Deutsche Telekom AG
XETRA:DTE
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Deutsche Telekom AG
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Good morning, ladies and gentlemen, colleagues. I welcome you to our call, our video conference. We'll be presenting the results for the third quarter. We're here at the telecom headquarters. With me this morning are Christian Illek, the CFO of Deutsche Telekom; and Tim Höttges, the CEO of Deutsche Telekom. Tim, start things off.
Good morning, ladies and gentlemen. Thank you for taking the time to take a look at our figures. Overall, Deutsche Telekom is in a very good spot. All our businesses are growing, and we are either meeting or even exceeding expectations, and we can tell you about a very favorable third quarter. And all that in an environment where the situation in Europe continues to be unstable. There's still a war going on Ukraine, energy costs are skyrocketing, and inflation is on the rise. And therefore, it's not all that easy to remain objective and present our figures to you today under such circumstances. I almost -- almost makes me feel bad to talk about such things now presenting these good results. But this objectivity is also linked to showing stability. And we want to make it clear to investors in the capital market that we stand for stability and that we will continue our successful course.
So we want to inspire confidence. We want to convey a sense of security. That's what is important now in times of crisis, and we can underscore that quite impressively with our figures. And above all, our customers, they can count on us, and they made it clear that they rely on us, and that holds true today just as it does tomorrow.
Our investments remain high. More than EUR 19.5 billion will be invested this year, and we're on track to actually making that happen. Our entire business, including the U.S., continues to grow. Our investments remain high and have actually increased further. And we are pushing ahead with the digital transformation of our company, and we are maneuvering this huge tanker on our chartered [ course ] as calmly and consistently as possible. And I think this will be underpinned today by the figures that I'm going to present to you. So all our businesses are growing positive trends across the board. And I would now like to elaborate on a couple of aspects.
One important cornerstone was the partnership for our cell tower business, which we agreed in July. And this is how we make the value growth visible while, at the same time, safeguarding the network build-out for our customers. Let me just remind you, EUR 17.5 billion, that's 27.5x the EBITDA. And this morning, [indiscernible] wrote that Vodafone did the biggest deal this year, but that's not true. We did the biggest one, EUR 17.5 billion, and we even achieved a much higher multiple. I just meant to mention that so that you can reconsider that.
Our operating businesses on both sides of the Atlantic have performed remarkably consistently over the year or so. Adjusted core EBITDA increased by 5.9% across the group in the first 9 months on an organic basis. In the United States, organic growth was 7%. And in business excluding the United States, adjusted EBITDA AL increased by 4.3% in organic terms.
Our U.S. subsidiary reported organic growth in service revenues, which are a very important market for us, of 5.4% year-on-year. Outside of the United States, this growth was 1.8% in organic terms. It's like we're putting our company on rails.
In -- over the past 4 or 5 Capital Markets Days, we were always able to inform the capital markets that we had overachieved or achieved the targets we had set for ourselves. The trend in the third quarter was so strong again that we are raising our guidance for the third time this year.
For the group as a whole, we are now expecting adjusted EBITDA AL of more than EUR 37 billion, and that's adjusted for translation effects. And you know that the dollar rate has changed. So if you consider what's really left, then it's almost EUR 40 billion in terms of EBITDA AL. And we are fortunate that we invested in the U.S. We made that business big there. And the U.S. capital market and the U.S. currency have now gained a lot in value, which means that Deutsche Telekom benefits from that disproportionately because there is no other competitor with a bigness -- with a business that big outside of their home market.
And this means that we are also raising our guidance for earnings per share from more than EUR 1.25 to over EUR 1.50. So we're putting another EUR 0.25 on top, and we will achieve that this year, which is very good news for everyone who focuses on earnings per share as an important KPI. As always, we want our shareholders to benefit from this positive trend, subject to approval by the Supervisory Board and the Shareholders' Meeting. The Board of Management plans to pay a dividend for 2022 financial year of EUR 0.70 per dividend-bearing share. That's more than -- almost 10% more than last year.
And I think the trust placed in Deutsche Telekom is paying off here. Maybe some people have expected even more. But when you look at the positive trend over the past 2 years, you can see this has been a very good trend. It is really paying off. And to me, we don't want to achieve a result -- a good result just short term but in the long run. And this good development of our financial KPIs is, in particular, down to our customers' confidence in our products because, ultimately, the financial KPIs depend on a good way of managing the people, and that is why people are flocking to us. I'll talk about that in the context of mobile communications in Germany in a moment but also in the U.S.
T-Mobile US, by the way, has set yet another record with 4.6 million new postpaid customers. I mean think about that 4.6 million new postpaid customers in the first 9 months. Such numbers are unbelievable. And our U.S. subsidiary now sets the benchmark in the world's most important mobile communications market, and we are way ahead of our competitors. And the integration of Sprint is progressing faster than we anticipated. T-Mobile US has just raised its synergy guidance for the current year yet again at midpoint by USD 250 million against the most recent guidance. So that's a run rate of almost EUR 8 billion in the U.S.
In Germany and Europe, there is also a very positive trend. When you look at what Srini and his colleagues achieved, it's fantastic. We recorded 1.4 million mobile contract net additions in the year-to-date.
So if you have the best network and if your customers can feel that you do have the best network, then you can only win. So we've had an increase of around 350,000 new contract customers compared with the prior year period across all markets. This was driven, in part, by the positive effects of our new next Magenta rate plans, offering new family-friendly conditions in the best network.
We want to demonstrate that Deutsche Telekom has the best network, and our customers know that. Just ask them. But is the network also affordable? Well, we are now offering family-friendly conditions in the best network. That's possible, and that's exactly the value proposition, which is also reflected in the prices that we're offering, and we are really pleased with the high number of customers joining us in the first 9 months of this year.
We are industry leading in broadband, too. In our European business, we've added 380,000 new customers over the course of the year, and we are also growing continually with TV with 150,000 net additions. And with the football champion -- world championship approaching, MagentaTV will certainly generate even more growth.
Both areas have seen an upward trend in the third quarter compared with the prior 3 months. Needless to say, we are particularly excited about the fourth quarter because a lot of things will be happening on our sporting MagentaTV platform.
So people come to us because we are offering the best infrastructure while keeping our sights firmly set on our annual network build-out targets. Our 5G mobile network already reaches over 94% of the German population. In the United States, it's 320 million people, 250 million of whom on the ultrafast 2.5 gigahertz band, and we do not only want to stand for a good network but also excellent prices. And we have that now, and we have an excellent network now, 5G network in the U.S., and our customers have demonstrated that they believe in us. We're also ahead of AT&T and Verizon. That makes us very proud. The market evaluations that we have been doing are all pointing in the right direction.
In the fixed network, our optical fiber start-up strategy continues unabated. Our fiber optic build-out teams are working to meet our annual target of 2 million FTTH lines, and hopefully, we will even overachieve or exceed this target. Next year, the target number is EUR 3 million, and we are already the #1 in the German market, and I can promise you that we will definitely be way ahead of our competitors. We always want to be leading. This is one of the drivers behind our corporate cultures. And wherever we do have a footprint, we always want to be ahead of things. We always want to be a driver, and I can tell you it'll be the same with FTTH in Germany.
Sometimes, however, I'm a little annoyed about the political environment in Germany. We are investing so much money. We are making so many funds available, and we could do even more. We could work even faster when it comes to rolling out the new infrastructure. But let me be quite honest here and say, it's not a money problem. It's to do with the permission processes, which are extremely long and protracted. We are world champions when it comes to red tape. And we're only permitted to use alternative cable-laying methods in exceptional cases. The bureaucrats out there are preventing us from using more effective methods. At the same time, we are refused access to public property for our mobile network build-out.
Just recently, I came across cases where the permission or approval process took like 3 years. And then there's another politician saying, "No, I don't want a cell tower being set up here." So yes, we could do more. We could be even better, but unfortunately, we are often unable to meet the requirements imposed upon us. I won't deny that things have improved in certain areas. Some politicians have understood that establishing a digital infrastructure for their citizens is vital.
So I'm not saying that everything is bad. But sometimes, I find myself just shaking my head and wondering, what do policymakers actually want from us? On the one hand, they are saying we need to keep on rolling out the network, and at the same time, they do what they can to make it harder for us. Now we will continue to wait patiently for answers as best as we can, but sometimes, I think policymakers are just sending the wrong signal for the network builder, and we are often used as a scapegoat.
Ladies and gentlemen, that brings me to my second point: Deutsche Telekom is exceeding expectations in some areas. And I will say, quite frankly, that I am very proud of how our share price has developed. Yesterday, we had a 23-year high in terms of the share price. We are scratching the EUR 20 mark, and our market capitalization stands at almost EUR 100 billion, but the relative KPIs are even better.
Over 3, 5 and 10 years, we've outperformed the DAX and the Dow Jones. And today, we are 30 percentage points ahead of the DAX. So if you had bought an index paper for the DAX, then that would have been a much worse investment than buying a telecom stock. So as we benchmark ourselves against our own industry and against the Dow Jones and the DAX, we come out as the #1. And that's why this is a very positive trend.
I've often said and I will still say it that there is still more potential here for the Deutsche Telekom stock. And I'm sure that we will live up to this claim. Our highest-ever value in the United States is a little higher still, USD 186.5 billion to be precise. That's the market cap of T-Mobile US as it stands today, making our subsidiary there the most valuable telecommunications company in the world, ahead of Verizon, by the way, ahead of AT&T and ahead of China Mobile.
A good 2 years after the approval of the business combination with Sprint, we are the #1. We almost own 50% of that company, and you know that we do what we can to gain an even bigger stake in this company. And none of us, apart from Christian, probably would have expected that trend. T-Mobile US's success story is unique in any industry, customer growth, value upside and customer satisfaction. All parameters have improved simultaneously. And we've [ left ] our competitors behind. Therefore, the situation in the U.S. has really changed in our favor. And we are also meeting all the conditions that have been imposed on us in condition with the deal. We want to lead the people in America into a better digital future, and we're on our way. And like I've said several times, we won't stop pushing ahead with this trend.
And as we already said in the past, we are pursuing a clear plan to secure the majority stake in T-Mobile US. We are not taking part of the share buyback that is taking place in the States right now. But we will grow as a result of this measure, which is part of the strategic development of the Deutsche Telekom Group. And we hope to be able to gain a majority stake in T-Mobile US, maybe even earlier than planned, earlier than 2024. And you know that we are kind of impatient, and we hope that we'll be able to announce this step as soon as possible.
We are also growing continuously in Germany and in our European subsidiaries. By the way, in Germany, we recorded the 24th quarter in a row of earnings growth in organic terms. That may sound like no big deal, but when you look at other European telecommunications companies, you can see nobody else achieved that. In our Europe business, we've now hit 19 quarters of unbroken growth, and this really shows how reliable our business is and that it keeps on growing.
At the same time, we maintain a consistent focus on achieving our sustainability goals. They've become more important than ever. And it is particularly important to me that we talk about this in the context of our business overall, which is why we did a Sustainability Day. I hope that you were able to follow up on all the statements we made there. But I can tell you that we are keeping track of our sustainability goals just as we do it with our financial targets.
The entire company is working on it. This is deeply embedded in our organization. We measure it, and it is also certified externally. Our goal is to be completely climate-neutral by 2040. And on Scope 1 and 2, we are already on track to achieving it, even sooner than planned. And by 2040, it should -- we should be able to address the entire value chain. And by 2030, we want to have fully transitioned to a circular economy for electronic devices.
Circular economy and that, of course, will also be a major step, and it receives a lot of management attention because we know just how relevant this is, both to our customers and to investors out there. I don't think there are any investors who would be willing to buy our share unless we also became a leading company in this field. And everybody can do their bit to help us achieve that, by the way. I would ask that you can maybe support us here because there are 200 million mobile phones lying unused in drawers around Germany. Only 4% to 6% of terminal devices actually come back, and we want to have them recycled completely.
We have set up the right processes for that. We've set up partnerships because the rare earth and other technological components of the devices are so valuable that they should be put to use. And we exclusively use sustainable materials for packaging of our devices and not just for the value creation for our end consumers but also for our supplier products. It's a sustainable process.
And we are also converting our fleet. From 2023, pretty much starting tomorrow, all our company cars in Germany will be electric. That is a first step. But by the way, we're almost talking about 10,000 vehicles here that will be electrified. And the entire fleet, including all the vehicles of our field staff should be electric in the future as quickly as possible. But that depends on 2 things. First of all, the vehicles must be available in the first place. And secondly, we need to have enough charging stations. As you know, we are active in this field ourselves, and we are happy to make such charging stations available ourselves. We're also working on that. But nonetheless, today's charging infrastructure is not sufficient for our technical customer service, but I am confident that this will improve considerably over the next couple of months. And then we will see a major leap forward in this field as well, which brings me to my last point for today.
Let me take a look at our business overall. Deutsche Telekom is a stability anchor in these difficult times, and I hope that you'll be able to see that when you look at our financial KPIs. We are strong, yes, but we are not self-sufficient. We do depend on the framework conditions that we are operating in. We actively accept our responsibility to society as best as we can. We are an inclusive company, not just to the inside but also to the outside. We welcome every customer, not just certain customer segments. And we are a large international company with more than 200,000 employees, which means that we also bear a lot of responsibility for society. And we are part of an economic cycle that must ultimately pay off for everyone.
We are investing huge amounts of money in our digital infrastructure every year. That is part of our DNA. By 2030, we are set to plow around EUR 30 billion into the fiber optic build-out in Germany alone. I'm repeating myself here, just to make it clear once again how committed we are to move to the next level as far as digitization is concerned.
There has to be a solid basis in place so we can cushion these costs. And when it comes to the fiber optic build-out, of course, costs are rising, especially for civil engineering, machinery, higher wages, the entire infrastructure. Costs for all that have increased considerably as a result of inflation. And such costs have to be offset somehow also in cooperation with our partners just to make sure that we can live up to our responsibility, and this is a major challenge this year. We've been successful here. But obviously, we also depend -- are dependent on the framework that has been set for us.
Let me share a personal observation here on the regulatory environment. I find it absolutely incomprehensible why the policymakers do not provide support to the companies who build out the infrastructure. And I mean this is one of the few growing infrastructures. And our prices have not risen compared to the shopping basket. Our prices have even decreased. So I don't see why we are not getting the support we deserve. We have to participate in an expensive spectrum auction. And so that is spectrum, which is currently being used. And we need to do what we can to get that spectrum in order to be able to support our future customers as well, which means this step will not have a price-stabilizing effect, quite the contrary, and this will certainly have consequences for the market.
Why is it that an industry that has not contributed to inflation is subjected to such conditions? Why are we forced to take part in such a spectrum auction? I just can't understand it politically, and I hope that politicians will think twice about that. They may reconsider so that we don't end up being tangled up in an extremely expensive spectrum. I think the spectrum licenses should be extended so that customers can benefit from that rather than just using the funds made by the government as part of the spectrum for taxes.
Deutsche Telekom has to safeguard its competitiveness if it is to remain capable of taking actions. So far, we've been very successful here through the year. Momentum is on our side, mind you. Customers are very happy with our brand. We scored the highest results here as far as brand acceptance and confidence in Magenta are concerned. And of course, that motivates us to become even better. Especially in times of crisis, our T symbolizes our leadership strength, and we wanted to stay that way.
So with these optimistic words, I'd like to hand you over to Christian Illek. We won't stop.
Thanks a lot, Tim. And as usual, I'll break down my comments into 3 sections today. First, I'll look at the development of the group's financials in the third quarter. Then I'll look at the development in the operating segments. And finally, I'll go into the development of net and net debt.
So first, the group's financials. They developed quite well in Q3. Reported net revenue increased 8.8% to EUR 29 billion. That's an increase of EUR 2.3 billion. And if I just look at service revenues and concentrate on that metric, it rose EUR 2.6 billion.
The group's reported adjusted EBIT AL (sic) [ EBITDA AL ] increased by 8.5% in this period to EUR 9.9 billion. That's also a growth of EUR 820 million on an annual basis. Tim just gave you the forecast for the year based on organic development. And there, we have 3 key factors we have to take into account that are different than the reported effect. First of all, since the 1st of April, we have deconsolidated T-Mobile Netherlands, and the fixed network business in Romania was all also sold earlier this year. So that has to be deducted. And we've had a massive positive effect from the dollar. It has increased in value by [ EUR 0.16 ], and that has a massive positive effect on our reported result.
This takes me to organic development. Organic service revenues, as I said, grew 3.4%, and adjusted EBITDA AL increased by 0.8%. As Tim said, this is growth on both sides of the Atlantic in the past quarter, both in the European business as well as the U.S. business.
This brings me now to the forecast. We will -- we are forecasting EBITDA -- we're increasing the guidance for EBITDA to EUR 37 billion. For adjusted earnings per share, we have a value of EUR 1.50. The previous guidance was for more than EUR 1.25 per share. After 9 months, adjusted earnings per share were at EUR 1.43.
At the beginning of the year, we assumed a dollar exchange rate of $1.18 per euro. That has to adjusted. If you base this on the consensus calculation by the capital market, then with a dollar exchange rate of USD 1.05 per euro.
So now let me give you a look at our operating segments in the third quarter. First, let me look at the U.S. business. The Americans commented on this a week ago in the market. The fact that the mean value of the synergy effect is being raised to USD 5.75 billion, this is another indication that the integration is proceeding more quickly than expected. The 5G network is being expanded more quickly than expected. We will cover 250 million people in total in the 2.5 gigahertz band. This results, of course, in ongoing strong customer additions. In the third quarter, 1.6 million branded mobile postpaid customers were added. Of these, around 0.9 million additions were attributable to the postpaid phone customer segment.
In addition to this, the Americans are offering broadband at home, and they gained almost 600,000 new customers in the first 3 months, and it's also very competitive compared to cable providers. A good share of this growth came from cable customers, and one contributing factor here was service revenue increasing by 4.3%. And this brings me now -- also adjusted core EBITDA rose by 11.4% in the third quarter in the U.S.
Now let me look at the -- at Germany. We recorded further strong growth in new customer acquisition here, although the market was weaker year-on-year. But in Q1, we did say that this effect from the amendment of the Telecommunications Act would lead to a slump later in the year. And if you look at the transition from the first and the trend from the first to the third quarter, it's -- the number of broadband customers has increased to 360,000. So we were right in our forecast there. Once again, in this environment, Deutsche Telekom remains the strongest provider, winning a proportion of new customers that exceeds our target of 40%.
On top of this, we have seen a massive increase in fiber optic-based lines in the third quarter, 950,000 additional lines, and this is, in particular, due to 700,000 lines migrating from ADSL to VDSL. That means a much better customer experience without any increase in price, by the way. And in the fourth quarter, we'll add 300,000 more lines from ADSL to VDSL in the migration there. Also, the increase in broadband lines megabits or faster has surged by 1.3 million year-on-year to 5.7 million. That means 93% of our customers have connection with at least 100 megabit. The number of super vectoring lines increased year-on-year by more than 50%, 52% to be exact. Now we have 1.65 million customers that have used our super vectoring offer.
Next topic is mobile customers. That's been a strong development in the third quarter year-on-year. We have increased the number of branded mobile customers. We've doubled it. That's almost doubled at 90%. And this is coming from all parts of our business, 50% from our business customer base. There's been a very strong share accounted for, with next Magenta and Congstar continue to enjoy stable customer growth.
Contract customer churn rate was still elevated on account of the immense effect of the amended German Telecommunications Act. Sales service revenues in Germany rose 1.2% in organic terms in the third quarter. Mobile service revenues increased by 2%. We spoke in the previous quarter about this and the fact that the regulatory effects and termination of an agreement with Lebara having a reducing effect on revenue. Otherwise, revenue would be at the level of the previous quarter.
Service revenues in the fixed network business rose 0.8% in organic terms, mostly due to our broadband service revenues, which increased by 4.7%, which is significantly above our target that we announced at the Capital Market Day. And revenue in the segment increased by 2.8% to EUR 6.1 billion in the third quarter. Reported adjusted EBITDA AL increased 3% to EUR 2.5 billion. As CFO, I'm always pleased that an increase coming from revenue and also the reduction in indirect costs. As you heard from Tim, we've grown in the Germany segment for 24 quarters in succession. That's amazing and bodes well for the future.
This brings me to the Europe operating segment. Here, too, we see very strong organic growth in the customer base, 0.25 million new contract net customer additions in the third quarter. 173,000 new FMC customers opted for our convergent product packages. And sales in the reported segment revenue declined by 1.1%. That was due to the deconsolidation of the fixed network business in Romania. And on an organic basis, revenue rose by 5.5%. That's around EUR 148 million. This includes an increase in service revenues of around EUR 80 million, divided into roughly equal parts between mobile communications and the fixed network business, including IT.
Adjusted EBITDA AL in the segment was down 0.5% due to the business in Romania but also a weaker exchange rates in some European countries. At the organic level, we grew 0.5%. That's a consequence of 2 factors, which we already discussed in previous quarters. First of all, the special tax in Hungary, 1.5% of EBITDA growth was lost as a result of this, and also energy costs. These 2 combined to slow organic growings. If it weren't for these, it would have grown by about 3.5%.
This brings me to T-Systems. Here, you can say the business is developing in line with our expectations. Order entry grew 6.5%; revenue, about 2%. And the source of growth was the same as in previous quarters. We see a decline in the classic infrastructure business and an increase taking place in digital solutions. This has led to a slight increase of adjusted EBITDA AL on an annual basis. And that was what we expected, I said.
This brings me to group development. We've already discussed this. The deconsolidated business, well, T-Mobile Netherlands was deconsolidated at the end of the first quarter. What remains is the cell tower business. And we're expecting the closing at the beginning of next year on our sale of the majority stake. And a total number of 41,000 sites are present in Germany and Austria. This increased by about 9% because of 1,200 new cell sites being built in Germany, with 300 sites being decommissioned in the last 12 months. Recurring lease revenues increased by 6.7% year-on-year in the third quarter. And if I just look at the customers that are not customers of German Telecom, we have 8.8%. Adjusted EBITDA AL in the cell tower business grew by 9.7% in organic terms. This includes the effect from the change in the recognition of the cell tower business that had a positive effect of EUR 50 million, but we're still seeing very strong growth organically there.
This brings me to the next metric, free cash flow AL in the group. That was stable compared to the previous year. In principle, we have seen an increase from cash flow from -- of about EUR 100 million on the back of the positive business development. And this contrasts with a significant increase in cash CapEx of EUR 1.2 billion, which leads basically to a flat growth rate.
Adjusted net profit increased compared to the previous year by 84% to EUR 2.4 billion in the last 3 months. That's a growth of about EUR 1.1 billion, massively aided by the adjusted EBITDA of around EUR 0.86 billion. That was due to a decline in depreciation and an amortization decreasing by around EUR 470 million. This is primarily due to the reduction of the terminal equipment lease business in the U.S. and the recognition of the cell tower business. If you earn more money, you have to pay more taxes and that we have had to pay more than EUR 300 million year-on-year in taxes, and Americans have performed better than expected. That also leads to also greater taxes for the minority shareholder in the U.S. But all in all, a great performance there.
This brings me to the net debt and the balance sheet ratios. As you see from the next chart, the financial net debt increased by EUR 3.5 billion to EUR 109.5 billion at the end of the third quarter. Just to give you a picture of this, around EUR 76.7 billion of net debt is attributable to T-Mobile US, and around EUR 32.8 billion can be attributed to the group, excluding the United States. This is due entirely -- this is based on free cash flow. It was -- net debt was reduced by that. Also, we have a buyback action that we've started in the U.S. And especially, we've had a huge exchange rate effect because of the strong dollar, and that increases our U.S. dollars debt -- debt denominated in U.S. dollars, but the pure exchange rate effect has had -- has led to an increase in the debt. Without the strong dollar, it would not have increased. To just illustrate this, in principle, in the first 9 months, we had an increase of about 9 billion in our overall debt in the total business of Deutsche Telekom. 11 billion came from this dollar effect.
This brings me of the ratio of net debt. This is excluding leases to adjusted EBITDA AL. That was at 2.79 at the end of the third quarter. The ratio of net debt, including leases to adjusted EBITDA, was, and you'll see the difference here, 3.34 churns as of the same date. This is due to the effect of leasing. Of course, our commitment is, once again, by the end of 2024, as we communicated to the capital market, to return to the comfort zone, and what will help us here is, of course, the planned revenue from the sale of our cell tower business of around, yes, EUR 10.7 billion. When we look at the other guidance figures, whether it's ratings, shareholders' equity, liquidity reserve, these are all within the target ranges.
And with that, I would give the microphone back to Tim.
Thank you. I think everything has been said. So why don't we continue straightaway with the Q&A. Philipp, over to you.
Yes. We're happy to take your questions. [ Marcus Huber ] is our operator today, and he will explain to you how to raise your questions.
[Foreign Language] The first 2 questions, [ Mr. Wolf ] from DPA.
I have a quick question on the 5G build-out. 94%, you said. That is more than before. Where did we stand at the beginning of the year? I think it was something like 92%, right? And how do you continue from here? Where will we be at the end of the year? Where will we be by the end of 2023? Maybe you could say something about that.
And the second question, just to be sure I understood this right. The -- you talked about the electric cars. And did I hear you say that starting tomorrow, you will only give electric vehicles to your in-house staff? Is that right?
Thank you. Well, first of all, this year, we are going to do a Network Day. And there, you can see where exactly all the antennas are positioned and what the coverage looks like. As far as I can tell, by the end of the year, our target is to reach 96%. At the beginning of the -- or at the end of 2021, we stood at 91%. And the last couple of percentage points are always the hardest because there is somewhere out there outside the big cities, and we are working on it. And there will be another thrust and also in terms of higher bandwidth in the next couple of years using state-of-the-art technology. More about that at our Networks Day.
Then you asked about electric vehicles. Starting the 1st of January 2023, everyone in this company who has the privilege of using a company car will only be able to order electric cars, which doesn't mean to say that, overnight, will be switching to electric cars 100%. We will continue using up the nonelectric cars that we have right now until the end of their life cycle, but from the 1st of January, our staff will only be ordered new vehicles as electric cars.
I think the next question comes from [ Mr. Guy ].
It's always nice to hear about the latest figures. You said that Lebara has left the partnership. Have they left completely? Or do you have some of their customers left? And as far as I can tell, they lost some 300,000 customers because of that, did they?
Well, yes, the customer is completely gone. And by the way, in our business model with Lebara, there was no possibility for us to make any money. So why would we continue this partnership to begin with? And that's why we decided to opt out of this business. We took it out completely from our balance sheet.
Right. There's a question from the chat here. You can also ask questions directly on the chat, as [ Mr. Huber ] told you. And I just meant to point out here, I don't mind reading out the questions here, but you can also ask them on the chat. But of course, colleagues from the media are welcome to join us on the call directly so that you can ask your question directly. But I can read it here as well.
This question comes from [ Mr. Saval ]. Question to Tim Höttges. This year, you want to build 2 million FTTH lines. Will you achieve this and how? How many lines do we have right now exactly? That's the question.
Well, let me try to answer this question precisely. Right now, we have 4.5 million households that are homes passed. So these are the lines we actually have. Last year, this number stood at 3.4 million, which means we are on our way to achieving the 2 million mark. Some of them are still under construction. They will be activated by the end of the year. And by the end of this year, we will have 2 million more than at the end of 2021.
I hope this answers your question. If not, we can get back to you and give you more detailed information about the exact locations of these optical fiber rollouts.
Well, you also made a comment on this number, the 2 million, but I think this number has been reconfirmed several times, including today. A question on net debt. Deutsche Telekom's net debt has risen to EUR 132 billion, again, which is more than you were planning yourself. Then you had to spend a lot on 5G frequencies in the U.S. More billions of dollars may have to be invested there and the further network build-out in the U.S. Maybe you could briefly comment on that, Christian?
Well, first of all, our commitment is by the end of 2024, we want to be in the comfort zone. That is definitely right, and I'll stick to it. And then we have a strong dollar that helps us in terms of revenue and EBITDA, but it also pushes down absolute net debt. In the first 9 months, the dollar effect was around 11 billion, even though the actual increase was only 9 billion, which means the dollar effect is bigger than the actual effect for de facto net debt.
Secondly, a lot of that debt comes from the U.S. And you see, the U.S. business is self-sufficient. They are funding their own business. And we are working on the network integration. There are spectrum acquisitions, et cetera. And not every spectrum auction is expensive. Take the 2.5 gigahertz auction. We got 90% of all these licenses, and we only had to invest something like EUR 300 million. And the lease impact that we had anticipated now stands at 0.55. So we are doing long-term agreements with the tower companies. And as a result, there is -- the operating costs are pretty low, but at the same time, it pushes up net debt. But let me repeat, by the end of 2024, we want to be back within the communicated range.
Another question on the phone. Over to our operator.
Claudia Mahnke from General-Anzeiger Bonn.
Can you hear me?
Yes, we can hear you all right.
Excellent. You talked about the responsibility that Deutsche Telekom has towards society as a whole. Now before long, the football world championship will start in Qatar. How does that fit in with the human rights code that your company has also subscribed to?
Well, thank you for this question. For Deutsche Telekom, it is quite clear that human rights are indivisible and universal. And generally, Deutsche Telekom stands for anything that brings people and different cultures together.
And yes, the human rights situation in Qatar is problematic, and the criteria that have led to Qatar being able to host the games is something that we look at critically. But I don't think it would be a good idea for the media to boycott the football world championships completely. We believe it is good to look at this tournament critically. We believe that this is actually an opportunity to shed some light on the problems in that country. And at the same time, we share the views of a lot of human rights organizations such as Amnesty International and Transparency International. They have said that the achievements with regards to human rights that we've seen in Qatar so far would actually be jeopardized if we boycotted the games. So we will keep a close eye on what's happening there. And we will definitely report on the world championships on MagentaTV.
Yes, let me add to this by saying that you are welcome to take a look at our reporting on MagentaTV, which has always been critical -- looking at all the critical issues, and that will also hold true for the world championship.
Okay. I have another question here from the chat from Mr. Alvares from Handelsblatt. It's about the issue of T-Systems. On Tuesday, there was a discussion about removal of -- on historical -- of this historical burden. And why has this decision now been made?
Well, basically, 2 things. First of all, T-Systems is a unit with staff members who are very important to future activities, but they're not 100% ready for all of this, and we have to support them. And also, we're in an evolution, and there's workers who are not even working right now who are already on -- in early retirement and getting these pensions.
And these are listed on the balance sheet of T-Systems right now. And we're in the process of trying to remove these and move this burden to the corporate level. But I don't want to state a particular sum publicly.
So once again, back to the virtual area in Frankfurt, where the call center is located. Are there any more questions there? Right now on my screen, I don't see any. Maybe -- I think I might have lost the connection to the server. Do we have any questions there on our colleagues?
No additional questions right now.
Okay, then I think we've addressed everything. So thank you very much for dialing in this morning. And as you've heard, the year isn't over yet, and we would invite you to be there on our next -- at the beginning of December at our next call. We will invite you, send out a separate invitation to that. And until then, thanks for dialing in, and I hope you have a nice day. Thanks. Bye-bye.
[Foreign Language]
[Statements in English on this transcript were spoken by an interpreter present on the live call.]