DT has inched up its earnings guidance for the full year on the back of a strong performance in the US, while closer to home its recent towers sale sliced billions of euros from its debt pile.

All in all, the German incumbent posted a solid set of financial results for the first quarter of this year, including including customer growth, backed by an increased topline and earnings, in its home market.

At group level revenue was virtually flat at €27.8 billion in the three months to the end of March, while service revenue increased by 3.5% to €22.8 billion and adjusted EBITDA AL grew by 0.9% to €10 billion. As has become the norm for the operator group, its numbers were buoyed by growth in the US, and indeed that market is the reason for its decision to slightly increase its earnings guidance for the full year.

Deutsche Telekom now expects adjusted EBITDA AL for calendar 2023 to come in at around €40.9 billion having previously guided for €40.8 billion. That slight increase – which amounts to €100 million; not a sum to be sneezed at – is driven by T-Mobile US raising its own earnings outlook by a similar amount last month. T-Mobile US increased guidance in a number of areas, including free cash flow, but at group level the telco retained its previous prediction of free cash flow AL of more than €16 billion.

While T-Mobile US always has a big impact on Deutsche Telekom’s group figures – this quarter the firm trumpeted 1.3 million postpaid net customer additions, which it notes is more than those racked up by AT&T and Verizon combined, for example – the telco also turned in a good performance in Germany.

It highlighted strong customer growth in Germany in particular, across both fixed and mobile. The launch of new mobile plans drove the addition of 274,000 new branded customers and a 1.7% increase in mobile service revenues, Deutsche Telekom said. Overall, its mobile customer base grew by 1.8 million to 56 million.

Fixed lines are still on the slide, but broadband connections increased by 74,000 over the three months to 14.8 million, while the telco’s fibre-to-the-home (FTTH) base grew by 37% year-on-year to 769,000.

The proportion of revenue generated in Germany may be falling – Deutsche Telekom brought in 77.4% of its topline from overseas in Q1 – but that’s due to growth elsewhere rather than contraction at home. Revenue and adjusted EBITDA AL from the German market grew by 3% and 4% respectively in Q1.

Arguably the biggest headline from Deutsche Telekom’s Q1 numbers is its massive, almost fourfold, increase in net profit to €15.4 billion. That came about as a result of the sale of the telco’s towers last year; it offloaded a 51% stake in GD Towers, which holds its German and Austrian towers businesses, to DigitalBridge and Brookfield, in a deal that valued the assets at €17.5 billion.

“We have reached a milestone in the implementation of our strategy,” said Deutsche Telekom CEO Tim Höttges, in a statement accompanying the Q1 numbers. “We now see in the figures how the tower transaction has created value for Deutsche Telekom.”

Deutsche Telekom retained an interest in GD Towers with a view to capturing the long-term value of the business, but the sale had a big impact in the short term too; the telco shaved more than €10 billion from its debt pile in Q1, thanks to a “substantial contribution” from the towers sale proceeds, reducing net debt (excluding leases) €93 billion. Including leases, its net debt stands at €133.5 billion, €2.4 billion lower than in the year-ago quarter.

It would be easy to focus on that towers figure, but actually it’s a small part of the story. Deutsche Telekom’s performance at home and in the US in Q1 give a more accurate view of the business, which at present is looking pretty healthy.

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