Good afternoon. Welcome to Deutsche Telekom's conference call. At our customer's request, this conference will be recorded and uploaded to the Internet. May I now hand you over to Mr. Hannes Wittig. Yeah, good afternoon, everyone, and welcome to our first quarter 2021 conference call. With me today is our CFO, Christian Illek. He will first go through a few highlights, and we'll talk about the quarter's financials. After this, we have time for Q&A. Before I hand over to Christian, please pay attention to our usual disclaimer, which you'll find in the presentation. With that, I hand over to Christian. Thanks, Hannes, and also welcome from my side. Today, I wanted to share some highlights of our strong Q1 results. We look at our first quarter as a strong step towards our full-year ambitions, ahead of our Capital Markets Day next week, where we're going to lay out our midterm ambitions. Ahead of our Capital Markets Day, we decided to keep this meeting a bit shorter, and you will have the opportunity to listen to Tim and all the other board members at a much greater detail. Let me dive into the highlights of this quarter. You saw T-Mobile's excellent results last week. They delivered strong customer and EBITDA growth, and they raised their full year's guidance. Today, it's the time for our ex-U.S. Business, and obviously for the group guidance, to be raised as well. This follows a very strong quarter in the first three months of this year, also on the European part of the business. We're getting into more detail later on. T-Mobile continues to make great progress with its merger integration, their 5G leadership is becoming more and more evident as you've taken a look to the ongoing network tests. Already, 20% of Sprint customers and 50% of the total traffic has been migrated to the T-Mobile network, obviously, creates a much better customer experience than it used to be. Also, the churn levels remain low. At its March analyst day, T-Mobile outlined a strong and long-term plan and its financial targets, it's also planning to basically return up to $60 billion to shareholders over the course of 2023 to 2025. This should happen via buybacks. If we're taking a look at the European part of the business, we had an excellent quarter. Despite the ongoing coronavirus headwinds, we delivered a 4.6 organic EBITDA growth. We see a strong momentum on customer acquisition. We made strong progress on 5G and fiber, and the German regulator approved our 10-year fiber wholesale agreements, but we'll get into more detail later on as well. Despite coronavirus, we managed to grow service revenues in the U.S., but also in the European operations. Let me remind you, as you may recall from our AGM, we also sharpened our climate targets, and we want to reach climate neutrality for our Scope 1 and 2 emissions by 2025, which is five years earlier than the old plan. For Scope 3, we want to achieve climate neutrality by 2040, which is 10 years earlier than the original plan. We have the opportunity to dive into more detail on this one also at our Capital Markets Day. Let's move to page four. Take a look at the adjusted EBITDA. All segments, as you can see, contributed to our strong and consistent EBITDA growth. The European segment has grown on an organic basis now for 13 quarters in a row, and in Germany, it's already 18 quarters in a row. The overall organic EBITDA growth was up more than 8% year-over-year. Next page on networks. This is the basis for our good customer and financial results. In Germany, we are already covering 80% of the population with 5G, and we raised our target by the end of the year 2021 to 90%. In the U.S., we are approaching nationwide coverage with our extended range 5G network, and we already reached about 100 million POPs by the end of the first quarter with 2.5 gigahertz. Our target for the POP coverage by the end of the year is 200 million. Our fiber deployments in Germany and in Europe are on track. In Germany, we passed around 140,000 homes this quarter. We announced various deployments, including the plan to pass one million homes in Berlin over the next six years. Let's move on to page number six. Importantly, what you can see is our customer results remain strong, and this is despite the pandemic. 1.2 million new postpaid customers in the U.S., 330,000 contract customers on the mobile side here in Europe, 160,000 new broadband customers, of which 93 are coming from Germany, and 80,000 new TV customers. This is stronger than our performance in the last year. Remember, the last year in 2020, in Q1, there wasn't a pandemic happening so far. Today, on page seven, we raise our guidance for 2021, both in the U.S. and ex-U.S., both on EBITDA and on free cash flow. Obviously, we reflect in our overall numbers the upgrade of T-Mobile, which has been communicated last week. On top of that, we will raise the EBITDA AL target in the European operations from EUR 14.3 billion to EUR 14.4 billion, which is an increase of EUR 100 million. We're doing the same on the free cash flow. We're raising the target from EUR 3.5 Billion to EUR 3.6 billion, which is also an increase of EUR 100 million coming from the European operations. All up, we're increasing the EBITDA guidance by EUR 200 million for the end of the year and also for the free cash flow. It's an equivalent contribution from the U.S. and the European operations. Let's get into the financial results which are shown on page number nine. Obviously, these financial results are massively impacted by the consolidation of the Sprint merger as of April 2020. Also on an organic basis, you see that we have grown revenues by 7.1% year-over-year, and that service revenue came in with a growth rate of 2.4% year-over-year. As I said earlier on, organic EBITDA growth was up 8.3%, and on our portfolio ex the U.S., it was up by a strong 4.6%. The adjusted EPS was down by 7%, which is roughly EUR 100 million. That can solely be explained by a drag which we're facing from the fixed price option from SoftBank because the share price has come down by $10 relative to Q4, and that obviously had a negative impact on its valuation of the fixed price option. Free cash flow has doubled year-over-year, but be aware that we have basically unwinded EUR 700 million of factoring in Germany in the first quarter of last year. Obviously, that is impacting these numbers here. Net debt, including leases, is up to EUR 129.5 billion. That very much reflects two effects, the C-band auction, some additional lease liabilities in the U.S., and some headwind from a stronger U.S. dollar relative to the previous quarter. Let's move over to page number 10. On page number 10, you see that we're consistently growing, on both sides of the Atlantic, the EBITDA up quarter-over-quarter- over- quarter. Last quarter was 10.1% in the U.S. and 4.6% on the European operations. Let's move over to Germany and its results in the first quarter. In Germany, our revenues grew almost by 2%, and we have an accounting change here coming from the IT services industry. If we would have factored that one in, the growth would have been 3%. We grew our EBITDA by 3.4%, and I think what I would highlight is we've seen an accelerating EBITDA growth in the German business. The accounting question I just alluded to, obviously, is impacted by IT services which are not coming as a high margin, so it wouldn't impact the EBITDA. Page number 12 on the service revenues. Obviously, you see that the service revenues are very much driven by the strong fixed line results. Overall, we grew service revenues by 1.7%, and the main driver was, as I said early on, the retail fixed service performance. Mobile services were on a reported basis down by 0.8%. If you factor in the COVID effects, meaning lower roaming and visitor revenues, then our revenues would have been up 1.2%. If we would further adjust for the ongoing MTR cuts, it would even be 1.5%. Move over to the next page number 13. Positive mobile KPIs. You see that our mobile customer growth is steadily growing, and that is also being supported by the low churn which we're having in the German business. Page number 14, fixed commercials. Our fixed commercials are really strong. We added another 93,000 broadband customers, which is 10,000 more than last year, and we assume that this is going to be around a market share in the first quarter of 50%. The line losses remain at a low 29,000. The TV net adds were lower than in the previous quarter. We had a deliberate discussion on this one, and it's basically attributed to the shop closures which we're still facing here in Germany. The demand for our fiber connections remains strong. Page 15. Our strong broadband customer growth obviously drives our broadband revenue growth, which was 6.5% in the first quarter. Organic retail fixed revenue growth was 4.1% year-over-year. We also saw a better performance in other fixed retail revenues to 0.4% growth. This is partly impacted by Telekom IT, some delays which we faced in the fourth quarter, and some exceptional public sector business wins. These tailwinds obviously mitigated ongoing Corona headwinds. Moving over to wholesale. That revenue number declined by -2.4%. There are two factors impacting that results. First, the shift to IFRS 16 in 2019 allowed us to basically go for a shortened amortization period of one-time fees. This effect is now rolling over. Secondly, since the beginning of the year, we're no longer allowed to charge extra traffic-related fees under the old contingent model. Therefore, there's going to be a negative impact as well. From the next quarter onwards, our new 10-year commitment model comes into force, which has been approved by the Bundesnetzagentur on April 1st. Let me deep dive a little bit into this one. As we said, and we also said it in the previous call in the last quarter, we're really happy to strike deals with our wholesale partners on a long-term basis. These drive our fixed broadband revenue fees and to some extent also secure volumes. Since the fact that they're long-term, meaning 10 years with a three-year extension period, that gives us good visibility in the development of our wholesale business. Overall, what you can see is that a large percentage of the excess revenues can be secured with these long-term contracts. Importantly is to mention that all these contracts actually provide a consistent and accretive more for more monetization framework on the FTTH side. We have the opportunity not longer have any kind of ex-ante price regulation, and it allows us to basically charge a premium for smaller local areas, which gives us a good monetization opportunity going forward. The FTTC bitstream fees, which we proposed and negotiated with the Bundesnetzagentur, they're coming in a little lower. Let me explain what's going to happen. When it comes to the effectively billed tariffs, I can tell you that for 50 Mbps and 100 Mbps, we're seeing a negative impact in the years 2021 and 2022 because of price declines. In 2023, we will basically reach the 2020 price levels again, then we have an increase until 2025, which gives us an extra revenue. That increase is about 10% higher than what we're seeing right now. From 2025 onwards, we're going to see on these two traffic price bands a stable development until 2030. On 250 Mb, we actively see a decrease over the whole period of time. Let me remind you, super vectoring, we're happy with the customer results, only reflects about 3% of our bitstream excess traffic, which we're seeing it right now. From this perspective, be aware that we're going to see some drags in the years 2021 and 2022, a break even in 2023, and then obviously a price increase onwards. Let me move over to the U.S. and the usual two slides which we're having on the U.S. Starting with page number 17, organic EBITDA was up about 10% on an IFRS basis year-over-year. On page 18, you see that we added another 1.2 million postpaid subs, of which almost 800,000 were phone subs. This puts T-Mobile U.S., again, when it comes to customer acquisition, on the top spot in the U.S. market. T-Mobile also outlines plan for the Ultra Capacity coverage, as I mentioned early on. That is a POPs coverage of 200 million POPs by the end of 2021, and 250 POPs by the end of 2022, and 90% of the U.S. population in the year end of 2023. As previously mentioned, at the end of March, the 2.5 gigahertz coverage was around 140 million POPs. At the Analyst Day of T-Mobile, T-Mobile also announced the higher synergy target, which is $7.5 billion. Already they have, as I said earlier on, migrated 50% of the Sprint traffic already onto its network. What you're seeing is the synergy capture is coming in higher and better than originally anticipated, and it will yield to higher synergy results overall at the end of the process. Let's move over to page 19 and take a look at the European segment. The organic revenues returned to a slight growth despite the headwinds of the pandemic. We've seen a very strong EBITDA contribution of 4.1% year-over-year. That was driven by both net margin growth as well as reduced indirect cost. Page number 20, you see it's not coming at the expense of customer growth. We have all up very strong results in the European segment with 150,000 mobile customers, almost 60,000 broadband customers, strong momentum on the FMC penetration, also a stronger TV business. Page number 21. On T-Systems, look, you see that we cannot compensate the legacy business decline in T-Systems right now with our growth segments, which is predominantly public cloud and digital solutions. We see a slight decline here. On the other hand, we're cautiously optimistic that we're going to see a stable outlook for the EBITDA, and we've seen some encouraging wins also in the first quarter when it comes to new deals. You hear me being a little bit more optimistic than I was in the previous quarters. I would say seeing is believing. Next one is page 22, Group Development. Our strong revenue and EBITDA growth continued. Headline growth benefited obviously from the inclusion of the Austrian tower and GD Towers. That said, organic financials were also strong with revenues 5% up and EBITDA even 9.7% up. Let's move over on the next page 23 to T-Mobile Netherlands. Also, the Netherlands continued to perform well. The broadband and the mobile net adds were negatively impacted by the shop closures. Still, you see a growth of 11,000 broadband net adds and 12,000 mobile net adds. Organic revenues were up by 0.6%. If you include the COVID impact, meaning roaming and visitor effect, it would have been 2.1%. GD Towers on page number 24, you see that we added organically about 1,200 sites over the past 12 months. The recurring revenue grew at 3%, EBITDA at 7% year-over-year, another strong performance. I would say I'll leave it as this on the overview on the segments and moving over to some financials. Page number 25 on the free cash flow. Free cash flow has doubled year-over-year. Again, as I said, be aware that we have basically unwinded EUR 700 million of factoring in the last first quarter of 2020. The net debt increased to almost EUR 130 billion. That reflects a combined impact of the C-band auction, which accounted for EUR 8 billion, another EUR 1 billion from additional leases from the U.S. We had a negative impact from the currency, which was almost EUR 4 billion, which was coming from a higher or a stronger U.S. dollar. Our adjusted EPS, again, was slightly below 7%, and that is very much driven by the SoftBank auction. From a leverage ratio, let me just dive on this one. You see that our leverage ratio has increased, including leases to 2.98. If we exclude the leases, it's 2.6. I think we're going to give you much more detail what we expect midterm, especially when it comes to EBITDA and free cash flow growth. That will be a key driver for the deleveraging. I think what we should bear in mind is we're going to see peak leverage ratios in the years 2021, and from 2022 onwards, they should decrease. With that, I would leave it with my short presentation and open it up for questions. Well, thank you, Christian. Now we can start with the Q&A part. If you'd like to ask a question, as always, press star one. I think some of you have already done that on your touch-tone telephone. I will announce your name when it's your turn to ask a question. If you want to cancel a question, please press star two. You can also send us questions via webcast. With that, we have a bunch of questions already lined up, and I think the first is Andrew at Goldman Sachs. Yeah. Afternoon, everyone. I had two questions. Hopefully, they won't be too strategic, and so you can answer them today. The first one is just on B2B growth in Germany in the quarter. It looks like corporates and public sector customers are starting to pull the trigger on contracts more today. Is Q1 2021 a better guide to the future than the weaker 4Q 2020? How do you think about the sustainability of the improved performance you saw in Q1? The second question was on the commitment model and wholesale revenue visibility. Given we're used to regulators undermining returns over time in European fixed, how much visibility do you have now to forecast returns on your fixed and fiber network? I think you mentioned just now visibility on some speeds out to 2030. Just any kind of commentary you could give on the swing factors around uncertainty. Is that just consumer demand? Anything you can give us would be great. Thank you. Starting with the B2B question, in Q4 2020, we see actually a decline in the B2B revenues of 1.6%. All up, it declined over the year of 2020 by one percentage point. This was obviously, especially in the mobile side, heavily driven by the roaming impact, which basically made 4.4 points on the mobile service revenue and other corona-related headwinds, especially IT projects which have been delayed. I think it is early days. We're seeing a slightly more positive Q1. Whether this is going to be a trend change, Andrew, I think it's a little bit premature. I can bet on it. I hope on it. Right now, I would say let's see whether the second quarter is coming in stronger. As I said, also on the T-Systems side, we're cautiously optimistic on this one. Okay, maybe I take the wholesale question. We have good visibility, right? Of course, there is uncertainty because it is early days for fiber to the home in Germany. In terms of customer demand, we currently see customers satisfied with the speeds that we are providing, as you can see in the trends. We said at the Q4 stage, we had about a quarter of customers paying for 100 Mb or more, which also means 75% are paying for less. What our opinion or conviction is that over time, customers will upgrade as they have done over the last few years, and therefore the blended usage will go up. Now for us to be able to monetize that, we need a reliable pricing framework. This is what we've agreed with the competitors on a 10-year basis, commercial, importantly, and this is maybe the Holy Grail if you want, it's not regulated anymore. Not ex-ante price regulated. There will be the usual, let's say, margin squeeze checks and this kind of stuff as they have always been, this is not ex-ante regulated anymore. Therefore, we have a lot of visibility because these are agreed prices for 10 years and beyond. The other thing to be aware of, the chart that we show you, shows the rates that the BNetzA is calculating. What we are looking at for our numbers, which is what should interest you, is what we can actually charge. Christian has provided a bit of guidance on that. On a like-for-like basis, except for the 250, which is currently a minority tariff, our tariffs will go down. What we effectively charge will go down in 2021, stay at this level in 2022, and from 2025, they will then grow. 2023 will be back at the level of 2020. 2025, they will be about 10% higher, and then they will stay there. You have accretion there. The next effect in accretion is the mix, which we talked about before. You can see on the chart also, 500 megs and 1 gig is more expensive. By the way, it's also more expensive still, and that's what you can't see on the chart in rural areas. There is multiple accretive elements in how this is built. That's what we can do on the demand side to monetize the fiber networks. I think the whole equation we'll revisit next week. With that, the next question is actually Akhil at JP Morgan. Yeah. Hi, good afternoon. Thanks for taking my questions. I've got two as well, hopefully again, ones you're happy to answer today rather than for next week, obviously let me know. The first one, Christian mentioned in his presentation the $60 billion potential buyback from T-Mobile U.S. I guess I was just trying to understand how DT Group's thinking about that in the context of obviously increasing their shareholding to 51%. The two parts are obviously, one is, would you participate or not? You've obviously got call options as well. Just how do we think about that bit? Secondly, obviously, if they did do the full $60 billion, that'd be way in excess of getting you to 51%. In that eventuality, how do you think about what you do and what your options are? That's the first question. The second one is just a follow-up to the commitment model. I guess what I was trying to understand was, firstly, how we think about the shape, because it sounds like the wholesale revenues might deteriorate a little bit first before seeing quite a nice recovery and acceleration accretion. Just if you could give us a bit of color around that. The second thing is, Hannes, you mentioned the rural premium mix effects. Just any sort of color you can give us on either the amount of that rural premium or how we should think about it, that would also be really helpful. Thanks. Akhil, let me start with the first question on T-Mobile U.S., I think we have been always very vocal that we really like our position in the U.S., be aware our lockup is still valid until June 2024. You will us be more open and clear what is our plan at the Capital Markets Day. You know that we have secured 101 million options from SoftBank to 45 with a fixed price option. The other one is the floating option. We have access to additional T-Mobile U.S. shares. How and if we want to execute against this, I think is not to be decided today. The second point is on the $60 billion share buyback potential. The U.S. said up to $60 billion, we see how the business will evolve in between 2023 and 2025. That we're happy with our position in the U.S. and that we're happy consolidating the U.S. figures into our group figures is not a secret. Let me put it this way, and I think we put some flavor onto this story next week at the Capital Markets Day. Yeah. On the wholesale revenue trajectory, yes, we will have a slight deterioration this year because we've had a negative trend in the first quarter, and the new tariffs will come into force in the second quarter. Depending on mix effects and so on, there should be a further decline and sequential worsening in the second quarter, and that will be with us for the year. As we said before, net prices will not drop further in 2022. To put it in context, maybe for those who are, let's say, focused specifically on our wholesale revenues, this is of course part of the overall equation, and we raised the guidance today, and we had 4.1% fixed retail service revenue growth. We are very pleased with the overall fixed line performance. I think we had the highest fixed service revenues that I at least can remember in a long time, let's say. The second point is, the way you should think about this wholesale, and I come to one aspect of this in a second agreement. It's an investment into something that will work for us over a long period of time. You know fiber is a long-term investment. We need something that works for us for the long term. The give is that we lower a couple of prices. I think the EUR 250 price cut is actually quite deliberate. We are happy with that to an extent. What we get is a lot, right? We've tried to convey that. We'll have price inflation, deterministic price inflation on our existing fees. Let's say the ones that will have a lot of volume behind it, we'll get the rural premium that you've mentioned, we have negotiated fiber prices that we are happy with for the long term. On the rural premium, let's say it's a sort of mid-single digit EUR per month. These prices are consistent across all the agreements that we have struck. As I say, they have been approved by the regulator on the first of April. Okay, the next question is from Polo at UBS. Two questions. The first one is really just about German EBITDA growth. It was obviously very healthy at +3.5% in the quarter. Were there any one-off factors helping EBITDA during the period, such as cost standby to a rephasing of marketing costs? Alternatively, was EBITDA growth simply a function of operational gearing and a good revenue growth? I'm also just trying to think about how that EBITDA evolves and flows through the rest of the year. Just really a bigger picture question on Germany in terms of competitive dynamics. Can you maybe just talk a bit more about what you're seeing on the competitive landscape for both mobile and also broadband? Answer your first question, no significant one-offs in the first quarter. We don't ask for furlough support. We're basically using the resources which are usually working in the shops for service activities. I think you can see also in our customer acquisitions that marketing costs are relatively, I would say, comparable with regard to the previous years. Therefore, no significant one-offs. On the German market, on mobile, I think you've heard that story probably a couple of times, at least a couple of several times. Obviously, it remains broadly unchanged. We have these three segments, as you know, the discount segment, the fair value segment, and the premium segment. There's not a lot of spillover. We did not change our prices and still basically we made 167,000 branded net adds, which is higher than last year. The market segmentation, as I said, basically keeps stable. Obviously on the discount segment, there was always a lot of promotion activity, as it was in the past year or so. I don't see any kind of significant changes right now. Therefore, I would say we expect that this continues in the future. On the broadband side, look, that's the debate on broadband. We always said, I think customers are buying for a bunch of reasons, and that is obviously a sufficient bandwidth, a good service proposition, a strong brand, especially throughout the crisis. I think that is a key driver and obviously a superior TV proposition. That's one of the key drivers why customers selecting us over others. This is why we're getting to that 50% broadband coverage. It proves the point that a gigabit standalone is not competitive against this kind of portfolio of reasons why you would buy this. From a competitive environment, I would say, also from our side, not a lot of changes, but Hannes, please, if you feel differently, let me just slow. No, I don't feel differently because I think that's the right way to look at it. Importantly, of course, if you have stability and let's say midterm stability on wholesale prices, that helps. I forgot to highlight just now that we also raised the recurring fees because some of our competitors base their pricing on recurring fees. They are up, right? Just keep that in mind. There's also talk about our competitors. There was a comment today in a conference call that we are, let's say, promoting very aggressively and in fixed line, that's not correct. We shifted to a six months promotion from a 12 months promotion period at the beginning of 2018. Since then, we have not poured fuel into the fire. We are growing because of the factors that Christian has mentioned and not because we are promoting. As for margin squeeze, the German regulator looked at the pricing in the first quarter and found that there was no concern related to a margin squeeze. With that, I pass on to Josh from Exane. Thanks, guys. Hannes has just answered one of my questions there. The other one was going to be regarding slide 15. It'd be great to know two things. Firstly, if we were to strip out the kind of IFRS boost that we saw in 2019 and 2020, what would the underlying wholesale revenue growth have looked like through the course of last year? Specifically, would it have been growing or would it have actually still been declining like we saw this quarter? The second question, it may not be possible, but under the kind of old disclosure, before we included SMEs in the retail fixed revenue growth, if we just look at the pure consumer-facing part of the fixed-line business, could you give us a sense of how that revenue growth is trending? Is it also up quarter-on-quarter? Or is it more in line with previous trends? Thank you. On the wholesale, we guided for 2% growth in the Capital Markets Day 2018. Taking into account those various trends, there are always ups and downs. There are also termination rate cuts and whatever. I think it's pretty fair to say we delivered on that broadly over this period. 2001 is what we've talked about. This specific factor that you've mentioned, IFRS 16 benefit helped us EUR 50 million a year, last year and the year before. The base against which that's calculated, total wholesale revenues that we are showing, is over EUR 3 billion per year. It's been a tailwind of about a percentage points a year, on that basis, or just over. In terms of our fixed service revenues, we are seeing growth in consumer and in business. You can see that pretty much in the wholesale, sorry, in the broadband revenue growth of 6.5% this quarter. Okay. With that, we move on to Ulrich at Jefferies. Thanks very much. First question is, you issued the guidance obviously just well less than three months ago. What has changed that you would raise it quite so soon, geographically or by business development, if you can pin that down? The second question is, there were some structural changes in the first quarter, in Germany. How much has that contributed to the acceleration of the growth? I'm talking, I think what this Telekom IT shift. Does that really make a difference in this context, or is that just a wash or too small to really matter? Thank you. Yeah. On the guidance, to be honest, the results are so astonishing in the first quarter ex U.S., if you take a look at our 4.6% growth. Obviously, we had a discussion whether we're going to wait another quarter or whether we basically roll it into our expectation for the full year. That was the reason. Because the U.S. has increased its guidance. We wanted to make sure and basically doubling down on the point that it's not only the U.S. which is driving phenomenal results here, it's also the European segment. The second question, Ulrich, was again, can you repeat it again? There was a smaller restatement, sort of involving Telekom IT, if I'm not mistaken. Did that sort of contribute to the growth rate, to the change in the growth rate in any way? It's the track we're talking about, right? What we have is we have some smaller, we have a bunch of, let's say, complexities in that number. However, the trend is pretty much what you see, and we're showing the organic trend. When it comes to that is not impacting the organic trend. The one specifically you referred to doesn't impact service revenues. We've had, if I want to maybe highlight a few of the factors, but honestly, they shouldn't confuse you because they cancel each other out and they don't affect the fundamental trend. We had this, let's say, a shift of some business from Germany into GHS. We had a shift of some business, IoT, from T-Systems into Germany. We had a change in accounting for an IT contract, from gross accounting to net accounting, which is what we correct with the organics. In sum, we say EUR 50 million revenue impact and EUR 14 million impact on service revenues and that's in fixed service revenues, and that's corrected in the organic, and it's irrelevant for the EBITDA. There was one question I got from Emmett, over the email. Why is German EBITDA growth strong, when actually your OpEx is up? I think this is a really good opportunity to clarify OpEx, because I know we don't provide a split between indirect costs and direct costs. We told you that we have a target for indirect costs, EUR 1.5 billion over the period 2018 to 2021, in our ex-U.S. business. It also said halfway, last year in February, that we are tracking well towards that target. We are, and we will update on that next week. Yeah? Look, I will give a little bit more glance on the indirect cost reduction that we can really prove that we have reduced that cost. Look, why don't you see it on the overall OpEx number? As we are growing our IT business, you have transaction-related OpEx here in as well. The stronger the IT business grows, the stronger is the direct OpEx. Since we didn't basically split up between direct OpEx and indirect OpEx on the total number, you don't see that result. I'm going to show you some proxies which really and truly prove that the indirect costs, which is the harder one to address, is really being managed down significantly, especially in both areas, Germany and Europe. We're going to see that next week. Thanks, Christian. Also the proof of the pudding is obviously exactly that puzzle, which is the EBITDA is growing, right? That proves it, because otherwise that equation wouldn't really work. What I like about the results, especially when you take a look at the European results and the German results, the EBITDA growth is basically being driven by one is accretive revenue growth with an accretive net margin and a reduction of indirect cost. The European segment is continuing doing this for quite a bit. In Germany, it becomes more also the normal story, and I think this is exactly how I want to see EBITDA developing, that it's not only coming from cost reduction, but that we also see that the top-line growth is actually turning into positive contribution margin. I had another question actually on text, and I shouldn't maybe answering those first because I appreciate that people have put themselves on the line here in the queue, but it is a follow-up, let me just deal with this. The question is from Keval, and he's asking, would you mind clarifying comment on the T-Mobile stake that we will update on the stake build next week? Well, what we have said and will say again, and we actually said it at the Citi conference, that we intend to get to 50% and ensure control, and that's it. We are very clear on that. In terms of the specific tactics, how to get to that stake build, and the sequencing of it, I don't think we will guide on that precisely. No. Just to be clear, because we will do what is best. For that, we need some flexibility. We have negotiated the bits and pieces, or we have the bits and pieces to get there. We got the buyback, we got the options, we got the fixed price options, and that's what we can communicate at this point in time. Next question is from Usman at Berenberg. Hi, gentlemen. Thank you for the opportunity. I've got two questions, please. Firstly, on the earnings per share kind of target that you put in your annual report where it was stated that you would expect a decline in the EPS in 2021 before a strong increase in 2022. Judging by the Q1 results, it seems that the decline in this year is being overly conservative, but I just wanted to check if there are any things that we should be mindful of through the remaining quarters. That was the first one. The second question was again, looking to the ex-U.S. free cash flow. The working capital trends have been pretty incredible over the last three, four quarters. You've gone from continuous kind of leakages on working capital to now, at least last year, ex the factoring, we saw positive working capital development. In Q1, again, we've seen a positive working capital development. Your guidance is implying that you will have a leakage in working capital for the full year, and I just wanted to understand if that is conservatism or if there is something structural there that should cause it to revert back. Thank you. Let me start with the EPS. To be honest, it's unclear whether we see a continued dilution relative year-over-year or a slight increase. Obviously, we're seeing that the business is coming in better relative to our original anticipation. Obviously, I cannot predict how the share price will develop, and you know that it's being reflected in adjusted EPS. Maybe the dilution will turn into a slight increase, but I think it doesn't make a different story. We're going to see an increase starting from 2022 onwards. On the free cash flow, I would say very much it's related to the merger-related costs in the U.S., which weren't that high in the first quarter. That question was ex-U.S., right? Would you understand I wouldn't call this conservatism. Look, what we said is, I think we said it in the Q4 call. We said, look, we have structurally lost EUR 500 billion of free cash flow in the ex-U.S. free cash flow statement. EUR 200 million is the suspension of the BT dividend. Obviously, since the U.S. is financing itself, we don't have a return from the financing activities which we had. There's also an IFRS 16 effect on this one. Now we're coming back. I think what we're doing is that we're continuously having more focus on the free cash flow development. Therefore, being more precise on what we're going to do and how we improve it, and this is also being reflected in the upgraded guidance. In Germany, to be honest, we haven't spent that amount of CapEx, which we were originally planning to. I would also say there are some of the phasing effects in there, but I wouldn't call this structural. Okay. Thanks, Christian. Be happy with the guidance as we have provided it, and I see no reason to change it today. We just increased it. Yeah. Next question from Jakob at Credit Suisse. Hi, thanks for taking the question. Two questions on the commitment model for fiber. Firstly, if I can just check, you say the new commitment model rates will kick in from next quarter. On my math, that's roughly a 3% point hit to the wholesale revenue line, it'd go from about - 2% to - 5% onwards. Does that sound roughly like the right ballpark in terms of the impact from these new rates? Then just secondly, a point of clarification. Just to be clear, when you set the guidance originally at the end of last year, were you assuming this step down in wholesale rates or is that something that's also changed this quarter? To put it a different way, would you have had a bigger increase in guidance if it had not been for this change in the wholesale model, specifically for 2021? Thank you. On our original guidance, we didn't have full visibility on the wholesale rates because this was still under negotiation with the Bundesnetzagentur. The commitment model which you have seen on that chart is the officially announced numbers, which you see from the Bundesnetzagentur. This is not what we effectively billing to customers. I wouldn't make a read across as you've done it based on that chart, because I think we have to compare the old billed revenues versus the new billed revenues if you compare the old model versus the new model. Hannes, you have there more detail on that one. Yeah, I think there will be a step down in wholesale revenues in the next quarter. We are not providing the effectively billed rates, but low single-digit deterioration in the run rate is okay. I would say while we didn't know the final for all the wholesale contracts, this is not a risk to our guidance. No. Okay? That's not a risk to our guidance, and we just raised the guidance, by the way. We didn't raise it really because of what we agreed on wholesale, but we didn't lower it because of that either. We are providing a pretty comprehensive picture of our outlook today. Next is George from Citi. Yes, good afternoon, thank you for taking my questions. I have a couple of clarifications also on the new commitment model. Just regarding the mix of customers, I think, Hannes, you mentioned that around a third of customers take the 100 Mbps offer. I was just trying to check if that's wholesale or overall, and if you don't mind just giving us an indication of how that is changing over the years. Linked to that, I think just now Christian mentioned that the way you bill your customers may be slightly different than what we are seeing here. I was wondering if there are incentives for them to move up to higher speeds, if there are extra discounts they may be getting versus the headline offers we're seeing on 500 or 250 and so on. Then my second question is around the ICT revenue growth. I was just wondering if you could give us an indication of what kind of gross margins you get on these revenue streams and also if now the margin may be lower than connectivity, but whether it is improving versus what ICT revenue or margins used to be historically. Thank you. Okay. On the mix of customers, we said at the full year results, 25% of our retail customer base pays for 100 Mb or more. We said now that 3% of our wholesale bitstream customer base, which is close to 8 million, pays for 250 or for a super vectoring contract. Therefore, we're not providing more detail on this except that we have shown that on the retail side, the percentage of the 100 Mb customers has steadily increased, of course, it will continue to increase. We are not predicting that on a line item basis, let's say here. It will depend on the customer demand. I don't think we provide granularity here. We will surely give you an outlook also related to our wholesale business at the Capital Markets Day next week. Maybe that's easier. Okay. Christian? Let me try to dwell on it a little bit on the IT revenue growth. First of all, we don't have full visibility what's going to happen to the market, as I said earlier on. We're positively cautiously optimistic, but it's not like that we're saying there's going to be a massive revenue boost over the remainder of this year. Secondly, on the gross margins, I think it very much depends on a project. We have IT products which gives you a 90% gross margin, where you have a one-off payment and then you have recurring revenue. The target you are shooting for is somewhere in the vicinity of 20%-25% across the whole portfolio. Obviously, the best way to improving the margin is obviously by driving the mix towards the higher profitable products. I wouldn't say that we're going to see a drastic or structural shift relative to what we've seen in the past years. Thanks, Christian. Next, we have Robert at Deutsche Bank, please. Yeah. Thank you. Back to B2B, does the public sector contract win Q4 last beyond the quarter? With regard the catch-up spend delayed from Q4, was there any particular type of business that is now being unlocked or is it just general catch-up stuff? Secondly, has there been any discernible change in the towers market or change to your way of operating, thinking about towers since the IPO of Vantage Towers and/or Telefónica's deal with AMT? Thank you. Okay. On the first one, you're right. We are having seen strong public sector business in the first quarter. That said, when you look at the first quarter, you need to also consider, what is surely striking is the acceleration relative to the fourth quarter. In fourth quarter, we had a deceleration. Why was that? Because we had significant COVID headwinds in the fourth quarter on a year-on-year basis. Please, it's more normal than what it looks like. That's maybe point 1. Point 2 is, yes, we have exceptional level of public sector business, and this is not going away for the year. Let's see how much it will continue to happen in the future. What is clear is Germany has a lot of upside in digitization, and we are well positioned to participate in the space. How much is now, let's say, in Q1, is deferred spending from Q4? We cannot really say, because the customers won't say, we didn't do this in Q4, now we are doing it Q1. We also don't know if it continues in Q2. Probably there is an element of catch-up, but there could also be a secular shift towards more digitization spending, and we can't keep it apart right now. Christian, you want to talk about the towers market? I think there's not a lot of new news on the towers market. You know that the towers market is super dynamic also in Germany. We've always said we're open on towers if we find a better solution relative to operating the towers itself, whether it's going to be a minority sale, whether that's going to partnering up with other tower operators. We haven't taken a decision on this one yet. Obviously, we were really eager to see what's happening with the Vantage IPO to basically have also a benchmark into the market. We haven't taken a decision yet. Therefore, there's nothing new on the tower side. We also don't expect that Vantage or Telefónica will have a massive impact on us and DFMG in the upcoming months because they are not new in the German market. From this perspective, I think, I wouldn't call out anything massively different relative to the previous statements which we've made on towers. Robert. Okay. The next question is from Steve at Redburn, please. Good afternoon, guys, thanks for taking the questions. I'll go for a couple a second, maybe in a couple of parts. Turn off. Just sorry to come back to the new commitment model, which obviously getting a lot of interest. I just wanted to understand whether there were any changes in the sort of level of volume commitments from your wholesale customers around the new deal and whether the regulator had sort of put measures in place to avoid you crowding out potential overbuilders or whether you're kind of free to lock your wholesale customers in for as long as you like. About 10 years, I guess. Any color on that would be great. Secondly, just on sort of general COVID, I guess the prevailing wisdom is that COVID is such as a headwind. If I look at your numbers, it's very hard to discern that apart from mobile service revenues, particularly in fixed. I guess the question is, as we come out of COVID, are there any things that concern you at all? I mean, O2 was saying they've been struggling to sell broadband connections because their stores were closed. Is it possible that you've been particularly advantaged because you're the incumbent, because there's been a rush to get broadband services? Just as the quick add-on is, if TV sort of stands out growing at 10%, ARPU up, looks like sort of 4% or 5%, is there anything weird in those numbers? Because it's an outlier against what everyone else is seeing in pay TV across Europe at the moment. Thanks. Well, since I've been taking some of those wholesale questions, maybe I just continue on this one. The regulator was very supportive during this process. The regulator understands that we need some visibility for the investments in fiber and is trying to support investments generally. Also keep in mind, this is not, let's say, a new construct for the German market. This is an evolution of an existing model and an extension to fiber. We've had a contingent logic, which was a kind of commitment logic before. Now we have similar incentives in place to provide commitments going forward. This is a evolution, and the regulator was very supportive during the process. Why don't I take the COVID question? If you recall, Steve, we said the negative COVID headwind, which we're facing was all up in 2020, around about EUR 200 million on the COVID impact. Obviously, we didn't anticipate a lockdown quarter in the first quarter this year. I think we expect, especially in the second quarter, since we're rolling over better year-over-year roaming results. We don't see a structural change relative to the key drivers. What we're seeing is, again, we're seeing some slight improvements on the IT, but you never know whether a swallow makes a summer. What we don't see right now is an increase in bad debt, still not. We'll see how this develops. There's no significant change, and I think we discussed it also with regard to the new guidance, whether we would basically be willing to take that risk absolutely on this one. On the TV stands out, I'm not 100% sure whether I'm getting the question. Look, what I'm not massively impressed by is the net adds in Germany with 32,000. I think this is below the previous quarters. I think we get very high ratings on our TV proposition, and we really have to see whether it's only the shop closures, which is the explanation from management. I think we got to work on this one and how it splits across the European segment. Does anybody help me here? Because I don't have the numbers with me. European segment had a good quarter. On TV, because we had totally net adds of 80,000. Yeah. There was nothing particular in this. We are selling TV. The way the distribution is different in different markets, there's some quarterly volatility always in these numbers. Let's see if we can say anything on the regional distribution. Christian, do you have some more detail? Anyway, across the piece, of course, TV wasn't so bad. Germany was a bit weaker. This was a bit stronger. Germany will be stronger again. I can help here. I got the net adds in front of me. There are three countries which are standing out. Hungary grew the net adds by 18,000, Croatia by 26,000, and even Poland grew the net adds on TV by 13,000. That obviously is a strong contribution to the overall 80, which we announced for Europe as a total. Okay. Considering also we'll have a lot of time together next Thursday and Friday, let's maybe have two more questions. Start with Ottavio at SocGen, please. Hi, good afternoon, thanks for taking the questions. It's basically a follow-up on the new commitment model. The rationale it's pretty straightforward. You grant a price discount, in exchange you get long-term commitments which enhance revenue stability and also up-sell and cross-selling improve the mix. What's not clear is how stringent these commitments are. If you can give us a bit of color, how many lines they cover. Will they cover the same amount of line during the entire duration of the contract or the line could reduce? What is also difficult for us to understand is that publicly, Deutsche solely appealed fiber rollout until 2024. We're talking about the real targets. While on the other side, your wholesale customers are committing for 10 years. Have you provided different visibility and which sort of visibility you provided, and if you can share this with us. This new commitment model contract extend also to networks that you roll out by JVs or that will be subject to different agreements? The second question is very straightforward. What's your market share at the moment in the provision of broadband for households renting their flats from housing associations? Thanks. Okay. We've given you a lot of color here. We're not providing details on all the commitments. Let me correct you or, let's say, maybe add a little bit on your first summary, because I don't think it's right. We did not cut the prices in exchange for long-term commitments. Over the lifetime, we are raising the prices, okay? We are raising the prices over the lifetime. There are multiple accretive elements. The commitments are on top. The commitments are basically related to penalties or to certain structures, some cost structures and so on. We will not go into this as a contractual detail. They are not actually the same for everyone. We feel very good about this contract. We feel we have a solid level of commitments here. Have we given them more visibility? We have actually said that our plan is to have 100% of Germany connected by 2030, and we have also said that we'll be the largest contributor to this. I think that's what we've also told our JV partners. Apart from that, we have given them our plans through 2024 that you've also seen. That's, I think, all we can say on this. Market share in broadband for housing associations, I'm not sure if we can provide this right now, but on the TV market, for sure, we are under-indexing. You can see our TV market share for the whole country. We have tried to compete in the housing association market. We have had some successes there. We had a housing association with 50,000 units that we gained last year in the fourth quarter, for instance. We have in total, I think, about 300,000 customers up and running with our own housing association business. This business model is going to change anyway now. Clearly, we have upside in this market. There's no question about it. Christian, anything to add, or are we okay then? No, I think it’s fine. I think on the visibility, Ottavio, we’re guiding until 2024, and as we said, we will continue to build out fiber and therefore it’s being reflected in the JV contracts without having been super explicit what’s going to happen beyond 2024. Expect that we continue to build out fiber there. The last question then, and sorry for those who we're not talking to today, but I'm sure we'll have lots of time together next week, is for today from James at New Street. Yes, thank you, Hannes, and congratulations to all of you on the strong results today. I have two questions, please. The first one was just regarding the European Recovery fund. I believe April 30th was the deadline for the German government to submit their plans to Brussels. I'd just be interested to hear what you've seen around those plans, how you think those plans might directly help the telecoms industry, and maybe more materially, how might they help indirectly if there are more subsidies to SMEs to continue to digitize across Germany? How well-placed do you think you could be to capture that opportunity? Secondly, just to come back to the guidance upgrade, which is obviously great to see, but the question I had is could it potentially go up further? If I think about the guidance growth you've just done, I think almost 4.5% growth in your non-U.S. business. The guidance implies that's going to slow, I think, to 2% growth for the rest of the year. Yet we should be lapping some of these COVID headwinds on roaming. I know maybe there's a little bit of wholesale drag to come, but I just wonder if there's anything specific to call out for the rest of the year that might actually lead to EBITDA growth slowing. Thanks very much. Let me start with the guidance question. The latest greatest which we have given to you is obviously the guidance upgrade ex U.S. today, which is the + 100 and + 100 on EBITDA and free cash flow. Look, if the business is developing even better than we expected it to be, obviously there's going to be discussion internally whether we can further raise the guidance. Right now, this is our best understanding on how the year will develop, and that allows to increase the guidance by EUR 100 million and more and not less. On the European Recovery funds, I think EUR 24 billion of this is earmarked to digitalization. There are a couple of things. First, we have a team working on this one and figuring out what are the opportunities where we can actually tap into. What we've identified so far is a potential of low triple-digit EUR millions. It is not clear to us yet how this basically can be pulled. Obviously, this is something where everyone's looking into, both on the Europe segment, but also on the German segment, on how we can basically use those funds. How they will develop and how they will help and which segment they will help, I don't know right now. Potentially, we can also discuss that question next week, because we have the segments available to answer those questions. What is clear is digitalization is a big subject across our various subsidiaries, Germany, but also some of the European countries which will maybe get a bigger share of this pie, right? Because they are in a structurally weaker situation like Greece or so. Just to keep that in mind, the disproportionate share will go to some of these countries rather than to Germany. In Germany, you already have EUR 1.5 billion-plus annual subsidies, and they will go up a bit, and so there's no lack of subsidization in Germany for broadband. We have now also will get, let's say, a new regime for the in-house wiring and so on. So there's a lot of political support for digital investments. Beyond that, there's a lot of interest from the industry, from the public sector in digitization. We will talk next week definitely about how we are positioned to take a share of that. Look, the learnings from the German subsidiary regime is it's not about the budgets. The budgets are available. The key question is how to make use of them and how can you pull it? If you basically take a look how much we have for the rural build-out, obviously, there's way more money than actually is used by the different operations. We have to see here as well on the European recovery fund, how they will make the money available once they have clearly defined what qualifies for a project and what not. Yeah. Digitization is a broader subject. We are well-positioned, I think, to be there. With that, let's maybe close up for today. Thank you very much for your time. As I said, we will have plenty of time together next week. We very much look forward to that. We will have eight presentations in total. They will also be available by replay. I hope this will work for you all and look forward to speaking to you then. For today, let's thank you again and wish you a good rest of the day and look forward to next week. Yes. Hopefully see you all next week at the Capital Markets Day. Thank you. Cheers. We'd like to thank you for participating at this conference. We are looking forward to hear from you again. Goodbye.