We are growing already today. And we believe we can grow at least with a CAGR of 2% in this environment in Germany and in Europe. U.S., we will double. We will double our B2B market share from 10% to 20% because we have the credibility, because we have, for the first time, a better network than AT&T and Verizon at affordable prices. And this makes us strong to gain market share of these guys. We will double our IoT revenues and even our ARPU in this area. A big enabler, and I can talk about hundreds of thousands of SIM cards, which we recently gained with car manufactures and the like, which is enabling IoT connectivity to cars. By the way, the chipset shortage is something which is good for us because every chipset is producing data, which has to get allocated in the infrastructure. So therefore, we are in the play. In public cloud, we are expecting that our public cloud servicing is growing by 50%. Coming to the field of ESG. And I think we can skip directly to the slide. It's not working. Go ahead. We can go to the slide. We have built a new team, a stronger team for all the ESG topics which we have. And we even have created a new ambition level for our ESG targets. The first thing is 100% of electricity from -- coming from renewables already this years. So every kind of energy we are using in our footprint is already today on 100% renewable energy. This is already, I think, a big step. And it costs us millions, double million -- digit millions to get there, but I think it's worth doing it to have a green network. Now the next step, which is new. On Scope 1 and 2, we want to, let's say, have a net 0 own emission by 2025. Now you might question, what are you talking? This is electricity. But we still have a fleet. We still have buildings who are consuming energy in this regard, oil and other things. And we are now working how we can reduce even this emission to 0. So that's the scope and our commitments towards 2025. And then we have up and downstream energy consumption, the way how our technology is getting produced: handsets, routers, all this kind of stuff. And we have the end customers consuming all the product of Deutsche Telekom. We want to make sure that the net 0 emission is achieved for this value chain at least by 2040, which is at least significantly ahead about, let's say, taxonomy and the targets of the European Commission and others. This is the Scope 3 where we're working on. Third, increase the energy efficiency in our network. Every single discussion should be not only saying, by the way, we help you to reduce the energy consumption. We should even think about how we can gain productivity in the way how we are consuming energy in this environment. And Claudia will talk about how she can do this in the technology field later on. Maintain an all-time high customer and employee satisfaction. Our people should be proud, our people should have a purpose, our people should understand why they're working every day for Deutsche Telekom. And we have a big purpose, as I have laid it out already. We are the enabler for future growth. And therefore, we should keep this momentum, that people are proud about the T, proud about Magenta, proud about what we are doing. And therefore, having almost 90% of the people being committed, I think this is unique if I see the benchmark of other industries. And then on top of that, we have ESG initiatives in the recycling field. And we have said, every board member, prospectively, short term, prospectively, every leader of this company should have ESG target in his long-term incentive scheme. So it's not only that we are committing to something. We will be paid by the fulfillment of our ESG targets, which I'm just describing. And the last thing is, apart from the GreenMagenta initiatives, we have a GoodMagenta initiatives. GoodMagenta is, what are we doing about digital literacy? What are we doing about democratic values in a digital society? What are we doing about hate speech? What are we doing about all these escalations which are taking place around us with regard to fake news, deep fakes and other things? We are fighting them. And we want to stand as a voice in this circumstance. We are by far the leading European telco and, therefore, we have a duty to tackle these issues. And we just launched a campaign together with Billie Eilish, which was seen 340 million times on the Internet from the next generation. So it has already impact, but this is definitely not a 1-session issue. It will be a campaign which we're going to create even beyond today. That brings me to the core of the core, our network. And what you see here is, today, we have -- as an example, our fiber situation in Germany, 5% is our FTTH position, 83% is FTTC. And then we have still some ADSL. We have 100% more or less ownership of this kind of services. We're going to change that, and we're in the middle of this transformation. 60%, 70% of the infrastructure we will own, and it will be fiber. We have made a clear commitment that we are now developing a significant acceleration on the fiber build-out in Germany. We had 600,000 last year. This year, we're going to 1.3 million, 1.4 million. The year after, to 2.1 million. And then we go to 2.5 million households on an annual basis as the run rate of the infrastructure. This is what we do as owners of the infrastructure. There will be as well external money going into networks, which we embrace, wholebuy, which is extending our footprint beyond where we are today. On reciprocal terms, reciprocity is the name of the game. Why should we overbuild somebody? If they have built already fiber, why can't we embrace them into our infrastructure? So third party will help us to have a big footprint. And you see we will keep our retail market share. We will keep the same position as we have it today at least. The commitment which we are giving is: Germany, we will quadruple the fiber-to-the-home output. We will attack. We will not be only in the outskirts. We will not be there where only subsidized monies are available. We have announced Berlin, Dusseldorf, Hamburg, Frankfurt already. I would love to see us being strong in Munich as well because that's a market where we want to, let's say, play a significant role on the city. So there are other markets to come soon. We will have additional footprint in Europe. Today, Europe is already at a run rate of 1.1 million fiber households on an annual basis. So we want to keep that, even accelerate this output effort, that we are the leading FiberCo in Europe. That's definitely our ambition. And therefore, we have allocated money to this one. It's highly profitable because it's easier, it's cheaper to build an FTTH structure in these regions. And this will bring us to an outstanding leadership position, not only on fiber, but as well on the 5G area. I don't want to repeat that. You know that there is no question. No question. Deutsche Telekom will always lead the mobile space. This is our ambition. We will win every network. Tested, by the way -- just this morning, OpenSignal published their test. We have a 30% advantage to our follower, which is Vodafone. We are really, let's say, ahead of our competition. I'm very proud about our technicians who make that possible. And in the financial envelope which we have laid out, by the end of this year, we will have 90% 5G coverage already in Germany. So that shows you the advantage of what we have created in this environment. In the U.S., I think you know the story, and Mike will talk about that one as well later. Which brings me already to the end, which is a very important piece: digitize, digitize, digitize. I always say to the company, if you do not understand the strategy, if you do not know what to do, if you do not have a leader who tells you what to do, digitize. Because there is always a place where we can improve. 3 areas of digitization: customer frontline, boost the e-sales and the digital reach. We want to have one unique app with a high usage. Service automation and remote provisioning. We are running the biggest bot farm in telco industries, 3,000 bots operating in our network already today, including predictive and proactive maintenance because the more proactive we are, the less complaints, the less costs we are creating in the system. Network and IT. Digitize, digitize, digitize. The way of Open RAN, the disaggregation of our network. So the way of running network from a software perspective than rather having it in a very decentralized way is the next thing. And this is in a kind of agile and cloud-native IT, our IT has significantly improved over the last years. The time to market has come down to numbers which were even not close to our expectation when we had the last Capital Markets Day. And then we have the operations. Everything internally has to get flattenized, everything has to get automized in a way. We should not bother our people with routines which we can softwarize. And therefore, there is a big boost for internal efficiency via digitization. And we commit to another EUR 1.2 billion of savings in the organization here in Europe for further productivity gains. The ambitions: 30% e-sales shares; 25% to 30% e-sales shares in Europe; 2 months time to market in Germany; and 1 month's time to market in Europe, which makes us much more flexible, much quicker in responding to our competition. And even our testing of new products is easier to handle. This is the last thing on the portfolio, the capital allocation. We want to achieve trans-Atlantic leadership by creating more synergies in our footprint. Due to the fact that everything is going in software, we can jointly work much better together. And we're doing that already today. Take our TV platform, which is now harmonized around the whole European footprint. Think about the mesh router and the router development, it's harmonized around Europe and beyond that. So we have a lot of areas where we can harmonize and where we can generate synergies within the footprint of the biggest telco in the Western hemisphere. Being in AAA market is, by definition, an advantage. We have one regulatory or more -- less harmonized regulatory environment with less risks, which helps us a lot. #1 in Europe and soon, #1 in the U.S. This is our ambition rate. This is leading. Build once and scale, I made that already. And the One App is another example on how we are driving it. We have just joined and integrated the team on this field that this development is just taking place out of one hand. And a repeatable playbook, leverage the best practice around the footprint. And this is not only for operations. It's as well in the way how we do portfolio and M&A. Always trying opportunities. We don't say we are selling and we are buying. We are even trying to do forms outside of the balance sheet. We are trying to do things that we have maybe even minority shareholders in some areas to create upsides at a later stage. And that is the way how we are driving things. And this repeatable playbook, which we have learned, is even stronger because we have one single business model in our organization. The commitment. We want to increase our return on capital employed for the German operation by 50%. We want to double the B2B market share in the U.S. We want to scale the One App beyond all the footprint. And we want to have 80% of the router base with an own operating system. By the way, even the home OS which we are developing, which is bringing all the home services together, is something which we are launching soon. So more to come on the product events. So this was my journey, in a nutshell, about what we are doing. We are very, very ambitious in how we see the future. And the headline, as I said, it is acceleration, acceleration. Revenues, 1% to 2%. Okay, you know that number. But nobody is interested about revenues from handsets. Service revenue matters. The utilization of the infrastructure matters. 3% to 4% growth. So we believe in a significant growth on the service revenue side. EBITDA, the group is going to grow by 3% to 5%. This is 2% more than what we said last time. Adjusted EBITDA grows by 5% to 6%. This is significantly more than what we said last time. Free cash flow today, EUR 8 billion; '24, beyond EUR 18 billion. Another EUR 10 billion in the year '24 on the cash flow which we are generating today. And ex U.S., we're going to bring it to the EUR 4 billion here. Adjusted EPS, we go to EUR 1.75. And the ROCE should be beyond 6.5%. The CapEx envelope is designed ex U.S., EUR 8.2 billion is the vicinity on how we are investing. And indirect costs should get reduced by EUR 1.2 billion. The shareholder remuneration, based on the EPS, with a payout ratio of 40% to 60%, which gives a perspective to grow our dividend significantly over the next years. Look, I think Deutsche Telekom is not only excellent. The strategy is something which we work very hard on it. It is supported from 250,000 people in this organization. I commit that we, again, will deliver of what we have promised. We see the future as a growth future. We see us positioned very well from our portfolio and the markets we are operating. We have a differentiator, which is around our infrastructure. We have an idea about how we are developing this company towards a new layout for the generation 2030. And with this, I'm very optimistic that we will create more value than the other telcos. Thank you very much for listening.

Thank you, Tim. Thanks for this great -- for setting this framework for us. Maybe you can join me now for the Q&A. We don't have too much time for the Q&A now, but we have Tim back on stage tomorrow after the last session. So let's have a couple of questions right now. I can see already Polo, Polo Tang from UBS there on the WebEx. So Polo, maybe if we start? We can have your question, please.

So I have one question, which is just on shareholder returns and the EUR 60 billion buyback at T-Mobile US. It's very clear that you want to get to a 50% shareholding in T-Mobile US. But once you reach a 50% shareholding, are you likely to participate in the T-Mobile US buyback program? And if so, what would you do with the proceeds?

Okay. Polo, thank you. The first thing is first step after the second. So the first step is we have a big commitments towards our build-out program in Germany on fiber and on 5G. On top of that, we want to achieve this majority position. And we haven't taken any decision on whether we will take part of that program or not. I would expect us having a 50%-plus position that we then will more think about how we can do the allocation of that money. Whether we do debt reduction or other things, I would not see us immediately, let's say, participating and extending it. I do not see an immediate value out of that. But that would be my spontaneous reaction of today. So now taking first 51%, and then letting the whole equation being reviewed again.

Very good. Thank you, Polo. And so the next question, I can see you Andrew at Goldman.

Yes. Tim, it's great to see your ROCE targets today, which ultimately come down to growth in costs. When we saw you in Bonn a couple of years ago, the main question mark on that was probably on sustainable growth. And it was actually viewed -- it's not a big thing to hear about a telco talking about growth. You've since delivered on that nicely, and your guidance from here is more credible as a result. But right now, there's a heightened uncertainty in the sector on what you described as the investment you put into the wheel. And so I wondered if you could talk a bit more about how much visibility and certainty you have on CapEx intensity? And also, how you flex for the spectrum that fits into that? Just to give us some confidence that we don't get a CapEx warning over the next couple of years like we've seen across the space over the past few weeks and months.

I think the uncertainty at the last Capital Market was significantly higher than it is today. Last time, we had the unclear position on the U.S. Last time, we were not clear how to do play the 4G game and extend our footprint to where we are today. Last time, we had this big auctions, AWS in front of us in the U.S. Last time, we had just announcement around the Vodafone integration of fixed line and mobile services here in Germany and the competitive challenges we were facing. Last time, we had portfolio assets which were not running operationally well, like the Netherlands. So today, I can tell you, I'm sitting in a portfolio which is more or less fixed in every regard. We're still working on 2 systems. We can talk about that. But from a total equation, that is for me, from an outlook perspective, the most uncertain one because I do not know how these markets are recovering after COVID and how much of this -- how much of -- that we are participating in that growth. But that said, I see that. The second one is I do not see super significant auctions coming. We always had this kind of buckets in our planning and anticipating big auctions. This time, looking to this one, it's much more foreseeable what's coming. This is millimeter wave bands which are coming. There are some European market with 5G services coming, which are not that big. I do not see significant big auctions on the horizon, which will eat up into our balance sheet. And on top of that, our position, think about our position in the U.S. We are ahead of our competition with 5G services and buildout. We have a very clear view that how we -- what we need is CapEx to stay ahead and what is needed there in the market environment. So look, I'm very confident to the German build-out. Because what we have changed is -- and by the way, this is even a regulatory approach. Look, in the past, people were saying, we won't expect that you build a new monopoly. We don't. We will make safe that -- we will protect our market share at least, that I said that. We will have a decent share of wholesale because the deals are already made in the vicinity of EUR 17 billion, even Germany as an example. So we have a decent wholesale share on top of that one. But we will not build the whole country. So there will be others doing it. So why should I overbuild others if these guys are opening up their infrastructure to us and we can sell Magenta services as well in this region? This is the way going forward. And that keeps me more relaxed than this attitude of saying we always in the fixed line business have to own a monopoly for the whole country. So I think this is a new learning, that we do not have to own whole infrastructure. We hope to own the majority. And the argument, is it 60%, is it 70%? This is, let's say, the pitch which we are doing. That just gives us credibility. But beyond that, we will have a lot of whole buy deals. And therefore, we are limited on this exposure. I think it's even a capacity issue. Building now 2.5 million households in Germany, this is a big stretch target for an organization and even for our external service partners. So therefore, look, I'm -- maybe I'm too optimistic. Challenge me on this one. But for me, the perspective is more easier to take than it was 4 years ago. And that is why we gave you higher numbers. On top of that, we have a better control about the fixed line market in Germany. You see our market share, beyond 50% on the net add side. We have no line losses anymore. So even the constant revenue stream we're getting out of this, the growth was around 5-ish already, is something which gives me confidence that we are well positioned.

Great. Thank you, Andrew. Thank you, Tim. And I can see Akhil, not at the trading floor, it looks like. And then, Akhil, can we have your questions? Then we have one more. And then we move on to Srini. Okay? So Akhil?

Yes. It's 2 very quick ones, hopefully. So one is on towers. Tim, you mentioned, as you have before, that you see yourself as a kingmaker when it comes to towers. I just wondered, with the strategic review you're talking about, whether that changes the options you're thinking about. I think in the past, you've said you are ruling out an IPO. You are ruling out a disposal. It was more trying to find ways to create incremental value. If you could just maybe talk to whether there are other options now, whether you're thinking around that's changed. So that's the first one. And then the second one is, you've talked a lot about the network of networks and this aggregator strategy as Deutsche Telekom going forward. How important is scale to that? And when you think about Europe, which remains very fragmented, do you think that, that means that, as this industry evolves, scale is incrementally important? And do you think cross-border consolidation therefore becomes more important, too?

Very good. Look, the first thing is, we have been at the forefront of carving out our towers. And we have, I think, over the last years very much professionalized the operations in Europe on the tower side. And we have increased our EBITDA, just from my mind, EUR 150 million on top of that. So not going to the market with a low performance, but having already, let's say, taking the low-hanging fruits on the services, which will give us a better value. We have seen that even the market contributes, I think it was EUR 6 billion or EUR 8 billion, now it's around EUR 12 billion value to this thing. So they see this value enhancing. We have seen that the Americans have positioned themselves into the European space as well. We have seen Cellnex scaling up their business. So we saw the multiples between U.S. and Europe becoming very similar. And on top of that, where -- we see that everybody is positioned themselves to become an industry leader in this space. So we saw high multiples, beyond 30, on these businesses. And we don't believe that these multiples are going now significantly higher on this one. So now it's the right timing to think about to play in this game. Because the fantasy of something organically is more limited. So we have now an asset on hand we can play with. We can consider selling the majority. We can selling -- a piece. Look, I want to send Langheim out there and come home with a fantastic deal. I'm open to every option, to be honest, open to every option. But it has to be a good deal. It has to be a fat and juicy deal for Deutsche Telekom. And that is why I think it's now the right timing where everybody is positioned and nobody is talking about theory. These companies are now built, and the players are there. And there was never so much money in the market. So I think this is now the right thing. Look, I hope that we can come soon coming back to you guys and show that we're doing the right deals here. Thorsten will talk about that one in more detail later on, but that is the strategic topic. Network of networks. Thank you for -- because, guys, I think we have to think about the future because, otherwise, we will not understand that the companies -- telco companies are long-term positioned. So the network of networks and the aggregator strategy is something you have to invest, you have to learn. You have to cooperate with hyperscalers in this case. So are they enemies? Are they frenemies? What role do they play? This is the thing where we have now to start working on. And scale is important, because the bigger the aggregator is, the better the economy scales gets in this ecosystem, the more your incremental cost of IT investments are getting lower. And therefore, I think it's important, but who is better positioned in Europe than Deutsche Telekom? Now compared to the U.S., compared to Asia, we are subscale. And therefore, I'm calling, desperately calling, as a European citizen, for a harmonization for a single market of Europe. We need it to survive. We need it to play a relevant role in this piece prospectively. So I'm not driving politics. I know that the single market is still far away. I'm calling for bigger consolidation. But Deutsche Telekom is not sitting here and willing to invest cash into buying a company and then integrating it. That is not what we are looking for. But I hope that this market is coming into consolidation, that we are creating GBP 200 billion, GBP 300 billion here who are able to create the same economies of scale like other markets. But this is a way which is very difficult to predict. And prospectively, with the software development, the cross-border consolidation maybe gets more juicy because you have better economies. Look, at that point in time, I can only tell you, there is no activity in this regard. Europe is on -- a little bit on the way in these network issues to get -- become more nationalistic due to all the discussions we have in the political landscape. But prospectively, we need a single market for Europe. I cry for that.

Thanks, Tim. That's very good. I mean we are very short of time now. So Usman, great to see you. Have a -- let's have a quick question and a quick answer maybe, so we can have time for Germany and the other subjects as well. Thank you, Usman. Good to see you.

It was just going back to the strategic question of telco relationship with hyperscalers, this one particularly in light of the deal that DISH is doing with Amazon in the U.S. So is it -- from your overview, I mean it's clear that more and more telco kind of network data will be running on cloud servers or hyperscaler servers. More of the network will be run as software, again, on commoditized kind of hardware. Through network slicing, I guess you have a situation where hyperscalers can in theory run telco networks directly into customer premises. So the question was really, I mean, how are you as an organization managing the potential disintermediation risk? And to what extent does the telco kind of connectivity model need to change in order to be able to get more upside from this relationship with hyperscalers, and not to be reduced down to just providers of commodity where connectivity were just priced down all the time?

Look, thank you very much for that good question here. It's at the core. And I have to be now fast. Very complex question. Now the thing is you have to manage your dependencies. And there's one dependencies, the hyperscalers will not go away. And there will be, definitely, let's say, a service which they're providing and where we can benefit from. We have to bring the physical connectivity and the logical connectivity. We have to bring that together. This is how we make services and quality of service for customers available. This is, I think, the logic. Therefore, we need hyperscalers prospectively. Now the question is, we should not become dependent on one hyperscaler. So this multi-cloud approach is one of the solutions that you're not relying only on one hyperscalers in the way how you cloudify your infrastructure. The second thing is, look at the car industry. The car industry is embracing big time, Amazon and Microsoft, to their services. But they're not losing value chain, and they take them as a service provider. And this is the way how we think as well about it. We are not building the cloud ourselves. We are not running it. There will be critical pieces which we have to control ourselves. There will be pieces of the network where we leverage our network. Think the housing of edge clouds. I can believe that we do that with hyperscalers together. And then there will be pieces of it. I think the value for us is in the centerpiece which we're having, on the other -- on the one side, orchestration infrastructures from us and others, and on the other side, having always the access to 260 million customers in our footprint directly, including our B2C relations and B2B relations. And for me, the hyperscalers can enable our services, which I laid out earlier: quality of service, different carrier grades and the like in a kind of intelligent way. I do not see them when they really substitute us. I think they will help us to enable this orchestration and the cloud-native approach of our infrastructure. And we will select not only one. We will work with different players together. That's the way how we -- how I see the future going forward. But Claudia will talk about that tomorrow, hopefully, for you in a more clearer way. That is the way which I want to drive. You cannot just ignore them. You have to embrace them. And that is why DISH and Amazon are working together in the U.S. And I think Rakuten is on the same journey. So therefore, we should adapt that.

Yes. Thank you, Tim. If you can't beat them, join them, but thanks for this great framework. And as you can see, the idea of today is we won't rest on our laurels. On the contrary, we will accelerate. So how do we accelerate in Germany because it's a great asset? Well, we got the guy from Europe who -- formerly Europe, but he's actually already here running the German business for quite some time. Sorry?

He has to accelerate.

Yes. And now he will accelerate. And he will talk to us how he will do that. And I cannot think of anyone better suited for this than Srini. So we look forward to now hearing Srini, how we'll take Germany to the next level. Thank you.

Thank you, Hannes. [Foreign Language] You can see 7 months into the role, my German is already fluent. But seriously, before I expose my numerous shortcomings with the German language, let me move to talking about the German business. So it's my pleasure and honor to spend the next 45 minutes talking to you about where the German business is right now and where we're going. So without further ado, let me jump right into it. So where is the German business right now? I think the German business is in a really solid, good place. We've delivered reliable, predictable financials on the back of solid operations. And through this -- and all of this, despite the fact that we've gone through a fairly large transformation, one of the biggest that I think any of the incumbents in Europe has gone through, the IP transformation, which gave us its own headwinds. And I'll talk in more detail about that. But where we are is a really solid foundation, a place that delivers solid financial results, a great experience, a really good brand and a solid operation. Question is, where do we go from here? Now this is a question I've been asked often within the organization over the last 7 months, and often in German. And so that leads to one of my favorite German words, [Foreign Language]. By which, we mean acceleration. And so the vision really for the next 4 years is to take the solid foundation and accelerate from there. What does acceleration mean? Accelerate in terms of building out the networks for the future; accelerate in terms of our revenue across consumer and B2B; but also accelerate in terms of our internal digitization, so that the combination of all of that creates an acceleration of EBITDA that self-funds the fiber rollout. And last but not least, use all of that accelerated EBITDA, allocate capital well, so that it's not just EBITDA, but also return on capital employed that accelerates. So it's a story of acceleration built on a solid foundation, which you can see has a lot in parallel with the way Tim was laying out the story for the group as a whole. So let me now dive in a bit into our performance and the solid foundation that I talked about. I'll start with just reflecting on some of the commitments we made in our last Capital Markets Day and how we've performed against those commitments. Now the commitments for 2017 to '21, and the numbers you can see here are our actual reported numbers from '17 to '20. So as I talk through each of them, I'll also give you a flavor of how '21 is turning out. Let's start at the top with mobile service revenue. Now we committed to a 2% mobile service revenue growth. Our actuals 2017 to 2020 were 1.4%. When you take out the corona effect, it was actually about 2%. And as we look at '21, we're pretty comfortable, giving us a tick on mobile service revenue. Let's talk about fixed service revenue. Here, our landmark strategic decision of actually going down the route of vectoring changed the game for us on broadband. So on broadband, we had committed a 4% -- 3% to 4% growth. Now the reality is we're storming ahead of that: 4.6% delivered till 2020; quarter 1 2021, 6.4% broadband growth. So clearly, vectoring is paying off in spades. If you look at our EBITDA commitment, we said 2% EBITDA growth. We've delivered 1.9%, 2017 to 2020. That despite the headwinds from the IP migration, and I'll talk about them in a little more detail on the next slide. And 2020 itself also had the COVID headwinds. So our 2020 EBITDA growth rate was only 1.4%, which brought down our overall growth rate in this period. But when you look at Q1 2021, with a lot of the headwinds behind us and some of the headwinds of IT migration turning into tailwinds, you can see the acceleration. We grew at 3.4% in quarter 1 2021. Cash, the last of those numbers, we said 4% to 5% growth. We've clearly nailed that at 4.8%. So financially, stable, predictable delivery. Let me talk a bit about IP migration because I mentioned it earlier. Look, we are the only scale incumbent in Europe who's really completed the IP migration. This was a tough journey. What did the IP migration involve? Essentially, swapping out all our legacy infrastructure to put in an all-IP network. Especially with B2B customers, this was also the effective equivalent of cleaning up your back book. Now we started in 2014, but it really peaked in terms of impact in 2018 and 2019. So in 2018, we had 700,000 line losses; 2019, 800,000; 2020, 200,000; 2021, an even lower run rate. The drag of this on revenue was about EUR 100 million a year in '18 and '19. It's about 0.5%. Now it went away largely in '20. You didn't see it in our results because COVID hit us at the same point. But when you start looking at 2021, you are beginning to see the release of that and the tailwinds coming in. So our service revenue quarter 1 2021 grew by 1.7%. Now the IP migration didn't have headwinds and effects just on revenue. It impacted cost as well. So installations peaked, because you've got to physically go there and change out the legacy network. Our installations are now down 30% from peak. And last but not least, and this, I think, will be the most selling factor for the future, the IP migration gave us the ability -- and I think we're the only incumbent in Europe who has this ability now, to really build modern, technologically sophisticated products, such as SDx, enterprise cloud communication, on top of our all-IP network, for our B2B customers. So solid financial delivery in the face of a tough IP migration. How have we achieved all of this? I think the core of a lot of this has been operational excellence. If you look at the chart here, we have seen complaints go down by 66%, a 20-plus-percent increase in first contact resolution. That's impressive. IT time to market going down from 18 months to 3 months. Add to that, the fact that -- and I've now worked in several incumbents, our IT infrastructure is amongst the most stable that we've -- that I've seen amongst incumbents. What's the payoff of a lot of this? Record levels of customer satisfaction and record lows on churn. A further testament to our strategy of invest in the network, invest in service, good things will happen. And that's not just us saying it. You can see, we won most of the awards possible in this space. So solid financials, tough migration handled well, delivery despite that, based on solid operational foundations. I'm going to close off the looking back with a quick sense of our other commitments, specifically the ones I didn't touch on earlier. I'd like to start by highlighting cost. It's a bit of a myth here that you can't take cost out in Germany. We reduced EUR 1 billion in cost across GHS and Telekom Deutschland. We reduced our workforce by about 10,000 people between 2017 and 2020. So you can take cost out, you can drive efficiency in Germany. I then want to spend a few minutes on the ambers. So B2B growth, we said EUR 500 million. We delivered EUR 110 million. Correcting for corona, we had about a EUR 240 million impact of corona, which was mostly lost roaming as well as the big IT deals. We delivered EUR 350 million. And I can always stand here and say, yes, IP migration was the rest of it. But cold hard facts, I think we would have liked to have delivered more on B2B growth. And we'll talk about our plans going forward. The second area of amber I want to spend a few minutes on is fiber rollout. We said we would get to a run rate of 2 million homes per annum. Last year, we delivered 600,000; this year, upwards of 1.2 million. But in the last quarter of this year, we will be running at close to 500,000 homes per annum -- sorry, 500,000 homes in the quarter, which is about 2 million homes per annum. So we'll get there. But truth be told, we would have loved to have got there a little quicker. And the last area of amber is then our revenue delivery, where we said we would deliver 1% in growth. Reality, we've delivered flat revenue. Now some of that is because of corona. Without corona, it would have been 0.4%. But I think the more important piece, which is same point Tim made, when you look at service revenue, we actually delivered 0.7%. We chose to let go of some of the lower-margin revenue. But still a near miss, so an amber rather than a green. So that's the scorecard and the state of the past, a really solid foundation. Let's now start talking about [Foreign Language] or acceleration. I'm going to skip through the first slide on this. This is the slide Tim talked about in terms of the priorities. Our priorities are consistent with the group priorities. Let me dive into the heart of it and talk about acceleration on the network side. So network acceleration. Where are we on 5G, first? As Tim said as well, we today have 80% coverage on 5G. Now this blows my mind a bit. I've been in the industry a while. It's rare that you find a case where, with the new technology being introduced, one player has twice as much coverage than the next competitor. And the task going forward from an acceleration perspective is, how do we now really get efficient about 5G deployment, and more importantly, how do we monetize it? Let's talk about the fixed line infrastructure. I think what was strategically brilliant was the choice to go down the route of vectoring. What has vectoring given us? Several things. We now cover 83% of the country with vectoring and super vectoring. Our choice of going broad and high speed versus narrow and gigabit really paid off over the corona crisis because we could almost overnight allow the entire country to start moving to working from home. The other big advantage of vectoring is in the fiber rollout. Now our last mile in Germany is shorter than anywhere else in Europe because of the depth of our vectoring coverage. So the last mile in Germany is 200 to 400 meters. That's a lot shorter than elsewhere. We'll come back to why it's still so expensive to roll out fiber. But the length of the last mile or the shortening of that length was a huge achievement of vectoring. As a result, we have a copper network that delivers -- that can deliver up to 250 Mbps. And for a large number of customers, already delivers more than 100 Mbps. That's different from a lot of places in Europe. So how do we build on that foundation and accelerate? Let's start with fiber and how we accelerate. Now I already talked about this at our Q4 earnings call, where we laid out our target of 10 million homes by 2024, with -- getting to, with our competitors, 100% fiberization of Germany by 2030. Now since then, I've spoken to a lot of you. And typically, there are 3 questions. The first one, I think Andrew was kind of subtle in the way he phrased it, but how do you know 10 million homes is enough? Is there another CapEx warning coming around the corner? The second one I've dealt with is, tell me more about your fiber strategy. How do you decide where to roll out? What's your strategy? And the third one typically is, how do the economics of fiber work? How does this contribute to monetization? So let me deal with them one by one. Let's start with, is 10 million homes the right number. We are convinced 10 million homes is the right number because we believe that's the number we need to get to above 60% infrastructure share. What drives that conviction? 3 pieces. Firstly, the demand side. Now I've seen fiber rollout in over 10 countries now. Consumer behavior remains quite clear. There are 2 principles. One, most consumers hate having to move infrastructure and change their in-house wiring and everything else, unless that's the only way they can get high speed. Second, most consumers upgrade the speed of their line one step at a time, at most, 2 steps. So they go from 16 Mbps to 50, 50 to 100, 100 to 250, 250 to 1 gig. Why do they upgrade 1 or 2 steps at a time? Because each step normally comes with a 15% price premium. Now you take those 2 principles, and all the data I've seen in Germany suggests that those 2 principles still hold. Now you add a couple of facts to those principles. One, over 80% of Germany has vectoring available. You take a second fact, which is that, in our retail plus wholesale 25 million customer base, 80% of customers are at least 1 or 2 steps away from the peak speed that their line can deliver. What does all of that mean? For the next 4 to 5 years at least, a lot of the demand for fiber will come from the 20% non-vectored areas, and the 20% in vectored areas who have already reached the maximum speed potential of their line, which means there will be demand, but that demand will be focused in certain pockets. And that demand will grow because what will end up happening is that more and more people will reach the peak potential of their line speed. But it will grow steadily. There isn't a flood of fiber. There's a steady, nice growth in demand for fiber. And when we work through the math of all that, we come to the answer, 10 million lines will comfortably put us in a place of 60% infrastructure share, assuming people build in economically sensible manners to drive demand. There's a second factor which convinces me that 10 million is the right number, which is supply side dynamics, and Tim referred to this. Germany, it's bloody hard to build out fiber. You have 2,700 different municipalities. And there's my favorite German phrase now, [Foreign Language], which is the process by which you get permission to build. That has to be negotiated with every single municipality at a local level. And by the way, the municipality doesn't necessarily always give you permission to do micro-trenching. In most cases, not. Almost never gives you permission to do overhead. What you get permission for is [Foreign Language], which is expensive and takes time. So it takes time to scale fiber in Germany. Now you add to that the fact that construction capacity is pretty limited. And scaling fiber in Germany is a lot harder than what I call fiber to the press release. So there are a lot of people doing press releases on the amount of money they've raised and the rest of it. It's bloody hard doing that with 2,700 municipalities. We'll come back and talk about some unique advantages we have in that context. I think that supply side constraint also makes me really comfortable that when we scale this machine to 2.5 million households, we will get 60% infrastructure share. Last but not least, every good plan has to have contingency to it. Now our plan has flexibility, firstly, because it's self-funded. But there's an important element of breathing room that we think is critical, which is external funding. Now what do I mean by external funding? I mean raising external funds in a manner that we get as close to owner economics as possible and raising external funds with a JV with as much independence that allows us to get off-balance treatment. What does that look like? Think KPN-APG. We really like that model. Now we're in quite progressed conversations on getting there. And that will come on top and give us capacity on top of the build-out we're just talking about. So hopefully, that nails question 1, why do I believe the 10 million number is right? Let's go to question 2, which is, how do we think about our strategy for rolling out fiber in Germany? In many ways, it follows exactly the same principles of supply and demand. Now the way we think about Germany, firstly, is to start de-averaging it. Let's start with the quadrant on the top left here, which is areas where we have an FTTC network and there is fiber competition or coax competition, more likely. This is typically in the large cities, so the Berlins, Hamburgs, et cetera, of the world. And here also, a lot of customers live in the multi-dwelling units. So how do we decide where we roll out here? How do we actually scale this? We start with the supply side. So the most important thing here is to absolutely make sure that you get the municipalities on site. Berlin, great case in point. We committed to rolling out 1 million households in Berlin because we have a deal with the city, where they have made massive improvements in their permission process. They have digitalized a lot of it. That helps take out cost. That helps cut time. We also look at making sure we get agreements with the multi-dwelling units so that we can put our fiber in there. Here, what has been achieved with the removal of [ nascent ] cost and privilege is massive because it suddenly changes our ability to get into these buildings. Obviously, the other factor we look at here is how utilized are these customers? To what extent do we see demand as people are getting close to top speeds? And again, in a lot of metros, that tends to be quite high depending on the area you're looking at. So that's how we think about the first set. Now in the first set, these are not just kind of empty concepts. We've evaluated and started now declaring our plans by city. So we declared 1 million in Berlin. We will do 1 million across Frankfurt, Hamburg and Dusseldorf. And we're now laying out detailed plans per city. Let me now go to the next quadrant, which is the top right. Now this is areas where we have FTTC and there is no alternative infrastructure. Now these areas are very different, and there's a lot of distribution between -- in these areas, because they range from the outright rural to just outside the city. And therefore, there is a massive deviation in the costs to cover here. So it can range from EUR 900 to EUR 5,000 in these areas. How do we decide where we go here? What do we do here? Again, the same supply and demand side factors. So let's start at the supply side. Freiberg is a good example. Really good cooperation with the city council help bring down the cost to build. Other factors we consider here are, clearly, the most attractive areas in this quadrant are ones with the lowest costs to cover. So we proactively go ahead there so that we can prevent cherrypicking. Now these areas from 2023 onwards will also become available for subsidy. And we'll compete hard and win a lot of subsidies in these areas. Let's talk about the third quadrant in here, which is the bottom right, which is kind of really rural. Now this space, you have no FTTC and no competing infrastructure. It's the center of the government subsidization program. Let me give you some facts here. When you look back from 2013 to today, we have won above 60% of all the households that have been subsidized. In places like Bayern, our win rate's actually 80%. So we like the subsidy program. It's very sensibly structured. And we will continue competing and winning in this space. Now to the bottom left. This is pure market share gain territory, honestly, because here, we're in a place where there is competing fiber or coax infrastructure. We don't have FTTC. And our shares are quite often lowest here. How do we attack this space? Again, supply and demand. Good way into supply, partner with a local utility. Example, Glasfaser Nordwest, where we're working with EWE TEL to build out here. But there are other options and models as well. The other thing we're looking at is, if the costs are low enough and there's high enough utilization here, let's go for it and overbuild, right? And the worst case or the last resort is, we will hold by and continue to provide our customers with this. So I hope that gives you a sense of how we think about de-averaging the German fiber monster, right, and how we think about going about it. The one thing in common with all of these is the way we approve projects and commit to building. Every project has to deliver greater than the hurdle rate of return or the hurdle IRR, which is 7.5% post -- sorry, 7.5% pretax. What that means is, our average is not 7.5%. That's the minimum. Our average is clearly north of that. So that gives you some sense of how we think about the different de-averaging of fiber. Let me go to the third question, which was, how do we think about economics of fiber? 3 big factors driving the economics of fiber: ARPUs, utilization and CapEx. So obviously, a fourth, which is market share gain, which we will have in some areas, but I'm going to focus on these 3 right now. Let's start with ARPU growth in retail, right? Now our retail ARPUs have followed the earlier principle I was talking about, which is customers upgrade one step at a time. And as we rolled out more and more vectoring, people moved out from 16 to 50. That's why we saw a 5% ARPU growth from '18 to '20. As we roll out fiber and add to that infrastructure, it will fuel the ARPU growth. On the utilization side, we're sitting today at 51% net add share, which is well ahead of our fair share. We will certainly defend at least 40% in net add share in retail. That combination on the retail side fuels the monetization of fiber. On the wholesale side, again, the same 2 factors. What gives us almost the bedrock of utilization is the long-term wholesale deals we have with our partners, 10-year deals. What drives ARPU is a really forward-looking framework from the BNetzA, which is structured around More For More. And I think Hannes talked about this in detail in the Q1 earnings call in terms of the trajectory, and why in '21 and '22, we see a slowdown, and after '23, we see the growth. But the reality here is, our new commitment tariffs have a price increase for 50 and 100 Mbps, but more importantly, a clear more-for-more growth path on fiber. So you pull that all together, the ARPU and the utilization levers across both wholesale and retail drive the revenue side of fiber. Equally importantly, driving down CapEx efficiency. We are committed to reducing our CapEx per home passed by 25%. Let me be clear by what I mean by that. That is CapEx per home passed like-for-like areas. Obviously, our overall CapEx per home passed depends on our mix. So if we roll out more urban, we have lower CapEx per home pass; more rural, higher CapEx per home pass. But on a like-for-like basis, we will take it down by 25%. Is that a pipe dream? Not really. Quarter 1, we are already running at about a 5% to 7% efficiency. So we're already beginning to really move the needle. So that by the end of the period, we will definitely be at a place of 25% lower CapEx per home passed. What drives this? 4 things drive this, right? #1, scale. So that allows us to standardize processes. That creates massive efficiency. #2, digitization. Claudia will talk tomorrow about how much we've reduced our time to plan, but digitization across the fiber factory is a very powerful tool, including with things like T-Cars, which allow us to map out an area before we go into that and give us a reliable sense of CapEx, right? The third big factor here is what our scale gives us in terms of committed relationships. So we talked earlier about construction capacity. We have 70% of our construction capacity for 2022 already signed and committed. We have a similar number even for 2023. Why do we have that? Because of scale, because of our willingness to do long-term deals and our willingness to do turnkey construction. Last but not least, my favorite topic again, [Foreign Language], right? Now the beast that getting approvals from local municipalities is, is hard. But it's a lot easier when you have 13,000 people who are deeply regional, come from the area, are able to talk the dialect, can work with the local municipalities to actually get us micro-trenching, to get us the local permissions that we need. So that combination of things is why I'm confident about the economics of fiber and about the 25% CapEx reduction. Moving on to the next piece of accelerating our infrastructure, which is 5G. Building on the head start that we have to drive efficiency and to drive monetization. Now the head start that we have is not just in coverage, but also in total spectrum deployed, and importantly, especially with 5G, number of sites backhauled by fiber. We have a 75% connect rate of our sites to fiber. Now how do we drive efficiency on top of this? Similar to the way we've actually been really efficient by using DSS as the way of rolling out our fiber, we are now retiring 3G. And we will use a lot of that spectrum for 5G. We are looking at small cell deployments to further increase the efficiency of our 5G. On the monetization side, I think the first couple of years of 5G will be monetizing using B2B. I think there's order of magnitude, a low 3-digit million number in terms of the size available as opportunity for us to go after, with IoT, with campus networks. And I'll come back and talk about that. On the B2C side, most of the monetization will come from upgrading our customers to higher tariffs. And again, I'll talk about this more on the B2C side. So that was the heart of network [Foreign Language] I'm going to now move on to talk about our B2C area and what drives acceleration within our consumer business. Let's start from where we are. Where are we today? A really strong consumer business that gets its strength from product leadership in each individual area. So we're clearly product leaders in mobile, fixed and convergence. And we have a really powerful brand that pulls it all together. Where do we go from here? How do we build on top of this? I think the next part of this journey, very similar to Tim's articulation of being experience-led, where we think go -- where we think we can unlock growth from herein is from going from product leadership to really growth driven by loyalty and owning the household experience. What does that mean? What does that look and feel like? So starting off with how we create growth from our existing customer base. I've already talked about the fixed line side and the amount of upside left in monetizing our base. 25% of our retail customer base today is sitting on greater than 100 Mbps. There is a huge opportunity as the demand for speed goes up for us to monetize this. We will see 100% to 150% increase in the percentage of our customers who are on greater than 100 Mbps. And with EUR 5 typically per upgrade, that is a lot of revenue. The second part of our upgrade story is in mobile, where we will see a 50% to 100% increase in the number of our customers on the largest tariffs. Now how do we do this? We can learn a lot from the playbook in Europe, in the DT European countries who successfully driven a More For More, including an accretive ARPU strategy by really managing channel as well rather than by discounting. I'll come back to this theme in a minute when we talk about convergence. But the important thing is this not just gives us more revenue. But you can see with the chart on the left, it gives us significantly happier customers. And that's a big part of creating growth through loyalty. The second part of the playbook for driving growth in consumer is convergence, is really beginning to own the household. Today, we have 11.6 million retail broadband customers. Stick a finger in the air, that probably means 20 million SIMs in these households. 5 million of them are Magenta. Gives you a sense of the opportunity available for us on convergence. Again, taking a leaf out of the European playbook, we're at about 51% convergence in Europe. Now how do we get there? Because 4 years ago, we were about 25%, 26%. We got there through very, very disciplined execution. We didn't get there through discounting. What does disciplined execution mean? It means every time you walk into a store, every time you make a phone call, every time you use the app. And I know you're an existing broadband customer. A combination of channel incentives, data in the ecosystem, my CRM, allows me to speak to you about the benefits of getting onto a convergent package. That, in the heart of it, is what unlocks all of the good stuff in convergence: the 50% churn reduction, the higher ARPUs as well as the higher customer satisfaction. Now that's very much the first 2 steps or, as Tim would say, the horizon one of this. Equally important is now binding this together in a true converged product experience. I know Claudia has got a lovely video on this tomorrow. So I'll leave you just with the headlines of this. In the end, we own the 3 most important and sticky gadgets in a consumer household: the router, which decides where you get coverage; your TV with Magenta TV; and the mobile devices. Now our vision here is to pull them together in a seamless experience so that you get a genuinely product -- a converged product feel. So that gives you some sense of what underlies the B2C growth story, the B2C acceleration, from product leadership, to loyalty, and household experience-driven growth. I'm going to move on next to B2B. Now B2B is interesting, right, because B2B is -- I'm sure a lot of you see it as the graveyard for incumbents on growth. Now fact one, our B2B business has grown, 0.7%, but it has grown in the last 3 to 4 years, which is more than you can say for most. It's grown despite the headwinds. 3 significant headwinds: IP migration, EUR 100 million a year; corona, EUR 240 million; and we went through a difficult process of integrating a EUR 2 billion TC business from T-Systems last year. Despite those headwinds and challenges, it's grown. Why? Because of an incredibly strong market position, really good distribution, good service and a great network. Now you put that together and you get what's now a common picture, I'm sure, for you, a solid foundation on the basis of which we can accelerate. One of the biggest forces that's emerging for me in Germany now is the flood we're seeing of businesses beginning to digitize. Things like the European Recovery Fund, with 20% of it allocated to digitization, will only help. But we are seeing, especially post the pandemic, a huge push towards digitization. And there is a unique opportunity for us in B2B to be at the center of this. But rather than me talk about it, I think this video captures a lot of what I'm saying here better than I can. With that, can we play the video, please, on B2B? [Presentation]

Thank you. I hope that gives you some feel of the speed at which this is moving in Germany and how central we are to making this happen. Now especially post the IP migration, with our ability to offer services like SD-WAN, right, this does change the game. Now a bunch of factors for me now convince me that this business is ready to accelerate. Two for me is the fact that the headwinds have turned into tailwinds, certainly with IP migration and as we're seeing increasingly with corona. And last but not least, our go-to-market is really powerful now, because we're able to take all the telecom services together and offer our customers -- serve integrated services from one hand. So that is the story of why we believe in B2B acceleration. Now having talked about the digitalization of our customers, I want to now talk about our own digitization. Now we will look to substantially accelerate digitization in the next 3 to 4 years. Now starting off with the front end, how do we think about digitalization at the front end? Now at the front end or customer facing, I think our strategy is actually really simple. It is bring together the best of digital with the best of the human touch. What does that mean? It means using digital to eliminate as many routine transactions, to eliminate as many faults proactively as possible. Tim already spoke about the 3,000 bots. We are putting in place now a tool called MagentaView, which gives you an overview of your entire relationship and is powered by AI. Tools like these help remove a large number of the routine inquiries, which then allows us to really invest in our people to solve those difficult problems which need a customized solution, which needs someone to talk to you. Now that said, the only way you can do that is incentivizing them right, right? I often say telcos sometimes are a bit bizarre. They first cause you a problem. And then they pay people to spend less time solving it for you, which is really what paying people based on average handle time really is, right? Now with our people model through dramatic digitization, what we can do is really take home the team of experts model that the U.S. has designed and focus on solving customer issues, focus on incentivizing first time resolution, first contact resolution. This combination of digitalizing the front end as well as combining that with people where we need them most will see a 60% first contact resolution, more than EUR 200 million in savings over the next 4 years and a growing customer satisfaction. That's sort of the front-end story. But our view of digitalization is full stack. It's not just about the front end. The principles of digitization apply across the entire stack. Claudia will talk about that in more detail tomorrow. But it equally applies to the back end. It applies to our IT. And it applies above all to our network through disaggregation, cloudification and automation. Let me just give you some quick sense of the way we think of the outcomes of this: really strong outcomes on customer touch points, as I talked about earlier, app penetration, e-sales share, digital share; very strong outcomes on the IT side in terms of a more agile, quick to react IT; and last but not least, at the heart of our business, cloudifying, automating, disaggregating our network. When you pull all of the digitalization stuff together, what's the payoff? Pretty impressive in the next 4 years. We will take out EUR 700 million in indirect cost. Now a lot of that will come through directly through the digital tools. Some of it will be the knock-on effect of the nature of the organization we will have, a slimmer, smaller organization, but also some real big knock-on indirect cost effects. We will give up about 300,000 square meters of real estate, 50% reduction in real estate because of this whole process. So that's then -- we've now covered off the acceleration of the infrastructure build, how we fund that through accelerating revenue on B2B and B2C and through accelerating digitization. Last but not least is a subject quite close to my heart, which is the place we occupy in German society. We are proud today of being an integral element of the German social fabric. Nothing shows this more than the way we reacted to the corona crisis. Things like 10,000 smartphones being given to old age homes, things like specific packages for our B2B and SMB customers to enable them to move quickly to homeworking. This lies at the center of what Deutsche Telekom Germany is. We believe we play a central role in society. And we don't see that as an obligation. We see that as a privilege and something quite special to be. Just as in all the other areas, we're committing to accelerate this as well. How do we do that? Deep involvement in digital education and literacy. 7,000 schools to be covered through FTTH and digitized. Real commitment to the environment. We're already 100% user of renewable energy. And again, Claudia will talk in more detail about this. But we plan to push further on energy efficiency. And even the way we build networks, build networks with the community for the community, not for ourselves. That combination of things, we think, is an integral part of who we are, a responsible employer, a responsible corporate citizen in Germany. That sort of covers all of the 5 big areas of acceleration. I'll move on now to the outcome of all of this, right? The combination of driving B2C growth from loyalty and households, to being the chosen partner for the rising wave of digitization in B2B; two, driving digitization within our own company; and having built a solid foundation, which gives us tailwinds now, enables us to accelerate EBITDA growth, from the 1.9% you saw to the 2.5% to 3%. When you put together this accelerated EBITDA growth with real discipline around capital allocation and asset management, some examples. As a result of IP migration, next year, we will switch off our SDH platform. That will give us EUR 50 million savings in indirect costs. We are now retiring our 3G network. Mobile network, we have 6,000 sites that we will share in white spots across us and Telefonica and Vodafone. That, plus all the CapEx efficiencies I've already talked about, will result in, as Tim said earlier, a 50% growth in our return on capital employed. So you have a business here which is growing, creating great terminal value, with 10 million homes with fiber by 2024, and still creating value each step along the way, not just with ROCE greater than WACC, but with a ROCE that is growing. And that truly is what acceleration means. Sum this up in terms of our midterm ambition, I think this is a repetition of a lot of the stuff we said. I'll highlight the EUR 0.5 billion higher cash CapEx. That was exactly what we guided at the end of -- at the Q4 earnings call; 2.5% to 3% EBITDA growth, which I've talked about; and 10 million FTTH homes passed; 97% 5G coverage; EUR 700 million indirect cost removal. So all in all, a comprehensive [Foreign Language] for the German business. Now as we talk about acceleration and everything that happens with it, none of this is possible without really charging the motor of this company. 60,000 people who come to work every day at Telekom Deutschland need a purpose. They need a reason to accelerate. And that reason and that purpose is [Foreign Language], turning our customers into fans. That's the reason why we accelerate. Now what that means is not just a slogan. It's about us really putting our frontline first, the people who are out there serving our customers through all of the pandemic, the people who are out there day and night actually delivering for our customers. Because we believe only by putting our frontline first can we put our customers first. And only by doing this, can we make the transition not just to acceleration, but from a solid, well delivering incumbent, to an accelerating un-incumbent. And nothing captures this spirit more than the film I'm about to show you. Thank you. The film, please. [Presentation]

Well, thank you, Srini, and that was really inspiring. And we also feel inspired. We think we should turn investors into fans. So that's our next mission here or we're trying. But the other thing that we really like is [Foreign Language], yes. So I can see our -- I need to make an organization announcement. As you might have noticed, we are running over a little bit. And so we skip the break and the subsequent sessions will move backwards a bit by 10, 15 minutes. Apologies for this. But I think it's important we also have a space for Q&A now on Germany. I know it's a business dear to your heart. And we start with Simon. I can see you, Simon from Barclays.

So on wholesale, you've been able to negotiate these new wholesale contracts with your wholesalers that have a very attractive more-for-more structure on pricing going forwards. And as customers move to faster speeds, and that means we're going to see your wholesale revenue growth after a short-term hit. But if we think about what's happened elsewhere in Europe, we've seen challenges actively try and avoid this cost inflation that this brings by maybe moving to alternative network providers. So I'm just wondering, is there something in the contract that gives you confidence that this won't happen. And how can you get comfortable that, say, if a wholesaler does get reasonable market share, they won't seek to get some help from say, private money that's very interested in digital infrastructure because you yourself said, if you get good penetration in certain area where you don't have infrastructure, then you'll be more than happy to overbuild. So I'm just wondering how you think those moving parts play out and why you have a lot of confidence on wholesale going forwards.

Yes. So maybe respond to the -- so thanks for that question, Simon. So a couple of things. One, there are parts of the contract that we can't really talk about, right? But the overall construct does give us a fair degree of reassurance in terms of utilization of the network, right? And it's hard for me to go into more detail than that, but it does give us a fair degree of reassurance on the utilization of the network. That said, will there be parts and geographies where some people will get some share on the wholesale business? Yes. But equally, there are large chunks of areas where we don't have share today. So there will be swap sets that will end up happening as a result of the -- of effectively an infrastructure reset, right? But there's enough in those to ensure that there's a floor to the utilization of our fiber network. And I'm already treading into ground that's beyond which is hard to talk about.

Yes. Thank you, Srini. And it's -- for sure, we feel very good about these contracts, and we went into a lot of detail as much as we possibly can. But -- at the earnings call, but it's -- and we are guiding today for a flat wholesale access.

You explained that briefly. So Simon, the reason we're guiding for a flat wholesale revenues despite the kind of more-for-more structure is a well-publicized fact that Vodafone has committed to a certain amount of migration of our network to achieve their cable synergies. So effectively, volume goes down, price goes up. That's what creates stability.

Okay. Thanks, Simon. Next question is from Josh at Exane. Josh? Good to see you.

I have 2 questions, please. The first is actually just going back to that very helpful quadrant on Slide 12 about the different fiber build areas. I understand the kind of cost of rollout and the potential returns in each of those areas may be different, but it'd be great to get a sense of which of these areas are going to prioritize most in the near term. I mean, in particular, it sounds like this move to counteract cherry-picking could be quite important when we think about the phasing of rollout in 2023 onwards? And then the second question is on this curtailing customers into fans strategy. So you've highlighted that moving to convergents helps. But are there any particularly strong products in your portfolio and also particularly challenged products, which you think you need to change the setup? And I think in the past, we've talked about the fact that TV might be a bit lagging a bit behind broadband growth. Are there any actual changes to the product structure you're thinking about as you look to achieve this?

Good. So let's start with the prioritization, right? Now on that slide, it also had the percentages of Germany in each place, right? So you have 55% in quadrant 1. Then we have 15, 10 -- 15, 10, 15, I think, in the rest. Now broadly speaking, our rollout will follow some of those patterns. Now what have we announced so far? We've said we will build out 3 million households in rural, right? And that's a public commitment, and that will fit into the right-hand side quadrants. That will be a mixture of subsidies, but also it will be counteracting cherry-picking. So that's clearly 1 place. And then because 55% of the population sits in quadrant 1, you will see us build out there as well, right? So I think there will be slight differences in our percentage of build-out versus the percentage of population, but it's not going to be dramatically different because that gives us enough leeway to deal with the cherry-picker issue. Because if you take the right-hand side quadrant, yes, there's 15% of the population there, but it's really probably half of it which is attractive to build out without subsidy, which could be cherry-picked. So you want to go there first, absolutely. And that we're completely committed to. But that doesn't result in 50% of our money being spent then. just because of the way the math lands are working, if that makes sense. I love your second question on product structure. So firstly, on TV, it's actually a product that we really like, and it's been going very well. As we look forward, one of the numbers I didn't put up there is our plan actually involves an increase in our 3P mix. So from about 25%, we will be looking to move that to 30%, 33%, which is more TV attach rate to our existing products. So it's actually something we see accelerating in terms of where we are right now. The -- let me come back to your other question of product structures and where that plays out. Look, I think some of the issues with an incumbent tend to be when you have back book issues, right? And the most significant of those tend to be in B2B. I think what I really like about our portfolio right now is IP migration washed out a lot of those effects, which means we can now start competing in some of those places, SD-WAN migration, for example, without this Damocles' sword of the back book necessarily hanging over us all the time. So my sense of where we are on product structures and what you should be expecting is a lot more focused on convergents, and a lot more focused on the Magenta brand in consumer. I think we punched below our weight on the Magenta brand in consumer, and you will see a lot more focus on that. Does that help?

And that's mainly also relative to, let's say, the Congstar brand or others. So it's not a very -- necessarily an imperialist statement. Next, we have Ulrich. I think, Ulrich, we have you on the phone here.

That's right.

Okay. Cool. Go for it.

Appreciate it. I have 2 questions -- segment, very short. The first one is the 4% minimum for the broadband revenue growth looks maybe a little bit conservative considering the MDU opportunity where the changes to the telecoms law means maybe 1/4 of households, your competitive situation improves. Is that essentially because you think there's a case we're not rocking the boat too much to sort of not disrupt market structure? Or what's the background there? My second question is about the 7.5% return hurdle for the project that you mentioned. Is that an all-in number after the loss of the legacy revenues that necessarily comes when you connect the customer to fiber? Or how is that calculated? Because it looks fairly high given that you're essentially replacing infrastructure from one where you have paying customers already?

Good. So I enjoy being told that 4% is conservative. Look, it's -- we are growing at 6.5% right now. Beyond the point, we -- I am very optimistic about the broadband business. Do I -- on rocking the boat on market structure, look, I don't like rocking the boat on market structure in general, right? Now we will gain share where we land up building. But even on the MDUs, in the vast majority of MDUs between wholesale and retail, we have 60% of the customers in an MDU typically are ours. So when I build into an MDU, I'm often building from my own base rather than to necessarily gain share. We will end up gaining share in some places. There are lots of places where there's performance issues with competition, and we will end up gaining share. But the 4% is, like I said, given where we are right now, I think we've benefited from massively from vectoring. I think there's been some flight to quality as a result of corona. So we think it's a sensible number to guide for. And from a market share perspective and a net add share perspective, I think the above 40 still continues to be where we are because we think that's the right thing from a market structure perspective. I think the biggest thing that the MDU access lands up giving us is it frees up consumer choice on TV, but also importantly, prevents people from blocking our entry with fiber, right? So that's the way I think of it. On the fiber IRR, look, we can do a separate deeper conversation on the specifics of the model. But let me just put some of the questions of fiber economics into context, right? Because I tend to think of fiber economics in the broader context of us running a business, a lot of which is valuation is based on the terminal value. Now you think of yourself today in a decision where you may -- where you don't roll out fiber. 4 years from now, you have largely a copper network, and you have a business where ROCE is greater than WACC. You think of the alternative. We grow ROCE greater than WACC, so we create value at each point. And we have a business with 10 million fiber homes, which clearly has significantly higher exit trajectory as well as terminal value. And happy to kind of walk you through the mechanics of how we calculate the project IRR and what drives the hurdle return, what's included, how much of it is a do versus don't do case, et cetera. And we can take that offline and talk through it in more detail.

Thanks, Srini. So that brings us to the next question, and that will be from Emmet. Emmet? Oh, there he is. Wonderful. Good to see you.

Yes. As Srini was trying to speak or was speaking some German, I'll throw a bit a German in, too. So you have a [Foreign Language] or 2 questions, please. And the first question is on your broadband market share and the outlook for that. And if I rewind the clock back to we say the Capital Markets Day in 2012, I think that's when you announced your initial VDSL investment. And clearly, that was a -- let's be honest, it was quite a defensive move because you were losing a lot of broadband market share at the time to cable. Now if you fast forward to this year, your broadband speeds are now quite high. You've got a vectoring available to 80% of the population. It feels like a little bit more of an offensive move. So with that in mind, is it fair to say that you could look at winning market share off cable, off the wholesalers as I think the motivation for moving to fiber as perhaps a little bit different this time? And then my second question was on the ARPU uplift, as you move customers onto fiber as well. Can you just say a few words about your experience as you move customers onto VDSL initially and on to vectoring later? And what the read across is for retail ARPUs as we roll out fiber?

Very good. Look, let's deal with the first one. I agree with you, fiber is a more aggressive move in the sense of -- not purely because of market share, but in the sense of I could sit here and make the argument that we don't need to do it just now. Now I believe that's a defensive incumbent argument. I fundamentally disagree with that argument because when I work at -- I think of this differently. I come back from where customers are going to be, right? The upgrade cycle, like I talked about earlier, the 2 principles of the upgrade cycle, everyone tries to stay with their infrastructure until they need to move looking for higher speed. Second, people make 1 upgrade at a time in terms of speed cycles. Now you could look here and say 80% of our customers, right, have at least 1 or 2 upgrade cycles left. Let's milk that and then go on, right? My perspective on that tends to be different, which is let's get the 80% of them done in the next 2 years and get ready then for the next cycle of investment, which will give us another round of ARPU upgrades. And let's fund that by being -- by driving our efficiencies really hard. And by the way, that upgrade cycle will help fund itself as well. So I agree with you on the -- it is not the classic incumbent way of thinking about it, which is milk the asset as much as you can for now. But it's -- the market share gain, it will happen when it happens. But the bigger price here is the growth within our own base. And for sure, we will end up gaining share in some areas, right? But we also need to make sure that it's coherent with the right structure. The ARPU uplift, great question. Look, there's a EUR 5 ARPU uplift, typically, with each speed up that you move from, right? What we have seen in the vectoring cycle is order of magnitude of 5% ARPU growth, annualized about 2.5%, right? Now this is where you kind of get into the question of, is 4% conservative or not, et cetera, et cetera. I would expect us to see at least the same because what you will end up having is more of a mix of the higher speeds. I mean here's how the typical pricing works, right, it's EUR 5 an upgrade up to about 250 Mbps. And then it tends to be more like EUR 10 an upgrade because we -- the curve gets sharper. So I'm hopeful of seeing an acceleration in that, but I will plan on seeing the 2.5.

Good. So I think we take 2 more questions now. And the first one is from George at Citi. George? There he is. Wonderful.

One is a follow-up on some of the comments you've just made around pricing. It's very encouraging to see that there are significant fiber investments have been given some returns as part of the wholesale agreements. I'm guessing some of the other resellers may want to raise prices over time in order to pass through some of this inflation to the customers. So I just want to hear from your side, what do you plan to do in [ outer ] to maybe give them the room to do that in order to raise ARPUs, not just when migrations happen, but maybe in a bit more active way yourselves. And then the second question is more around capital allocation outside of fiber. So fiber is slowly turns, but low depreciation, we can understand the mix when you benchmark -- with returns of [indiscernible] employee. In the previous presentation, Tim also mentioned about cloud-native networks, IT. And some of these things are easier to do when you are a greenfield, not when you have a huge established space and also a legacy of technologies. But I'd be interested to hear from your perspective, what are the challenges in your view? And does that mean you depreciate some of your existing assets earlier in order to move into cloud-native solutions before competition?

So let me start with the pricing piece. Look, I think 2 -- 2, 3 separate perspectives or reactions to it. I tend to think of speed upgrade-driven ARPU increases as healthy. And there are some -- there's a real danger in fixed line, right, where sometimes you are the only supplier in a region and you view that as permission, sometimes like cable in parts of Eastern Europe, to have an annual round of price increases. I think that can get dangerous from a pure customer experience perspective, but also from a regulatory perspective. So I have a bias towards growing ARPUs through as people upgrade, right? The way I think about room -- and I think a healthy market structure is always worth keeping an eye on. And one of the things I keep a really close eye on is how is our net add share evolving? Are we making sure that we're at the right mix in terms of net add share? And that's where I think your really good question on how do you make sure you give people room plays in, because they can -- ultimately, their pricing is their own call. I look at titrating my mix in terms of what is my net add share. And I do, I think that's appropriate from a healthy market structure perspective. On capital allocation, and especially on new technologies, Claudia will talk a lot about it. Look, I think, firstly, on the IT side. I think the view that somehow incumbents have a huge disadvantage is increasingly changing, right? As you get into a world where you're able to introduce, for starters, an intermediate layer, which is API-based, you're able to start with overcoming a lot of your disadvantages. And then there's so much cloud-native IT available today that you can, piece by piece, start taking apart your old BSS and OSS to do a 3-year migration. Now I think the old world of -- if you're an incumbent, all you have to do is a big bang IT project that costs 3x as much as you thought and takes 3x longer. I think we've proven now in several countries that, that's a myth. And in Germany as well, we're making the same journey, right? I think your network question, I think there, it is harder to swap it out overnight as an incumbent. But I also think the components of a network cost structure are more complex, and there are several incumbent advantages in it, the amount of spectrum you have, a huge advantage, the amount of towers you have fiberized. Yes, it's easier as a new player to come in and establish a cloud-native core, but the core is a small proportion of the total cost structure, right? And scaling is really hard. I mean, just to give you an example, let's say you have a player in Germany who is building a cloud-native infrastructure. They can build that, but it will take them 10, 15 years to get to -- or take them 10 years to get to 50% population coverage. And that scale itself does have limitations purely because of the availability of sites, the antenna available on rooftops, et cetera, et cetera. All of that does impact their ability to really attack. For us, on the other hand, as an incumbent, we are in a place where if we started pushing on O-RAN, which we are doing now, and we're looking at lots of options of really scaling O-RAN, in 4 to 5 years, we could have a significant part of our network disaggregated, and we will always have our 30-odd thousand sites, which gives us a scale advantage. So I think there are puts and takes on it.

Excellent. And of course, more on this from Claudia tomorrow. And last question, please, is from James. James, good to see you. Go for it.

Yes. Hannes, Srini. So 2 questions from me, please, first. The first one would just be interested to hear a bit more about your targets around B2B growth. And I'm thinking about this specifically in the light of what Vodafone said yesterday, they specifically were talking about increasing their investment in B2B and seeing considerably higher growth rates maybe heading towards mid-single-digit revenue growth. I mean is this an opportunity you see where you might actually be able to increase investment more in Germany and potentially drive higher growth than you're targeting at the moment? Or do you see something specific about Germany that maybe the B2B growth rates in this market are going to be a little bit lower? And the second question I had, please, was around the network economics you were talking about in some of these joint fiber projects. And we just love to hear a little bit more about how that works. So your projects, for example, with NetCologne or EWE, as you're migrating customers potentially over onto those shared networks, how are you incentivized to do that if you're moving from 100% ownership of a network to a network that is joint owned? We'd just love to hear a bit more about how you see the economic payback from those models?

Good. So let's split 3 different types of models, James. Sorry, I'll deal with your second question first. 3 different types of network economics models, right? I think the NetCologne one is a pure whole buy, right? And so that's why I said this is my last resort, right? It's -- I do lose margin in the process of moving to a whole buy, right? That's -- now we have whole buy today in FTTC. We will have some whole buy tomorrow in FTTH. But that's not going to be the center of my economic model. EWE TEL, a very different case. That's one of the bottom left quadrants, right, where we didn't have FTTC reasonably low shares, there's a lot of upside in creating that model. The third different model is kind of the KPN APG model, right, which is if we get into a model with an investor. Now there, the way we maintain as close to owner economics as possible is by trying to figure out ways in which we can effectively capture a lot of the value between the passive and the active layer, right? Because when you look at -- when you deleverage a network, right, ideally, when I buy someone else, I want to buy passive. Or if I'm buying active, I want to be the provider of the active services that go with it because I have scale on active, right? That's -- so that's how I think about making sure I get close to owner economics and gives me incentive to migrate. Or in the other -- in the EWE TEL case, there's pure upside. And NetCologne, whole buy is whole buy. I will do it when I have to. But it's not my going in -- it's not my going in choice. And I would ideally prefer to do it when I do it with community-based players like EWE TEL rather than pure overbuilders and cherry pickers. So to your first question, B2B growth, look, I think there's upside. I think the place -- I don't think this is a question of investment in our case because we're making the investment in fiber and networks and infrastructure. I think the real question here is for us, how do we make sure that we develop cutting-edge B2B product, right? And cutting-edge B2B product, both in terms of software-defined networks, but also things -- I mean, Tim's point earlier, being able to manage a disparate diverse network and being able to control and automate it, right? That, plus areas like cloud communication, right? So I don't think this is network investment. I think this is product investment. We do foresee a fair amount of that. Is there upside to the 2%? Yes, I'd love that. I love for there to be, right? Am I happy to say right now there is? We'll see. I mean I think you can bet too much on things like the EU recovery fund. I saw a lot of press about that yesterday. If those tailwinds blow in Germany as well, then we will benefit from it more than anyone else.

Excellent. Thank you so much, Srini. And that brings us to the end of this Q&A session. And of course, we will be talking to you a lot more in the next weeks, months and years on many of these subjects.

So apologies, again, for taking your time and taking your break away, and we come to the next session straight away. And the next session is on Europe. And our next session will be presented by Dominique Leroy. She doesn't need much intro in this audience here. We are delighted to have her in our management team. At our last CMD, we presented our turnaround plan for the European segment. Now 3 years on, Europe has become one of our best-performing assets, Europe's best-performing telcos. And we have the same challenges in Germany, how to accelerate, how to make something good even better. This is a noble challenge and who would be better qualified to take this challenge than Dominique. Dominique Leroy.

Thank you, Hannes, and good afternoon, everybody. I'm really happy to be here in my new capacity of Board member Europe. And I'm sure you remember, 3 years ago, Srini was standing here and was talking about turning around Europe. I can tell you that today, I'm very proud to say that the turnaround has been done and that we are today, a leading large-scale European telco, and on top of it, a very fast-growing European telco. So the whole challenge we have today is how do we write the next chapter. How do we accelerate that growth? And what we want to do is really go to long-term sustainable growth by focusing on customer centricity and on digitalization. We have opportunity in the B2C area. We want to scale fiber. We want to upsell customers in fixed mobile convergence, grow revenue per household. We want to improve customer service even further. We want to grow in B2B. There are several markets where on B2B, you have still lots of opportunity, and we will grasp that because we will also converge telco and ICT products in the European region. Next to that, we want to -- people are very important to me. We want to scale agile organization, customer-centric mindset, I will talk about network, how we will scale fiber, how we will bring 5G and a very important element for us as well is how do we scale digitization and how -- where do we go from where we are to the next step in digitization. One element, which for me is a very important one, and I would probably not have said that 3 years ago, I think today the telecom operators that will be very successful going forwards are the one that are multi-country. We are able, with digitization coming up, with cloudification coming up to really scale across the countries, and that will give us a very strong advantage versus local players. We will be able to get best practice from 1 country to another, skill or digital infrastructure, scale cloudification, and that will give us way faster speed to markets than competitors. A last element which I will comment on is very much how Europe will bring a fair share and a fair value to DT equity. We have been growing. We will continue to grow and accelerate growth. We have a very strong cash conversion, and we want to accelerate that as well. And on top of it, you will see that ROCE is a quite nice evolution as well. So let's start with the review over the last 4 years. If you look at that, I mean, these are the figures of 2020. We are EUR 11 billion turnover European telco, if you look at the region as a stand-alone region. We delivered almost EUR 4 billion EBITDA, close to EUR 2 billion cash. If you take those figures in a stand-alone European landscape, we would be around the seventh biggest telco in Europe, far ahead of Iliad, of KPN, of Telia. But on top of it, we are one of the fastest-growing telco. If you see some figures here, even with 1 year of COVID in the 4 years, and COVID has impacted quite a lot the European segment because you have a lot of countries like Greece, Croatia that have had quite a loss of revenue and profit in terms of roaming and visitors. But despite that, we have been able to get a 2.3% EBITDA growth over the period and a 3.9% cash growth over the period. So I think a tremendous presentation of the EU segment and somewhere, I think something is not always well known or known enough in the community, and I think we should really reconsider Europe as a key engine for growth within DT. If we look at the market, because then sometimes you could say the European markets are not very healthy markets. I would just say it's the opposite. If you look at our market, we have quite a lot of growth potential. If you look at the expected consumer spend on telco market, it's around 3.5% going forwards, a very strong potential growth. If you look at the structure of our market, most of our market are 3 MNOs markets, where we can indeed further drive growth. Only 2 of them are 4 MNOs, which is Poland and Romania. We also, today, very much more than before, we have regulation and we have governments that are really looking at how can we faster digitalize those countries. If you look at the DC index in Europe, we are currently in the countries we are in relatively below the median, with the exception of Austria. So we see that quite a lot of political will is there to further drive infrastructure rollout, to further drive digitization, and we will get around EUR 20 billion of EU funds that will come into the DT EU footprint. So I think those -- all those elements should give you confidence that the EU segment is growing, is big and that's quite a lot of growth potential going forward. But let's look at what we have achieved over the last 3 years. You see here 13 quarters of growth in a row. Growth coming from around 1/3 net margin growth, 2/3 reduction of costs. I will go one by one for those parameters. If we look at the revenue, it is both value and volume, very important, and you see the acceleration over the last year. The value has been achieved by upselling customer on the mobile, but also, I mean, pushing the fixed mobile convergence and the volume, you see here a few figures, 2.5 million new extra mobile contract customers and close to 1 million broadband customer. On the cost side, I think it's quite impressive. What has been done on the cost side, we have been able to reduce IDC by EUR 320 million. So a 30% IDC percentage on revenue, which I think is close to best-in-class, but you will see we will not stop there. We will go further. We have done that through some reduction of people, quite a lot, 6,000 people less in 2020 versus 2017. But that has been very much by downsizing central function, outsourcing some noncore activity and a bit of digitization, but that's where I think we can still grow further if we look at the future. Another thing we have been doing and Tim has highlighted it, we have been able to put 1 new home pass in fiber in 2020. It was the first year that we have been able to get to this number, but our intention is really to go forwards with that number. And you see here some figures, 22% coverage, which is quite significant. But what's for me is even more important, it's not just home passed, it is homes connected. The homes connected, 30% utilization of our network, 1.7 million homes connected on fiber already in our footprint. So if you look at then all the promise that were done back in 2018, I'm very proud to say that we have delivered. All measures are green, being measures on the customer side, the consumer side, the business sides and the financials, I have highlighted most of them. So I think we can really be proud of what has been achieved in Europe. So let's look together now how we move forward from here. Strategy '21-'24. A few elements and Hannes highlighted to it. It is really moving from good to great. And we want to do that by a few elements, keeping a fast-growing telco with a customer-centric and digital focus; winning the hearts and minds of customers, even going further than just a good customer service, it is winning hearts and minds; truly converged fixed mobile convergence in every market we are in; drive further digital, as we have a very strong basis; change the organization to an even more lean and agile organization; and last but not least, move our brand from a rather functional brand into a territory, what I would call it, love brands, but I will come on that later. We'll do that around 6 levers for growth. I will not go in details on this one, but immediately jump into the B2C elements. Where we are today, I think very strong growth in number of subscribers on all our products and a quite strong FMC, 51% of our broadband base is already fixed mobile convergence. If we look then at the future, I mean, what we want to do is further drive fixed mobile convergence value, but also capture underserved segment. So the fiber build-out we will do, the 1 million additional fiber a year will really help us to boost broadband penetration. From there, the strategy is to really cross-sell and upsell, get several multi-mobile customer onto our broadband, upsell on TV, but also upsell potentially on new services coming down the line. The second bucket for growth in the B2C is very much capturing segments. So we are running segmentation study in all our footprint. And from there, we are really looking how can we capture also the young generation, be relevant with proposition for the young generation, but also look very relevant to either reshape or introduce a second brand where we can really tap into the smart shopper segment. That will help us to drive new customers and then being able to upsell them to the Magenta NT proposition. Customer centricity. Best customer experience, our very second pillar. We have a lot of customers. We want that those customers are really happy and loyal customers. We want to reduce churn further than we do today. For that, we will really drive a customer-centric organization. We will also make sure that we implement a tool, which is called Medallia in all the footprint. It will be rolled out this year. From there, we will really get a lot of information on every interaction we have with our customers. From those knowledge, we will be able to identify what are the pain points, and we will then be able to really reallocate resources and CapEx to make sure that we tackle the pain points that are really hindering the most our customer experience. And last but not least, we really want to implement the customer journey, the mentality in the organization and processing the organization by really being end-to-end, really looking at end-to-end experience for customer, doing that also across all the channels, knowing that, of course, we want to push more digital channel, but we will making sure that both digital and human touch are centric to our customer interaction. I touched upon it in the info, the love brand. So the love brand for me is really how can we, with our T brand, convey digital optimism to the countries. How can we turn employees and customers into our brand ambassador? And also, how can we bring the brand in a much more emotional territory where people are really attracted by the brand, and therefore, we will be able to fish in a much bigger pool of customer that would come to Magenta NT brands. We will -- that's all the major pillar of growth on the B2C that should translate in those metrics. So we want to further grow significantly our EUR 6 billion consumer business. We want at least to have net add share in line with our fair share and to be honest in countries where we are not significantly dominant of incumbents, we want to even grow these net adds. We want everywhere to grow value market share, and we want to deliver 1% to 2% net margin growth. You also see on the right side, everything our targets on fixed mobile convergence, we want to grow by around 10% a year to at least 4 million fixed mobile convergence, driving value and driving the RGU per households. Let's go to B2B. In B2B, we have already realized quite some good growth. ICT is within Europe, so that's probably not always known to investor that the faulty system is in the NatCo, in the EU NatCos, So we go to customer with a full package of connectivities and digital solution. We have been able to grow our ICT product by around 7% a year to more than EUR 1 billion, and we have done that with a strong focus on profitable growth. So you see there as well our ability to grow net margin in the B2B by around 2% over the last 3 years. Next to that, there is always a very important element in terms of competence, in terms of skills. So we are organizing ourselves to have competence center in the B2B area to really drive the knowledge on our products across the region. And last but not least, I think we have done quite a lot of good work on the IoT and on the Smart City, where we are rolling out Smart City in several of our countries. If we look forwards, I mean, we want to continue the growth in the B2B, focusing very much on the different segments and accompanying our customers into their own digitization. So we want to become the partner of digitization in the B2B area. If you look at the public sector, it's all about driving further digitization of public sector, also using EU funds because a lot of countries are running new projects based on those funds to digitalize faster the administration and the country, but we also want to bring quite a lot of value in the enterprise segment. We will then focus on smart connectivity, SD-WAN, unified communication collaboration, but also tapping into the hybrid cloud space and bringing security into our portfolio. And on the small and medium businesses, I think there is also a very different way of driving business there. It will be very much to Magenta bundles where we bring connectivity and digital solution in packages to small and medium company with service on top and therefore, scale their ability to tap into the digital domain for their business to become more successful. If we look how that translates in figures, we want to add a EUR 300 million additional revenue into the B2B segment. I think there is a very strong opportunity still in 3 countries, and those countries are the biggest in terms of footprint in B2B. I mean Austria, Czech and Poland. And these are 3 countries where we are still a bit small. So there is still a big growth potential there. And as I already said, we want to further grow with a healthy margin. So our objective is to deliver 2% net margin in B2B as well. If we move to people, I think people is very important. I already said it, it is all about attracting the right talent, having international and diverse scope, having organizations that are lean and agile and very much having a culture which is very customer-centric, and you see a few elements there. We really want to become top employers in the country we are in. We are also a big player in most of the country we are in. So we also want to really take ownership for our impact on society and bring positive impact on society. We want to do that on digital inclusion. We have a lot of programs running in the countries to see how we can bring digital and STEM to the youth, but also how we can include more the elderly people in the digital space. We also have a lot of program on environment alongside the whole DT objective by reducing our CO2, reducing -- or increasing our energy efficiency and making sure we also have more recycling, less waste. So quite a strong program on those elements as well. Let me turn to network because I think network is a very important element. We have already done quite a bit of network. We have currently 98% coverage on LTE. We have already 22% on fiber, but we want to go further. If we see here, we want to become the undisputed fiber leader in our footprint. We want to do that by rolling out fiber in several countries. And why do we do that? Because we think fiber is a very -- is very good economics in our country. We have been able to roll out fiber in 2020 for less than EUR 400 per home passed. So that gives us quite good TCO and quite good payback on fiber. So our objective is to really further roll out fiber. We will complement that with partnerships. You have countries where there is already quite a lot of fiber. For instance, like Poland. One -- that country, we will not try to overbuild with fiber. I think it would not be really sensitive and sensible to do that. We will do a whole buy with people that have already deployed fiber. So we will have a hybrid model about own fiber rollout, but also partnering where it makes sense. Our objective is to have 40% coverage of fiber. We have an objective of 10 million owned fiber. We will complement that by 4 million to 5 million fiber that we'll buy in whole buy deals. Our utilization rate will even increase to 33%, where we will then have at least 3 million households connected to fiber. So quite a strong program on the fiber. On the mobile, we are very mobile leader in the country we are in. We want to stay mobile leader. So we will further roll out 5G. We have already secured spectrum in a lot of our countries. So most of the country, we have been able to buy 5G spectrum. We will deploy 5G along the renewal cycle of O-RAN and our radio units. We will make sure that we stay ahead of competition. We have an objective of 75% coverage for 5G, but we will also make sure that we retire the 3G to increase capacity for fourth and 5G, but we also very much focus on monetization of fiber -- or monetization of 5G, excuse me. We will do that by putting the 5G where there is capacity needs. We will do that where we put 5G in some rural area where we'll be able to bring fixed mobile substitutions or fix wireless access to customers, but we will also monetize 5G in the B2B area with campus network with further scaling IoT. The -- one of the very large but strong pillars of growth is everything around digital. I mean we have been able, over the past year, to really build an impressive digital factory. And I can say it because I try to build it in my former job, I can tell you, I have been very much impressed by what has been built in the EU segment in terms of architecture. We have a harmonized API layer where we can connect with all the countries. So serving 10 countries. And hopefully, quickly, 11 country and even 12 countries when the Netherlands and Germany will try to move into the same platform. On top of that, we have really been able to build new type of application, new type of platform, which are state-of-the-art and where we build them once, and we expose them to all the countries. But instead of speaking quite long here in front of you on that chapter, I propose we just watch the video and see together what has been done and how we want to move forward with that one. [Presentation]

So I think quite a strong video that really explain you what we have done, but also what platforms we have to build the future. So let me go quickly through some of the elements. The first one was everything around digital telco. You've seen it's the OneApp, it's how you manage your products, your contracts, how you do payments. But from there, you can imagine to build a lot more services in there, and that's really a route that we'll be looking at. The second pillar was everything around broadband. We have one firmware for all the countries. So it means that we can get quite some advantage in procurement. On top of it, we have the RDK layer, which enable us to build a lot of services on top of that. You've seen some of them, parental control, guest Wi-Fi. But from there, you can imagine that you can build a lot of different home solutions on that platform. If we look at TV, the same. one firmware for Europe, building on the IP -- Android IPTV platform. And from there, you are able to really get one of the best UI, aggregated content, voice search engine, which are harmonized and where we can really offer all our customers state-of-the-art content viewing. And the last bit is also a very important one. All these new digital platform have been built with 1 data lake, where we are able to store a lot of data from the way our systems are working with our customers. From there, we are able, through data analytics, through AI, to really see what our potential problem and we can do predictive maintenance, predictive action so that we are really increasing the satisfaction of the customer because we avoid a lot of thought. But on top of that, it's a way to drastically reduce the cost. And that's what you see as well here on the slide that our ambition going is to further decrease cost on the call, on the truck rolls, increase the number of transaction in the app and also have a first-time right provisioning above 95%. These are all elements that are now possible, thanks to the digital layer and in 10 countries in 1 go, which is quite amazing. Last but not least, we can try to do the same in the network piece. I mean we said already a few times. I'll say it again, Claudia will come on that a bit more in details tomorrow. But we are able to further modernize our IT structure in our network. We want to simplify the way we work. We want to simplify our legacy, but we also want to simplify further our portfolio and our business roles to be able to automate more and also get some more benefits. And the same is true on cloud, the more we will put on cloud, the more we will be able to harmonize and to automate. This should bring us to around 42% workload in the cloud by 2024, another EUR 300 million reduction in costs and other elements like 4 of our NatCo that will already be on 5G stand-alone by 2024. The last topic I wanted to highlight with you is everything which is about capital allocation and portfolio. There has been quite a lot of work that has been done to strengthen our portfolio. We have gone out of several geographies. You see here, Albania has still been done, and we are in the process of closing the deal with Orange to sell our fixed business in Romania. That has enabled us to reinforce ourselves in other countries where we needed more capital. The first one, which is a very important one, is the merge we have done with UPC in Austria. Through that, we have been able to bring our EBITDA margin from 34% to above 40%, thanks to a lot of synergies, both in cost and in revenue. In Poland, as I said, we have been able to sign whole buy deals, mainly with Orange, but also with several small players where we now have access to more than 4 million fiber households. And as from beginning of this year, we are really accelerating the fixed mobile conversion strategy into the country. And you probably have seen that in the first quarter, we have already been able to have several thousands of new FMC customers in the country. And last but not least, Czech will be a bit of a hybrid model. We will roll out fiber ourselves. We have done some small M&A, but we will also do partnership deal because in Czech, there is not so much fiber in the ground. We still need to build it, but we will build it together with some partner like the agreement we have done with CETIN to exchange some fiber build-out, which give us further access to fiber going forward. All that very disciplined capital allocation and capital management has enabled us to significantly increase our return on capital employed. You see here 3 basis points extra on the ROCE between 2017 and 2020. If we look forward, I really believe that we can still further improve ROCE, further decrease costs and further grow mainly because we have a lot of synergies. I come back to what I say in the beginning. I really believe in the power of multi-country synergies in the new era we are entering. We need, of course, a culture that allows that. We have built the next chapter strategy together with the country, and there is a strong willingness to go there. We see that we can have competent center which serves the whole region. We have, for instance, 300 people in our digital lab in India, helping us drive the digitization. We have these data lake where we have common data analytics, AI model that serves the whole region. We are able to develop products, develop capability once. We roll it out to countries. We are fostering today a lot of exchanges of within the country. We deploy playbook, whereby we do it in 1 country and then we see how we can have repeatable models in other country. I think all that should really change a bit the game going forward and really enable telco to drive more synergy, more speed to market, more cost reduction in a multi-country approach. So that's then my last slide before we come to the ambition level. I think, I hope at least, I've been able to convince you that Europe is probably a bit unknown or under evaluated jewel within the DT footprint that we are strongly growing, that we are strong in execution. We are growing in customer. We are very strong in cost reduction. We have a highly digital infrastructure we can leverage. We have strengthened our portfolio. We are investing a lot into fiber. We are investing in 5G. We have secured the spectrum in most of the country at very good conditions. We still have a few countries to go. But we also think that we will be able to get spectrum at very decent price. So this all enable us to continue to grow. We have 13 quarters of growth behind. We want to further grow, and we commit to a higher figure than on the last CMD. We want to have an EBITDA growth between 1.5% and 2.5%. We have a very strong cash generation, and I think that's very powerful that we will even increase going forward to 57% of EBITDA. With a stable CapEx, it will give us a cash growth of around 4% to 6%, so quite a significant number. And for the first time this year, in 2021, we will have a return on capital employed that will be superior of the weighted average cost of capital of the region, and we will further grow into ROCE going forward. So I think a quite strong region, a quite strong segment that has proven to be able to do the turnaround, when I'm very convinced we will be able to further deliver growth and deliver value for DT. If you look at our commitment, but I think I've been through most of them during the presentation, we have strong commitment in terms of customer centricity, in terms of network. We have strong commitment into financials. We want to have revenue growth above 1%. We want to have EBITDA growth between 1.5% and 2.5%. We will further reduce IDC by EUR 300 million. Our cash CapEx will be stable, even though we want to continue to grow fiber and 5G. We will reprioritize the CapEx. And we have a ROCE that will be higher than the WACC. So this is my story for Europe. I hope that I've been able to convince you about the power and the growth ambition of Europe, and I was very happy be able to bring that story to you. Thank you.

Great. Thank you, Dominique. I think Europe is just a fascinating story really. And when I think about it and if we really look at it in isolation, it really strikes me as one of Europe's most attractive telecoms operators, size and the level of digitization, the level of network penetration with fiber and the growth. And so I think a lot of it is really -- it all stacks up really.

And with that, we come to Q&A. We start with George, I can see you. George, the man from Greece or rather the Little Island next to it. Okay. So George, can we have your question?

I have 2 questions, maybe. The first one is around portfolio optimization. And obviously, you are now in the process of exiting the fixed line in Romania, but you still have a mobile operation and that's a bit subscale. Also I think from your business is maybe Poland, the returns are a not as good as some other countries. And I think you have some issues maybe with the vendor changes that may come in that market. So can you kind of run us through how you're thinking about other actions you can take around the returns in some of these markets and where your focus is in terms of optimization? And then my second question is on the European Recovery Fund. I'm guessing for all of these countries, this could be a major event. If you could perhaps give us an idea of the scale. Also, where you think you are well placed to win some of these projects and actually benefit from that? And then finally, if we can get an idea of what the bottom line impact is because it's hard for us to know if these digitalization projects are high cash flow projects for telco or whether a lot of it has something lower gross margin for revenue flows?

Okay. So thank you, Georgios, for your questions. So I think, yes, Romania, we are exiting the fixed business. We are selling it to Orange. We will keep the mobile business. I think we have proven in -- certainly in the Netherlands that we are able to grow and to manage an attacker position on the mobile segment. So for the time being, when the closing will be done, we are currently preparing a plan to really see how we can further scale the mobile and have a position, which will more be an attacker position in the Romanian market, but that's currently where we are in Romania. Concerning Poland, I think Poland, we have a strong position. I mean, we could -- some people say we are the #4 on the market, but we are the #4 with 20%. So it means everybody is relatively close to each other. I think what we are currently missing in Poland is indeed this fixed mobile convergence opportunity, but we are really building it. We have now the wholebuy deal that has been finalized with several partners. We are starting to have communications on the market to really try to scale it. So I think Poland is a country which, for me, is still a very great opportunity where we can further grow and it will be one of the growth engine going forward in the region, where we want to, of course, keep and increase our mobile positioning but also complement it with a strong FMC positioning. Concerning operators and supplier, this is something we need to discuss, when there will be the auction will come and then when the government will decide about their Cyber Act. So I think it's too early to give any indication on supplier in the country. So your second question, I think, was on the European Recovery Fund. So I think there, it's a big opportunity. And as Srini said, we don't want to oversell it because the funds are there. But in every country, you have now -- we are now going through a process where we have to apply for some funds. I think Greece is probably one of the countries where it's most advanced. So we will definitely use some of the funds to build infrastructure, to further build fiber in more remote area, that's currently ongoing. But we are also certainly in Greece looking at using that and not only in Greece, in the B2B area, where we have strong position back in Hungary, back in Slovakia, Greece, even Croatia. These are all countries where we are former incumbent, our B2B position is quite substantial. And when you talk about digitization, there is quite a lot of opportunity to partner with public sector and further drive digitization. So that's certainly one of our key elements in growing in the B2B area next to the 3 countries I have highlighted where I think we can still grow even in -- a lot in the enterprise market because we are subscaled. Your last one is the bottom line impact on the digitization project. It's difficult to say. What I would say is that probably 2/3 of the IDC savings will come from digitization and waste reduction. So it's quite significant. We are looking at EUR 300 million IDC reduction going forward, and ballpark, I think 2/3 of that reduction should come from digitization. But for me, digitization is not only a tool to reduce costs. It's also very much a tool to enhance customers' experience. And that's great about digitization because you really can do 2 things at the same time, you improve your customer experience and you decrease cost by decreasing waste. And I think that's really what we want to do going forward with our digitization opportunity.

Great. Well, thank you, Dominique. And the next question is from Charlotte.

My question is around competitive dynamics and competitive intensity. Would you provide some more color on the markets where you see competitive intensity, particularly increasing or decreasing? I suppose it builds on Georgios -- the first part of Georgios' question as well.

Yes. No, I think as I put it forward, we have -- most of our markets are 3 MNOs markets. So where you have, of course, quite high competitive intensity in all markets. I think you also have a lot of markets where the ARPU is still very low. So I see that personally today as an opportunity because what you see as well in a lot of market is a huge demand from consumer and from enterprise for more data, more capacity, more coverage. So there is competitive dynamic, but there is also a huge potential to increase the value of the market. So I think somewhere, it is relatively healthy competition. It's competition to serve customers with more products, more capacity. Where you see more intense competition, it's typically Romania. That's probably also one of the reason why we have decided to sell the fixed business and because if we would need to compete there, we would probably have to put quite a lot of money in upgrading our fixed network. The ARPU is relatively low. It's still low with digi being an operator, which is quite aggressive on the market. So there, we have decided indeed to move out of the country to be able to invest in other. You could say Poland could be also more intensive because Play has just been bought by Iliad. But so far, we have not seen any increase in competition. I think there as well, everybody is looking, how can we further bring fiber to the country, how can we further bring high-speed Internet in the country? And it's, I think, again, more healthy competition on trying serve the customers on the next step. So I think all in all, the markets are relatively healthy with strong potential for growth as the ARPU is low, the demand is high and the regulator and the government are now more and more looking into digitization of service, rolling out of infrastructure as an important way for them to be recognized as a good leader. So it's not anymore getting money out of the auction or out of the industry, it's much more trying to roll out better infrastructure, better service to serve their customers or their citizens better. And I think we can now really mean play on that and get value out of that in most of the countries. So I'm very optimistic about the potential of the European segment.

Excellent. And then we have one more question from Jakob.

I had actually 2 very short questions, if that's okay. Firstly, just on the revenue growth side. You're guiding for 1% revenue growth, which is very similar to what you did over the previous 3 years, even though you've got what I think is a reasonably sizable tailwind for roaming. So can you maybe just give a little bit of context on the revenue guidance, which looks a little bit conservative? And then just secondly, I'd be interested in just hearing your thinking around tower ownership in the region. Is that something that you're a bit more flexible on and that's perhaps one of the ways where you could relatively easily drive up your ROCEs in the region?

No, thank you, Jakob, for the question. I think on revenue, I mean it's true that roaming is, I mean, it has impacted us in 2020, EUR 130 million, so it's quite significant. We will, of course, have some tailwind from that this year and probably next year. But next to that, we also have quite a lot of MTR cuts, which are still coming in from mid of July, mid of this year, July this year. I don't think it's such an impact because it's in percentage high, but in the value, it's relatively low, but that's anyhow something which will impact a bit the service revenue. And the guidance is on full year. So we have always a tendency and DT, but also myself to try to really deliver against the guidance to make sure that we potentially even over-deliver And we have a 4-year period. So I think for the next 2 years, we should probably be a bit better. But going forward, we have to be prudent and see what happens in the market. So around 1%, I think, is a very decent figures, and we will do everything we can to over-deliver on that. On tower ownership, I think it's a good question. We have done tower co in Austria. But what I think -- and we can look in -- at other countries And perhaps you'll hear about -- a bit more about that tomorrow. I don't want to reveal too much today. I'll leave something for Thorsten to tell you. But everything we will do, we will do towards DT TowerCo. So it could be a way to improve ROCE and ever, but it will not be a leverage that we will do to third party. I think that the strategy of DT is really to build a strong tower co internally with DT Funkturm. And so if we do carve out of tower in Europe, it will be to DT Funkturm and then we will see, as a group, what we will do with our tower assets. So we will not start to do some individual tower carve-out to third party in Europe.

Great. Thank you, Dominique. Before I let you go, maybe one question from me. Now that you have -- of course, you work there for -- you were brand Proximus before. And so I just wanted to see how does it feel to work at Deutsche Telekom in this group? I mean, is that -- and how to work in the European portfolio? Any impressions that you can share?

So I think it's very different. I think DT is, of course, a much bigger group. What I have been impressed is that DT is a very diverse and international company, probably much more than people sense when you look at it from the outside. So I think it's a much more international and diverse culture. And I think in Europe, I think it's very much a hidden jewel. I think Europe is a great asset. It's -- there is not a lot of publication. So it's difficult to follow, I guess, as analysts or investors. But when I am here and looking at the country, I think there is a lot of potential. And I think DT is so well placed with this transatlantic foot in the U.S., foot in Europe. And in Europe, there is a lot of focus on Germany, but there are a lot of other countries. And I think when we will be able to get even more scale and more harmonization within the European footprint, it is really a base from which I think we can really deliver growth and even potential further growth going forward.

Acceleration. Okay. Very good. So thank you very much, Dominique.

Thank you, Hannes.

That brings us to the last session of this Capital Markets Day. First day of the Capital Markets Day, I should say, Capital Market Days it is. So now we are welcoming our U.S. team. So we will be having -- we'll be joined by Mike Sievert, CEO; Peter Osvaldik, CFO; and our very Neville Ray, President of Technology. And at the end of their presentation, Jud Henry, my colleague in Seattle, will host a Q&A, to which you can register in exactly the same way as you have done the whole day. So I'm happy now to announce T-Mobile's dream team.

[Presentation] Hey, everyone. It's so great to join all of you for the DT Capital Markets Day. Thanks for being here. When I was last with you, back in May of 2018, it was just 1 month after we announced our merger with Sprint. And we shared some big aspirations for the combined company. So today, I'm happy to be back, just over a year since we closed our merger, to share our progress and our plans for growth and value creation. And while I wish we could all be in Bonn together this year, I'm coming to you this time virtually. As is Neville Ray, our President of Technology; and Peter Osvaldik, our Chief Financial Officer. Let me just start by saying how proud I am of our team and of how our employees have united as a combined company to serve our customers and deliver outstanding business results during unforeseen times like this past year. Our first year results as a combined company say a lot about our people and about our culture because many mergers really struggle in the 12 months right after closing. We persevered through a pandemic, an economic crisis and significant social and political unrest. And this team rallied together around our love for our customers. Our success reinforces the fact that we've assembled the best team of leaders and employees in the industry, and it's something that continues to set T-Mobile apart from the competition. 2020 also marked the true beginning of the 5G era in wireless. T-Mobile is already the demonstrable leader with the largest and fastest and most reliable 5G network in America. And I'm here to tell you why our network advantage will last for the entirety of the 5G era and beyond, while translating into strong business results that we believe will result in extraordinary shareholder returns. Our mission is to be the best in the world at connecting customers to their world. And our strategy to get there isn't complicated, but it is differentiated. We plan to simultaneously deliver the best network and the best value for businesses and consumers, something that has never been done before in our industry and something that only T-Mobile can aspire to as the leading pure-play wireless company. Customers shouldn't have to choose, and at T-Mobile, they don't. Add to that, the differentiated customer experiences delivered by this customer-loving team and you have a formula that allows us to pursue our simple, yet audacious vision to become #1 in customer choice and #1 in customers' hearts. We'll get there by focusing on 3 strategic pillars. First, building the world's best 5G network and delivering product leadership by turning our combined network and spectrum assets into a truly superior wireless experience, an experience that T-Mobile becomes famous for and one that's here to stay. Second, unlocking the potential of our scale and the superior cost structure that results from our network assets to deliver ongoing value leadership while also expanding margins. And third, delivering the best experiences from the best team as we build on our Un-carrier strategy to make customers happy by rewriting the rules of the industry in their favor. As we deliver on these strategic pillars, we're focused on some simple ambitions, the outcomes by which we'll be measuring ourselves and by which we think you'll be measuring us as well. They showcase our balanced approach to growth and profitability. First, our goal is to consistently and continuously profitably lead this industry in growth, particularly once the major elements of our integration are behind us. Second, translate that growth into an increasingly valuable business, focusing on synergies, scale economies and cost transformation. And third, we'll do all this without borrowing from tomorrow. We'll continue to make the right decisions and investments to position T-Mobile for long-term success. For T-Mobile, all of our short- and long-term goals start with building the best 5G network. It's the underpinning of virtually everything we'll talk about today. And our build is tracking well ahead of schedule. And it's clearly differentiating T-Mobile as the undisputed network leader in the 5G era. T-Mobile already offers the largest, fastest and most reliable 5G network in America, delivering 5G across more geographic coverage than AT&T and Verizon combined. And our ultra-capacity 5G, utilizing our spectrum depth of 2.5 gigahertz mid-band and above has been rapidly expanding. While Verizon's 4G leadership may have helped them over the last decade, T-Mobile is positioned to be famous for our network in the 5G era and solidly take that crown for years to come. That's a perception shift that we're laser-focused on at T-Mobile, and we're already starting to see the tide turn. And because of our merger, we're essentially funding this entire network build through merger synergies. In a few minutes, Neville will dive into the value our network represents to customers and how it serves as a linchpin for our business. Now let's talk about the work we're doing to expand our addressable markets and fuel growth for years to come. Our expansion into smaller markets and rural areas across the country will open up massive potential as our network has expanded significantly in the last few years, delivering LTE coverage on par with the other national carriers and 5G coverage that's miles ahead of the competition. And when we say smaller markets in rural areas, that represents 50 million U.S. households, almost 40% of all households in America, where our market share is in the low teens today compared to our national market share of roughly 30%. We plan to significantly expand distribution into these areas to finally bring real competition. Our strategy to unlock this opportunity will require growth in areas where we already have both the network and distribution assets today as well as growth in areas that will receive these investments in the future, building the best 5G network throughout rural America is foundational to unlocking consumer switching, and we plan to expand our physical footprint in smart ways. We'll build hundreds of new stores in small towns in rural areas over the next 5 years and add significantly more points of distribution, including entering national retail channels like Best Buy and Walmart as well as leveraging our recently launched Hometown Experts, an innovative and cost-effective initiative to recruit individuals dedicated to assisting communities too small to support the cost of a full retail store. Combined, we expect these efforts will help T-Mobile to grow our share in smaller markets and rural areas to nearly 20% over the next 5 years. Another key area of focus is the enterprise and government sector. After having successfully redefined consumer wireless for good over the last 8 years, we're bringing that same un-carrier attitude to businesses. Our share today in the large enterprise space is only around 10%. And we're already starting to win in this space. There are over 50 million corporate liable lines today, which is a massive opportunity. We like our game plan here because it's building on a strong 2020 performance. With our 5G leadership, businesses no longer have to make the trade-off between the price they pay and the quality of the network. They can have both. This includes our recent WFX launch, an innovative suite of products that are ideally suited to help companies adapt to the hybrid workspaces of the future with fully featured secure calling and broadband products and the peace of mind of having unlimited data for those companies that have still been handcuffed with pooled data plans by the carriers. We see room to run here with a massive market share potential running up to 20% over the next 5 years, which is still quite under-indexed versus fair share. And the B2B space is a great example of the benefits of a strong partnership with Deutsche Telekom, affording us a unique opportunity to capture transatlantic synergies by leveraging the assets of DT and T-Mobile to offer solutions to global companies. Now looking beyond traditional mobile wireless. One of the immediate opportunities is home broadband where we're bringing competition to an estimated $90 billion market. After successfully growing our 4G LTE home Internet pilot throughout 2020, last month was the official launch of T-Mobile Home Internet, a simple, fast broadband service, leveraging our expansive high-capacity 5G network to give customers a real choice in high-speed Internet. And while others in the industry are still in the planning phases of what wireless home broadband could look like in the future, T-Mobile 5G reaches more than 30 million eligible broadband households today. Our focus is on a great service at attainable prices because our business plan isn't burdened with significant capital costs, given that the network is funded by the mobile business plan. We're excited for everything ahead here in this space, and we expect to serve 7 million to 8 million customers over the next 5 years. We're also rapidly expanding our addressable market with prime consumers who value network quality and who may not have considered us previously due to legacy perceptions. For example, earlier this year, we launched our Magenta MAX plan, giving customers the industry's only truly unlimited plan and putting the full capabilities of our ultra-capacity 5G in the palm of their hand. The early indicators that we see from Magenta MAX customers underscore that the most discerning consumers increasingly consider T-Mobile when we offer the right plan that really showcases our leading 5G network. So we'll unlock customer growth by both growing the total number of customer accounts and deepening these customer relationships with more premium services and additional connected devices to consistently and profitably grow both our core business and exciting new businesses. T-Mobile continues to win customers because of how our company creates experiences. And we're relentlessly looking for ways to simplify and optimize the customer experience. Our focus is on further enhancing our digital capabilities to provide even better options for customers who, after a year of the pandemic, are showing a willingness to work with us digitally in ways they didn't before. For us, it's all about serving the customer how they want to be served and building on our already industry-leading award-winning customer service experience, which is our secret sauce. Ultimately, we believe that when you provide customers with the best network and the best value and the best customer experiences, they will become loyal ambassadors for the brand and further drive our growth and long-term success. Now let's talk about merger synergies and our financial performance. I am incredibly proud of the team for being able to execute and perform in a competitive marketplace, while simultaneously driving integration faster and better than expected to capture our merger synergies and deliver value for both customers and shareholders. Our 5-year growth and financial plan, built on the conservative market assumptions I've shared with you here, creates enormous potential shareholder value. Peter will go into greater depth on these topics in a few minutes. Now before I turn it over to Neville and Peter, I want to provide some insight on another important focus area for T-Mobile, making an impact that matters for our employees, our customers and the communities that we all serve. Throughout the merger, we talked about how we've not only become a bigger company but also a better one, using our network scale and resources for good. Our marquee initiative here is Project 10 million, and it's focused on the audacious goal of helping to connect every single student and eradicate the homework gap in the U.S. so kids can get the access they need and the education and equal opportunity that they deserve. We launched this unprecedented $10.7 billion initiative last year and then enhanced it to address the more pronounced inequities that have arrived in the wake of the COVID-19 pandemic. We focused heavily on our people over the past year as well because we believe only the best team working together and inclusively can deliver the best experiences. With the world watching, America has experienced significant social unrest over the past year and the quest to achieve greater racial justice. At T-Mobile, our commitment to diversity, equity and inclusion plays an integral role in our culture, and it always has. Last year, we launched our 5-year Equity In Action plan, which reflects the ways we're embedding DE&I into our culture as the un-carrier. And we continue to build diverse talent in our leadership ranks to reflect our highly diverse employee group and the communities we serve with more ambitious programs in this space than ever before. In addition, we continue to follow through on our long-standing enterprise sustainability commitments. T-Mobile was the first major telecom to commit to a 100% renewable energy back in 2018, a goal that we expect to achieve this year. And in recognition of our efforts, we were recently named to the CDP's A List for Climate Change (sic) [ Climate A List ], the gold standard of corporate environmental transparency. We've created ambitious goals to positively impact the planet, and we're immensely proud to be the only U.S. telecom given this top listing. Okay. Now let me turn it over to Neville to tell you how T-Mobile's 5G network is leading this industry into the 5G era and how we are prepared to sustain and expand our network advantage for the duration of the next decade and beyond. [Presentation]

It's so great to be here today, and I'm excited to update you on our network journey and the progress we continue to make. As many of you know, I have been personally invested for many years in creating a leading network here at T-Mobile. But there has never been a more exciting time in the growth of our network than right now. We are uniquely positioned to become famous for network as we continue to combine our superior assets and execution to deliver a demonstrable and sustainable 5G and overall network advantage. There are 5 major and compelling reasons why our network leadership position today will be a durable advantage into the future. Let me walk you through these one by one. First, we have a clear 5G coverage leadership position today with 5G coverage in all 50 states and Puerto Rico. Our extended range 5G provides reliable coverage where customers live, work and play. And just less than a year after reaching nationwide, we now cover 295 million people with 5G across more than 1.6 million square miles today. That's nearly 4x more than Verizon and over 2x more than AT&T. And we're expanding our extended range 5G to over 300 million people by the end of this year, and we expect to cover 97% of all Americans by the end of next year. At the same time, we are the only operator to have deployed dedicated low-band and mid-band spectrum, delivering on the true promise of 5G, with our ultra-capacity 5G delivering game-changing speeds averaging 325 megabits per second and reaching 140 million people already in 2021. And we're expanding our ultra-capacity 5G at a remarkable pace to bring those game-changing speeds to 200 million people by the end of this year, expanding to approximately 250 million by the end of next year and on our way to bringing ultra-capacity to nearly 90% of all Americans by the end of 2023. Multiple independent third parties, including Ookla, OpenSignal and Umlaut all recently gave exciting accolades to T-Mobile's 5G network based on real customer usage from millions of device measurements. We just continue to pull away from the pack. OpenSignal recently released their latest report, showing that T-Mobile customers average 5G download speed increased by 23% since the beginning of the year, while speeds on other networks stayed virtually unchanged, widening the gap to competitors as T-Mobile now has nearly 50% faster speeds than Verizon and 30% faster speeds than AT&T. All signs point to 1 clear fact. T-Mobile is America's 5G leader. We're the largest, fastest and most reliable 5G network. Second, our network upgrade program is fueled by synergies from our network integration. This integration program, combining the assets of Sprint and T-Mobile networks, has presented the opportunity to not just combine the networks for LTE services, but upgrade them at the same time for 5G, unlike our competition who face incremental 5G costs in all that they do. Third, we maintain a meaningful spectrum advantage following the FCC's recent C-band auction where we added to our ultra-capacity 5G in urban and suburban areas that the spectrum is well suited for. We came out of the auction with the best mid-band spectrum assets by far while our competitors spent unprecedented amounts trying to catch up. Our mid-band is mostly comprised of frequencies with superior propagation to C-band, which means they are superior not just in reach, but also in deployment costs. With this recent C-band spectrum auction complete, we are well positioned to maintain our 5G leadership for the duration of the 5G era, not just for a year or 2. Our position and advantage will be long-standing. Bringing all of this together, our 5G leadership is even more clear when you combine both our spectrum and coverage deployment plans as contrasted to our major competitors. Fourth, through this capital-efficient deployment, we have the financial capability to smartly invest and maintain this network advantage, as Peter will describe in a few minutes. We are delivering faster on this deployment and a broader rollout of the 2.5 gigahertz spectrum for less total capital than originally planned in the merger announcement. This is as a result of material procurement savings from new agreements with key partners and significant savings from an efficient deployment engine, including adding multiple spectrum bands on a single site at the same time, as well as more effective controls via a lean deployment model, effectively reducing the time to deploy. And fifth, but by no means least, we have the most technically advanced network and a clear leadership edge on 5G innovation. Not only are we building the densest, deepest and broadest network, but we are also building on our history of 5G firsts, and embracing technological evolutions as they are ready to improve customer experience, lower costs and unlock new revenue opportunities. And our network enhancement program is running at a truly unprecedented pace with thousands of radio upgrades underway each and every month. So in summary, I am so excited that T-Mobile is leading what I expect will be a 5G revolution. We have all the tools to succeed, a robust plan and a powerful team to go execute it. Now let me pass the mic over to Peter.

Thanks, Neville. I'm excited to get to our financial highlights, starting with a look at synergies. As you already know, we beat our own aggressive synergy targets for 2020, realizing EUR 1.3 billion or 4x what the original merger plan expected to achieve in the first year. And during our Q1 earnings a couple of weeks ago, we updated our 2021 synergy guidance, now expecting to realize $2.8 billion to $3.1 billion in merger synergies, which represents a $550 million year-over-year increase in avoided costs and a $1.1 billion year-over-year increase in P&L benefits at the midpoint of our 2021 guidance, helping to fund the investments in our network and growth initiatives this year, and we're not slowing down. Our team's strong execution led to us updating our expectations at our Analyst Day for total run rate cost synergies of approximately $7.5 billion per year by 2024, up 25% from the original merger guidance of $6 billion. While the full original and increased run rate synergies are achieved in the same time frame, primarily due to the time line for avoided costs, we overachieved in each year relative to the original plan. In fact, we now expect to exceed the original $6 billion target in 2023. As we have said from the beginning, these massive synergies are unlocked with some onetime upfront costs to achieve. We continue to expect approximately $15 billion of total net cost to achieve, delivering more synergies with no incremental cost. This faster paced and increased run rate result in a new net present value of over $70 billion for shareholders, more than 60% higher than the original $43 billion NPV in the merger case, including a lower cost of capital, which reflects not only lower rate market conditions, but just as importantly, our scale and performance driving a lower cost of capital, as demonstrated by our capital markets activity. Our team's strong execution and our strategic plan is now expected to deliver financial results that exceed both the original 3- to 4-year and longer-term targets that we provided in the merger announcement. For reference, we are using 2023 as the comparable midterm point as it is the third full year following our actual closing date. And as we think about the long-term projections for the business, we are using 2026, which is actually earlier than the original long-term guidance milestones, which assumed 7 to 8 years out. And of course, our ambitions include continued growth in the business beyond 2026, driving a sustainable increase in shareholder value in later periods, too. All right. Jumping into the numbers. And for clarity, these are on a U.S. GAAP basis, which will differ slightly from IFRS. Core adjusted EBITDA, which reflects our underlying business performance without the noise of declining lease revenues as we deemphasize device leasing quickly post-closing, is now expected to be between $22.8 billion and $23.2 billion in 2021. In 2023, we expect to be between $28 billion and $29 billion versus the original merger plan, which implied core adjusted EBITDA of $25 billion to $27 billion, a $2.5 billion increase at the midpoint, driven by growth in service revenue and higher synergy realization. We expect further growth in 2024 with core adjusted EBITDA expected to be in the range of $31 billion to $32 billion, with additional service revenue growth and full synergy realization. Long term, we expect core adjusted EBITDA to be more than $36 billion, more than $1 billion above the high end of the original merger target, driven by higher service revenues, along with additional efficiencies, including in the areas of continued distribution transformation and an increasing consumer digital experience. Looking at capital expenditures. We now expect CapEx in 2021 and 2022 to be between $11.7 billion and $12 billion annually as we deliver our network integration milestones earlier and build a nationwide multilayer 5G network with better capital efficiency, thanks to both material procurement savings from our improved scale and deployment efficiencies, which Neville highlighted. We expect CapEx in 2023 through 2026 to be between $9 billion and $10 billion per year, reflecting the capacity and network efficiencies we expect after having completed our network integration and be largely done with our nationwide 5G deployment by 2022. This capital plan also includes all of our expected costs for C-band deployment. This all translates into the promised unlock of significant free cash flow. In 2021, we now expect free cash flow to be between $5.1 billion to $5.5 billion. Looking ahead, free cash flow is expected to be between $13 billion to $14 billion in 2023, a massive $3 billion or 30% increase from the original expectation of $10 billion to $11 billion. Again, a product of increased growth in service revenue and operating leverage, bigger and faster synergy capture and improved capital efficiency. We see further growth into 2024 with an expected range of $16 billion to $18 billion. And long term, we expect free cash flow to be more than $18 billion, above the high end of the original target. And similar to our 2021 guidance, our mid- and long-term free cash flow guidance does not assume any material net inflows from securitizations. And while our expectations for midterm and long-term milestones are all above the original merger plan, equally exciting is that this is really a story of cumulative overperformance in every year, delivering cumulative free cash flow through 2025 of up to $65 billion, up nearly 20% from the original plan. So as Mike highlighted earlier, with our increased cash flow, we see the flexibility for substantial shareholder returns, potentially up to a total of $60 billion from 2023 through 2025, all assuming a conservative mid-2x core adjusted EBITDA leverage ratio. As you would expect, we will always focus on maximizing value creation for shareholders, and we'll assess future spectrum purchases, M&A options and share repurchase opportunities to create the most shareholder value. And of course, there is massive potential beyond 2025 as well. I couldn't be more excited about this updated plan, and I'm extremely proud of our team's ability to consistently meet or exceed the guidance we commit to. We have done that now as T-Mobile since 2013, and we have every intention of continuing to deliver on that front and maintain the trust you place in us. I can't think of a better high note to end on. Now I'll hand it back over to Mike before we get to your questions.

Thanks, Peter, and Neville, great job. Okay. We're eager to take your questions. But let me leave you with a final thought. As you heard in our remarks, we believe T-Mobile is uniquely positioned with this once-in-a-career value-creating opportunity. We have a great hand. And to me, that means the industry's best assets, a clear and simple business strategy that's already proven, lots of room to run, exciting new businesses where we have permission to win and a team with a track record of delivering. Add to that, a strong balance sheet and a compelling financial plan, and the result is a business with massive cash flow and value creation potential. On top of it all, we have the opportunity to continue to change and improve this industry yet again as the Un-carrier to the benefit of consumers and businesses everywhere, to be the best in the world at connecting customers to their world and to earn their hearts in the process. I am tremendously excited about our future. Now while we get into position to take your questions, I'll leave you with this video, a collection of a few words that form our brand manifesto, words that say everything you need to know about who we are, what makes us different and where we're going. Take a look, and we'll see you live in a minute. Thanks, everybody. [Presentation]

All right. All right. We're excited to get to your questions. So let's get right at it. It looks like we've got some names queuing up already. So let's take our first question from Usman Ghazi from Berenberg.

I guess the question I had was on one of the comments you made earlier about investing to create that network perception change in the U.S. And specifically, and I don't know whether this is the right perception, I'm obviously sitting in London, so I might have gotten this completely wrong. But it seems that Verizon obviously has a very close relationship with Apple. I mean at the iPhone launches, you see them -- Verizon there. And on the TV, when I'm watching, I mean there's a lot of joint advertising going on between Verizon and Apple. I'm just wondering, I mean, that, at first, it seems surprising obviously, because I mean you -- it's pretty clear you have the best network and you're extending that lead on 5G. So is there any chance of TMUS being able to break that triangle that Verizon has with Apple, obviously, because of the captive 4G base that they have? Or is it going to take more time?

Yes. Thanks, Usman, great question. Thanks for joining. And yes, it's very interesting. I'll answer it 2 ways. First of all, as it relates to the big companies, I'd say T-Mobile, AT&T and Verizon all have great partnerships with Apple and the other major providers. So no concerns there. And I wouldn't overread Verizon appearing at their event in any way. We all do the exact same amount of joint advertising and co-development and so many things. But your question has another premise to it that I think is very important, which is Verizon has established for over a decade now brand fame around being the best network in the United States. And that's very clear. And that's something that you heard us remark on in our upfront remarks that we know our opportunity is to turn that around. And let's face it. n 2010, at the beginning of the 4G era, they jumped out in front. And AT&T jumped out with the iPhone. But Verizon jumped out with LTE, and they got after it faster than anybody else, and they claimed that mantle of network leadership in the 4G era and then rode it. They made the rules of the 4G era. And those rules, by the way, were terrible. Things like contracts and overages and roaming when you leave your country and treating people poorly and so forth, high prices. So we came along and decided to try and change those rules, and we were always in catch-up mode on our network during the 4G era. Today, in the 5G era, T-Mobile has the opportunity to make the rules. And those rules are going to be customer-friendly and they're going to be built around a brand that in the 5G era claims the mantle of network leadership. And that's so important. Right now, we have 5G leadership, way ahead, as Neville just got done describing to us. But we have to translate that into perception of overall network leadership. That's going to mean working with our partners like Apple to the premise of your question, but it's also going to mean taking advantage of big expansions into the places where we've historically been behind. We already get good credit in the big cities for having a good network. But in the huge swaths of this country, 40%, 50% of the country that are smaller markets and rural areas, we've been way behind. And that's a massive tailwind for our business as we start to come up the curve with the demonstrably best 5G network in rural America, as we talked about in our remarks. So we're taking this very seriously. We know we don't just have to be the best. We have to get credit among businesses and consumers for being the best, and our strategies are geared around that.

All right. Excellent. Let's take our next question from Joshua Mills from Exane.

There's 2 from me. The first is related to what AT&T has talked about earlier this week with the deal they've done on Time Warner, the decision that they want to accelerate in CapEx, market share gains, et cetera. Now you've talked a lot about how 5G is an opportunity or a window for you to win share and change perception. And I guess a lot of the work you've been doing is to try and extend the window on 5G leadership and you use that as an opportunity. So my question is, firstly, does the AT&T deal and the cash they've unlocked perhaps even narrow that window because they'll be spending more on CapEx? Or make the market more competitive in the near term if they choose to deploy more cash into handset subsidies? And then the second question -- go on, sorry.

Please let us know. Yes.

Yes. And the second question is just we've heard a lot today from the European side of Deutsche Telekom. And I think after we look at the U.S. business and see the growth in returns it's quite envious. But a key theme that's come out of today's presentation is the importance of convergence, fixed line, et cetera, in Europe. Now I understand the U.S. market is different, but do you see any advantage at the moment from your competitors owning fixed line? And is there any potential scenario in which you would think about either doing deals with fixed line operators on wholesale or maybe even building organically in that space?

Thank you. Those are great questions. First of all, I'll start on AT&T and then let Neville pile in. I think what we've seen from both Verizon and AT&T over the past 2, 3, 4 months, and certainly this last week with AT&T, is a journey towards both of our major scaled competitors realizing that T-Mobile's strategy of being a pure-play mobile Internet company is the right one. All content and entertainment of all kinds are leaving their prior linear forms and going digital, landing on the Internet. And the Internet itself is going mobile. And T-Mobile years ago, established itself as a pure-play mobile Internet company and sought the best assets and won the best assets in the industry, to lead the industry as the mobile Internet company focused on this space. And it's a great space. This is a viable, profitable industry that's changing people's lives in big ways. And both of our major competitors have decided to wake up and try and emulate our strategy. The problem is they're years behind, and we have the wherewithal to stay ahead for the duration of the 5G era, as Neville mentioned in his remarks. And so an example of that would be -- and I'll let Neville jump in before we get to your second question. An example of that is what Neville took you through in his remarks, which is the pace at which we're going, even with AT&T's new found love of mobile Internet, will allow us to stay ahead, especially when you apply not just the spectrum we'll have on 5G, the amount of spectrum, but the amount we have deployed on 5G, multiply that to look at megahertz pops, as Neville showed us, and the advantage that we have is massive and sustainable. Neville, maybe you can comment on it.

Yes. Thanks, Mike. And obviously, delighted to be here today and take the queues. To your question, Josh, on what happened this week with AT&T, I mean, finally, now we see our major U.S. competitors, as Mike said, starting to look at our strategy overall as a business. But importantly, too, they're starting to mirror and chase our network strategy. And so we've talked for a long time about the capability of a multilayered mid-band, low-band network. And so now we see AT&T kind of coming all in on that model and plan. And to just shape some of the news and announcements they made, I mean the one thing that caught my attention was that they said they would have 200 million people covered with the recently acquired C-band spectrum by the end of 2023. So to contrast that to where T-Mobile is today, as I outlined in my comments, 140 million people we've covered in the last year since we combined with Sprint. By the end of this year, 2021, we'll be at 200 million people covered on that mid-band layer and a much deeper and richer spectrum layer than AT&T can accomplish by 2023. So even though they're coming after and starting to mirror and chase our strategy, we have an incredible leadership position that they now have to try and close that gap. And so as we talk through here, every day, our network and the performance of this network is improving. And our customers are starting to understand that more and more each week and as we move through every month. And so for AT&T and Verizon, there's a lot of catch-up they have to do to try and mirror and match what we can do this year, inside 2021.

Just to the profitability piece, before we move to your question on fixed assets. Look, I think this is very good moment in time for the industry. And if the premise of the question is if Verizon and AT&T have finally decided to come around and pay attention to their mobile Internet businesses, is that bad for us? And I'd say absolutely not. Competition is tricky only if there's no differentiation. Competition is a great thing and something welcomed by T-Mobile because our position is differentiated. And the more this industry focuses on mobile, the more this industry focuses on smartphones, the more we get to showcase to people that increasingly consider, whether they're with the right carrier in a more vibrant market, our differences. Showcasing our differences of being the first company in the history of this industry to be able to simultaneously offer the best value, which we can sustainably do with our asset base and the best network where we're ahead by several years and positioned to stay ahead. That's something that, in a market that's more vibrant and made -- a market where there's increased switching through the efforts of our competitors, that will ultimately favor us. And we think it's a very good market. It's the profitable part of the industry. That's why all of our competitors have decided to focus on it. I think that means that they understand that it needs to stay profitable because this is the knitting. And so all of these signs, I think, are good signs for us. Now to the second part of your question about fixed and we'll try to be quick here. I give the short answer and then again turn it to Neville. No, we don't see it as an advantage. In fact, when the primary profit pool is mobile, as we just talked about, the advantages of owning fixed assets are a bit false. And you'd be stealing from one profit pool to feed the other. And so the ownership advantage gets diminished. We think we can get there and have demonstrated we can get there through partnerships. We have fantastic fiber relationships all across this country. There's plenty of supply. And when it comes to tackling enterprise opportunities, we're working with partners like our recently announced collaboration with Lumen. So just briefly, Neville, on whether or not, not owning fiber as a disadvantage or perhaps if it's an advantage to have the flexibility that we have.

No. I mean, clearly, Mike, for us, I mean it's an advantage for us to drive our investments into our radio and our wireless network. And we have just tremendous deals and partnerships out there to support our fiber delivery to our cell sites in a 5G world. And we've had fiber to our cell sites for many years. Now we're just scaling that delivery. We have actually decreasing price levels coming into our business while we scale the throughput and output on those links. So we're very, very comfortable today with how we construct our delivery there.

And this is an area where, to the premise of your question, the U.S. market is a little bit different than Europe. Obviously, the trend here, we never did fully converge. And in the recent moves as it relates to media convergence, both of our major scaled competitors shedding media assets as a sign that there wasn't the promised benefit of convergence that they had sold shareholders.

All right. Let's take our next question from Ulrich from Jefferies.

Mike, if Deutsche Telekom were to sell the T-Mobile stake tomorrow, what elements of your midterm guidance would you have to change? I mean I suppose it's a slightly cheeky way of asking what are the tangible benefits that the pan brings to the party from your point of view where you're sitting.

Well, first of all, I'm not sure it would change anything in that -- I'll answer it from 2 perspectives. One is we've certainly been enabled to buy DT through the years with investment. But now we have a business that is producing significant cash flow and is able to for -- in recent years, acquire its financing on its own. So a company that is viable on its own. And secondly, it's a business that is neither constrained by DT. Every major thing we've needed to do, we've been able to partner with and be supported by our major owners, DT. And so we've not been constrained yet either. What we do have right now are some terrific opportunities for synergies, as I talked about, and we're collaborating with major global companies to serve those companies together in transatlantic ways. And that's terrific. So look, we -- DT, I think, much to its credit, has run and allowed us to run the U.S. business as an independent U.S. public company with them as our major shareholder. And that has allowed us to focus on our knitting in a way that's created an awful lot of success. And so for us, we're consolidated into DT and are looked at by DT as part of DT, but they deliberately asked us and with our Board to run this as an independent company. And my fiduciary is to all shareholders of our company, all shareholders of TMUS, DT included, and that's how we run it, as an independent U.S.-listed public company.

Great question. All right. Let's go to Jakob Bluestone from Credit Suisse.

So I had a question around the capital returns that you referenced earlier. And I guess there's 2 aspects. One, can you just sort of talk us through how do you look at dividends versus buybacks when thinking about it from a TMUS point of view? And also, as you rightly pointed out, you've got a fantastic track record of beating your own guidance. So do you think there's the potential that we could see those buybacks or those capital returns starting sooner than 2023?

I absolutely love it. You announced an up to $60 billion share buyback, historic buyback program, and it's how soon can it start? So Peter, can it start by 2022? And can it be bigger than we promised?

Absolutely. Well, thank you so much for having us, and a great partnership here. So first off, I'm really excited about the massive free cash flow generation of this business, and it truly is a differentiator, as we've talked about. This massive 5G network that's being built, the greenfield opportunities that others do not have, in smaller markets in rural America, in enterprise, and the unlock of synergies during that whole time frame allows us to have expanding margins, and by the time we get to our midterm guidance, have the best conversion of service revenue into free cash flow, which helps unlock and allow those massive potential shareholder returns. A couple of questions you had. One is, how do we think about it? Would we do share repurchases or dividends? And right now, the way we're thinking about it is our intention is to continue to be a growth company, both in the midterm as well as the long-term guidance. So as we see it right now, we're definitely thinking the flexibility that share repurchases versus a dividend offer would probably the way we would initiate shareholder returns and, of course, assess it during that period and go forward. In terms of can we start early, as you know, right now, the focus point is building this massive network and spending the cost to achieve funds to unlock the synergies and the integration as rapidly as possible while also making all the investments to unlock those markets and get to those rapid free cash flows. So is there opportunity? If we go faster, if we have better success in terms of quicker integration, quicker synergy delivery or outperform some of the assumptions that we put in the model around growth, ARPA, ARPU, there's always a potential that we could come to our Board and ask to initiate something even before 2023.

Excellent. Let's take our next question from Polo Tang from UBS.

I just have 2. So it's clear that you're significantly exceeding expectations in terms of both growth and synergies. But what do you see as the main risks to your medium and longer-term outlook? Is there anything that keeps you awake at night? Is it cable gaining share? Is it DISH building a fourth mobile network? Or is it AT&T and Verizon getting more aggressive? So that's the first question. And the second question is, you obviously outlined a clear plan in terms of accelerating growth from expansion into rural areas, the B2B market, but also fixed wireless access. Are there any recent data points that you can share to give us an idea of how you're progressing in these new segments?

Sounds great. Well, I'll start. It's a great question, Polo. The way I think about it is that for me, obviously, we've built this company by being fighters, by playing above our weight, by being scrappy, by running scared, by never resting. You saw some of that philosophy in the video that we ran right before we came on. And look, I think competition is a great thing, as I was saying earlier, as long as we're differentiated. And so the thing that keeps me up at night is making sure that in every time period for the foreseeable future for years to come, T-Mobile is well differentiated in this market for both businesses and consumers. Because that's what allows us to navigate competition and win like we've been doing for years. As it relates to the specific competition, look, I feel great about our hand of cards. It's never been better. Relative to cable and DISH and smaller companies, we have the scale and we have the advantage of our synergy-backed model, and we have owner economics. It's going to be very hard for much smaller companies to compete with us over the long haul on being the best value, something that our brand is famous for in the United States. As it relates to our scaled competitors, we have better assets on network. The factor of competition for scaled competitors is network. We're way ahead and with the superior assets and balance sheet to stay ahead. And that allows us to compete on product leadership and network leadership with the scaled competitors. And so look, I feel great about our differentiation potential. As I said in my first comment, we're going to need to convince the world. Our brand is coming from a place of where we haven't been the network leader, and that's a risk to our business. We've got to convince businesses and consumers that we are the demonstrable network leader in the United States. And we've seen great progress on that. With the percentage of people seeing us as the 5G company more than doubling just in the last 6 months. So then the second question that you're asking about is our big growth areas like small town rural, smaller markets, prime suburban families, enterprises, home broadband. And I'd just tell you that all of the signs are looking good for these growing businesses. As you know, we're not starting from scratch. We declared several years ago a path to move from 230 million to 265 million people covered by our full distribution. And we carved out shares from single digits now up to 13% share in smaller markets. And we're saying in our plan, the one that delivers all this cash flow that we can in 5 years after a lot of effort, get it all the way to just 20%, just shy of 20%. And I -- that sounds a little conservative to you. It should. Because, as you know, our national market share is well over 30%, and that includes a giant swath of the country where it's only 13%. So do the math on the balance of the country, especially the big markets where T-Mobile already is the market leader. So that's a terrific opportunity. Similarly, we're a 10-share in the enterprise space and already growing share at a rate that would allow us to exceed our ambition of being a 20-share in the planning horizon. Our last 2 quarters were some of the best quarters in our history when it comes to gaining share among enterprises for smartphone adoption. So some terrific early indicators. Home broadband, as you know, we piloted it for a year in LTE. We just launched it. And the experience that customers are having is fantastic. We look at early on, you're looking at things like remorse rates and Net Promoter Scores and whether or not people are happy with the service. Because that bodes best for whether or not our long-term aspirations are solid. And the Net Promoter Score has tripled from people who adopted our service versus what they -- the score that they gave their prior providers. So they're very, very happy with what we're serving them in the early going. So those are a few things. And we'll be sure to check in as we announce each quarter and provide some spot reports here and there on how we're doing on these growth trajectories.

All right. Let's move to Steve Malcolm with Redburn. Steve, go ahead.

Yes, a couple. Just on coming back to sort of collective outlook for the industry. I mean I think we all understand your 5G network advantage. But when I look at what you're saying, AT&T is saying, Verizon is saying, you all seem to think you can grow EBITDA in the mid-single digits. Just sort of backing into the AT&T release, it looks like they think they can grow EBITDA 5% to 6%. Do you think that's a credible position for the industry over the next 3 to 4 years? And if not, what is the downside of maybe your big competitors failing to hit their targets? And then just on fixed wireless access. I know it's very early days, but can you maybe help us understand what you think the sort of annual switchers pool in the state is, give us some sort of bottom-up sense of how you get that 7 million or 8 million number, percentage of the gross adds that you have to take to get there, that would be very helpful. I understand the top-down picture, but the bottom-up would be quite interesting.

Yes. Thanks. Well, first of all, on the home broadband piece, I can't unpack it for you too much other than the fact that if you think about the market that we're addressing, the vast -- a huge swath of the market, a significant minority, in fact, almost half of the market where we're going has no choice. They have one or fewer options in rural America, smaller towns, as it relates to home broadband. And so what we're doing is bringing our model that knows how to compete into these markets. And we're going to be bringing competition and choice for the first time. And it's important to note that we're ahead of our other wireless competitors in this area. And so think about it this way. When we arrive in town with a viable option that's high quality and lower price, there's suddenly going to be a big market out there. People saying, "Hey, could I save some money?" In a time when the economy is probably telling people to find ways to save money. And at the same time, we're advertising our mobile service and our 5G leadership in their neighborhoods. Now when our competitors arrive, when Verizon and AT&T arrive later, they have to do more than that. They have to offer something that's better than T-Mobile to be a late entrant. They have to come with a superior point of difference. And they don't have it. They're not going to have that to offer in very many places. And so that shows, I think, the importance of our urgency of getting to these markets quickly with our mid-band strategy. Now as to your first question, the health of the industry. Listen, I take it as a very good sign that both of our major U.S. scaled network competitors have decided to focus on strategies more similar to T-Mobile's, mid-band-centric, 5G-oriented, focused on the knitting pure-play mobile Internet companies who then say they want to grow their margins. And to me, those are all healthy signs for the industry. This is a viable profitable industry. It's capital intensive. It's difficult. It's competitive. It's getting better for consumers every year. But it's got players that are now going to be able to -- have no choice but to be focused on the overall profitability of their mobile operations, which is probably a good thing for the ongoing health of the industry. They have no place else to go to make their financial aspirations. Now the second part of your question, which is asking me to speak to their credibility, listen, I can only speak to our team's credibility and thank you to the last couple of people who gave us some credit for the fact that we do what we say around here. When we say we're going to make 100 million POPs on mid-band 5G by the end of 2020, we get there. When we say we're going to get to 200 million in 2021, we get there. When we say what the financial results are going to be, we go get that done. And our competitors -- look, what they're doing today is a complete about-face from what they stared at the camera just a month ago and said they were going to do. And so look, I can't speak to their credibility. There's some disarray and some turmoil, it looks like, from the outside. But what I can say, regardless of their words, which I'm not sure what people are perceiving about the quality of their words right now, regardless of their words, my perception is, they have no choice but to treat this industry as the place that they will drive margins and cash flows. And that's probably overall good for the health of our industry.

All right. Let's take our next question from Ottavio Adorisio with Societe Generale.

Congratulations on the results. A couple of questions. It's actually both for Peter. The first is a follow-up from shareholder returns, and the second is on the future renewal at tower leases. On the shareholder returns, I didn't hear about the credit rating as a sort of key priorities whenever you decide about the cash distribution. Consider that you are still non-investment grade and in a climate of rising interest rates, could you just tell us if your share buyback to start what is the acceleration will be timed according to an upgrade to investment grade for credit ratings, or that is not a priority. And the second one is on your renewal of the tower leases. Now T-Mobile does not report net debt with tower obligation included. But Deutsche Telekom does report that under IFRS, and that's required to capitalize all leases. Now I believe that T-Mobile has 3 to 4 years left in the tower leases with Crown Castle and SBA Communications. If you renew American Tower lease 1 or 2 years before the expiry date, would you plan to renew the Crown Castle and SBA comps within the next 2 years? And if so, would the impact on tower obligation for T-Mobile be smaller or larger than the $11 billion that you recorded after renewal with AMT?

Excellent. Well, thank you for those excellent questions. And one, we are absolutely focused on getting to corporate family investment-grade rating. And that's a priority for us. And this business plan, with the massive unlock of free cash flow and rapid deleveraging where we'll be in the mid-2% core EBITDA leverage range by the end of next year, allows that for us. And we're absolutely taking that as a priority. You can already see where our secured investment-grade rated notes trade ahead of AT&T even today. So I think the market takes us very seriously. They're very much looking forward to us delivering on the progress, and that's the stepping stone to get to IG. I don't see getting to corporate family IG as the precursor to beginning shareholder returns. It's something we would consider in terms of the timing of that, but they might come very closely together and not necessarily a precursor for us. On tower leases. So yes, you mentioned and referenced our ATC renewal, which was just an incredible job by Neville and the team to allow us massive flexibility, lock in decreasing escalators in the industry for a significant length of time and generate, most importantly, cash savings from day 1. Yes, there's accounting interpretation of this that puts it on the lease liability. But from a cash savings perspective, it was day 1 savings. As it relates to Crown, the priority right now is building this 5G network and giving Neville and his team all the tools necessary and investments necessary to maintain this lead for the duration of the 5G era. And if there's opportunity to do that, that makes economical sense and benefit with Crown, then, of course, we're going to entertain that.

And the impact of the tower obligation will be larger or smaller because from memory, I think your exposure to Crown and SBA combined, it's larger than the one towards American Towers, at least historically going forward.

Yes. I'll tell you, I can't speak to where any sort of negotiations can end up. But I can tell you that just like we approached ATC and just like we approach everything, we're looking towards value creation for this enterprise. Flexibility to maintain the duration of the 5G era the network advantage by giving Neville the flexibility but also creating economic advantage for our shareholders. Where that ultimately ends up in terms of a magnitude and when, it's hard for me to predict right now. But those are going to be the fundamental drivers for any decision that we make.

All right. Let's take next question from Akhil Dattani from JPMorgan.

I've got 2, please, if I may. The first one, obviously, we've talked a lot about your accelerating cash generation and the $60 billion buyback potential that you have. And maybe just wanting to address that question another way, which is, obviously, there is accretion and value to be created by buying back stock. But potentially, that money could also be used to accelerate growth or find new other opportunities to create value. So I just wondered if you could talk about that trade-off. Are there other areas of opportunity for growth that you can think of? Where else could you spend that money if we think about alternative uses of cash? So that's the first one. And then the second one is, sitting here in Europe, we always struggle with the belief of CapEx going down a lot long term. European telcos haven't had the best track record on that front. You've obviously got a very nice message around CapEx, spending out $9 billion to $10 billion long term. Can you just talk us through how we get confidence that CapEx can reduce to those sorts of levels long term.

Yes. I'll start and then maybe ask Peter to comment because your 2 questions are kind of related to each other. First of all, this business plan that we have crafted is a growth plan for the duration of our planning period and beyond. So it includes the investments that we need to make in order to continue growing after the planning period. And that's different than I think some business plans out there look like. And so in the out years, these $9 billion to $10 billion in CapEx are what we believe we need to have a viable competitive network on the back of years of building on a superior asset base in order to be able to continue to grow. And the delivery of significant cash flows that gives us the potential for share buybacks is net of investments that we would make in ongoing growth. Now that's not to say that there might not be trade-offs as it relates to the growth that we have and potential greater growth opportunities that could come instead of those returns. And so it's important to understand that as we go along, we'll be looking at opportunities. And if there are great opportunities that accelerate our long-term potential, we'll trade that off, and we'll be very transparent as we do that.

Absolutely, Mike. I couldn't agree more. It's going to be looking at that point in time as to what are the opportunities in front of us to create the maximum shareholder value. But what's equally exciting, as you stated, is the magnitude of free cash flow that this plan delivers, not only from 2023 to 2025 of the $60 billion, but beyond into the long term that continues. So you have a lot of room with free cash flow generation to make the right trade-offs and decisions and maximize shareholder value, not only in the midterm like we're doing, but also into the longer term. On CapEx, one of the beauties of the scale that we've been able to accomplish with new T-Mobile is Neville and team have been able to successfully go out and create procurement arrangements with some of the largest OEMs. And we are building faster in terms of the network build than anybody has in this country before. And that pace is what we're doing to build $11.7 billion to $12 billion in CapEx annually. So you can think about, as this massive network build completes, then it's rational that you would have a lower step down in CapEx. And the beauty is that those procurement synergies that we've been able to deliver on with the scale are what drive not only today the ability to build this network at such a rapid pace with the CapEx that we're actually doing, which is significantly less than our competition, but also then allows that step down.

All right. Let's wrap up our final question with our host today. Thank you again for having us. Tim, go ahead with your questions.

Look, first, what I want to say is, guys, we got everything recorded what you said, you sounded very bullish. Peter, I got your payback starting 2022. So here we go. Everything is recorded. So that's -- thank you. Guys, we want to say thank you for an outstanding performance and a great partnership with you -- we have with you guys over the last years. Thank you for your great friendship and what you delivered, including the pandemia management that was outstanding in the 10 million campaigns. There's one thing what I want to say, guys, you have to work on your outfit. Now the Germans are looking cooler than you guys. We are differentiating. Mike, you have to work on the differentiation. You know that.

That's fantastic. I guess cool is in the eye of the beholder.

But we are definitely cooler than you guys. Keep on running guys. It's great working with you, and it's fantastic the results, and good luck with the upcoming months. We'll see you soon.

It's great to see you guys today. Thanks for having us. And great day, great first day to capital markets. I hope to see you guys soon.

Thank you. Bye-bye.

So thank you, everyone, for bearing with us. And I think -- I hope you had a good first half of our Capital Markets Day, 2021 Capital Markets Day. So in terms of organization, tomorrow, we start again. We start at 11 in the morning. The presentations for tomorrow -- that's CET. The presentations will be available from 7:00 a.m. CET, so 6 GMT. And Claudia, tomorrow will take us -- Claudia Nemat will take us into the engine room or I would call it maybe the cloud, rather. And in any case, it's stuff for the dreams, and here we go. So look forward to welcoming you back tomorrow. Thank you very much.