Good afternoon, welcome to Deutsche Telekom's first quarter 2023 conference call. As you can see with me today are our CEO, Tim Höttges, and our CFO, Christian Illek. Tim will first go through a few highlights, followed by Christian, who will talk about the segments and our group financials. After this, we have time for Q&A. Before I hand over to Tim, as usual, please pay attention to our disclaimer, which you'll find in the presentation. Please also note that the conference will be recorded and uploaded to the Internet. Now it's my pleasure to hand over to Tim. Thank you, Hannes. Welcome to the first quarter 2023 results call here. We had a good start to the year. Customer growth and financials were in line or even better than we expected. We're stepping up our 2023 guidance. Our leverage has taken a big step down. We are now at 2.9 times including leases, at 2.3 times excluding leases. We achieved the majority in T-Mobile US, which you have noticed already. We continue to deliver consistent growth, by the way, in all our businesses, as promised. Let me go through some highlights before Christian will then deeper dive into the quarter. Our growth continued in the first quarter. All segments contributed here. Organic group service revenue grew by 2.6%. Ex U.S., it grew by 2.2%. The organic core EBITDA, ex handset lease revenues, increased by 4.4%, ex U.S. by 4.6%. The ex U.S. EBITDA growth was impacted by cost phasing in GHS, and we expect it to re-accelerate in the coming quarters. Germany has now delivered 26 consecutive quarters of organic EBITDA growth. The European segment, 21 quarters. I've asked for the U.S., but Hannes couldn't deliver it because I think it's something in the vicinity of 40 quarters. You see all areas on growth and as well T-Systems are growing. Total organic revenue were down year-on-year, and that is something we're gonna explain later. The main driver of it is explained by 20% lower U.S. equipment revenues, which we don't have after the Sprint merger has been accomplished. The decline mainly reflects two temporary effects. The first, our planned unwind of handset leases. This constitutes a headwind of more than 1%. The second is the anniversary of particularly strong handset sales last year, when we seeded the Sprint base with handsets that functioned on our network. Both of that are not recurring in the future and therefore, we see the decline in our group revenues. Moving to the networks. The foundation of our growth remains our network leadership and all the investments we have taken here. We now pass almost 14 million European homes with FTTH, up by 3.1 million households year-on-year. We passed 5.7 million German homes with FTTH now, and our ultra capacity 5G network reaches 275 million U.S. PoPs. We are way ahead of our competition, and we will reach 300 million PoPs by end of the year. In Germany, we cover 95% of the population with 5G, and 92% was the number last year, so another increase of 3 percentage points. In the European segment, we stand at 51%, up 20 percentage points in the last 12 months. Our strong customer growth continued. In fact, in most categories, it even accelerated. In Germany, we benefited from our new mobile tariff plans and from the end of last year's headwind from the telecom law. Moving on to ESG. At our AGM in April, we sharpened our climate ambitions. We now want to reduce more than half of Scope 1- 3 emissions already by 2030, and we keep our climate neutrality goal for 2040. In addition, we now strive to reduce our Scope 1- 3 emissions by at least 90% under 2024. You should know that a reminder of the 10% under 24 is going to be carbon capture. Despite strong growth in data usage, we managed to reduce our energy consumption once more, despite the fact that our data consumption cloud, our build out is increasing. We were able to reduce it by another more than 7% in the 1st quarter, and this on both sides of the Atlantic. Now let's move to our guidance quickly. As expected, a couple of weeks ago, T-Mobile US raised its guidance for customers' EBITDA and free cash flow. Today, we reflect this by raising our group EBITDA guidance by EUR 100 million, as you can see on chart 9. We expect 7% core adjusted EBITDA growth in 2023, and more than 40% growth in free cash flow. Note that our guidance remain based on a US dollar exchange rate of $1.05 and continues to exclude any contributions from GD Towers. Please refer to the appendix for a like-for-like comparison of our guidance with the latest consensus. With that, very quick, after five minutes, I hand it over for a deeper dive to Christian for further details. Thanks, Tim, welcome everyone, I gonna slow down. Yeah. Well, let me start with the US. I do comment there. Revenues were down year-on-year. I think it has been mentioned by Tim already. This is due to lower equipment revenues. You know that we have a planned reduction in the handset leases, but also we had an unusual high amount of revenues coming from handsets in the last quarter and the first quarter 2022. Since the customer migration has come to an end, obviously that number is coming down. Service revenues were up by 2.8%. That is driven by two different factors. We kind of have a reduction in our wholesale revenues in the vicinity of EUR 200 million on a year-on-year basis, whereas our retail postpaid revenues remain strong with a growth rate of more than 6%. Core EBITDA based on US GAAP was up 9%, obviously driven by the top-line growth by increased synergies, but also by the increase of the contract asset. As you know, we have given you a breakdown between core EBITDA into IFRS, Adjusted EBITDA. This is being reported on page 29. What you see there, first from core EBITDA, we have obviously a planned reduction in handset leases, which is the roughly EUR 115 million less revenues coming from almost EUR 500 million last year. The second one is from the bridge from US GAAP into IFRS. We had a fairly regular, I would say, quarter in 2023 when it comes to the EUR 200 million. We had a very, very favorable quarter in last year, which was giving us a hard comp on a year-on-year basis. Look, T-Mobile continues to deliver strong customer growth numbers, 540,000 post-paid phone adds, more than half a million high-speed internet adds. We have now a total of more than 3.1 million customers into our installed base, which gives us a good direction towards the 7 million-8 million by end of 2025. This is the reason why T-Mobile has increased its customer guidance by a quarter of a million. We're now expecting a range from 5.3-5.7 net adds, and obviously around 50% of that is gonna be phone net adds. That would be my report out on the U.S. Let's move over to Germany. Already mentioned 26 consecutive quarters of EBITDA growth. Organic revenue growth was 2.3%. Organic EBITDA growth was 3.1%. As you can see on page 14, service revenues grew at a total of 1.6% in the given quarter on a year-on-year basis. Mobile was coming in at 1.7%, and we expect a similar growth coming up in the upcoming quarter. I think in the last quarter, in Q3, we flagged that we had some, I would say, tailwind coming from roaming and from visitor revenues. Also, the Lebara loss was offset by some one-timers. If you include everything in, if you include Lebara and if you include the termination cuts, we would be in the vicinity of a 3% growth rate. Fixed service revenue strengthens to 1.6%, as you can see, it's very much driven by a strong broadband revenue growth of almost 5% combined with strong IT revenues. Again, recall back what we said last year in Q1 2022, we had some supply bottlenecks. Obviously, now on a comp basis, we're benefiting from this in the year 23. The wholesale revenues on the lower right-hand side were actually a bit weaker this quarter, there's a big one-off being built in there. Let me rest assured you, we expect a strong development and a rebound, and we expect stable to slightly growing wholesale access revenues for the full year of 2023. Coming to our customer numbers, you see the 74 broadband net adds, 50,000 TV net adds, strong result relative to what we've seen in previous years. I think we're making a very good progress in upselling customers, which you can see here now in between Q1 2022 to Q1 2023. We increased our customers with at least 100 megabits bandwidth by more than 1 million, and we have now a representation of 42% of our complete broadband installed base having those tariffs. A new chart which we have added to our presentation is the disclosure on FTTH customers. We have an increase Q over Q of 65,000 FTTH customers. However, we're building and we're coming from a fairly low utilization. Let me give you a handful of arguments why the utilization is actually that low. First and foremost, it's the exceptional strength and quality of our vectoring network. Customers don't see a necessity to upgrade to FTTH so far, but the demand will come. If the demand is coming, we are ready. I think vectoring is one of the biggest reasons. Second, as we're accelerating our build, obviously that impacts the denominator on the utilization in a negative way. The third one is, there is a meaningful time lag between homes passed and homes connected. You see this on the chart 16 with the 550,000 customers. These are customers who have signed a contract but haven't been connected yet. That time gap obviously is part of our operational review on how to shorten this. The fourth one is the build-out mix, and we have a more focused area on urban areas relative to the overbuilders. Obviously competition in urban areas is higher than in suburban or rural areas. Finally, we do not require pre-commitments from customers as some of our competitors do. We're building out if we believe the business case is in our favor. What you should expect when it comes to FTTH monetization, expect a continuously rising tide as we're moving into the future. On mobile, very strong customer numbers on mobile, 274,000 net adds. It's basically distributed between Magenta 1 mobile on consumer, more than EUR 100,000. Strong B2B results was close to EUR 100,000, and Congstar is still contributing roughly EUR 80,000 into that mix. That is a very good sign because that means that the new tariff scheme does not cannibalize against Congstar. It cannibalizes and it's taking share from competitors. Also what you see is that the churn rate has significantly come down. Obviously, this is driven by a phasing out of the Telekommunikationsgesetz effect. Moving over to Europe. Again, Europe growth on a reported basis 3.8%. On an organic basis, 4.9%. I think it was the zloty and the forint which was hitting us in this quarter. Despite meaningful headwinds, as you can see on the lower right-hand side, we're still able to deliver growth despite the fact that we have the Hungarian special tax and higher energy costs compared to what we've seen in the last year in the first quarter. Systems. Order entry was down, this is an effect due to a very strong order intake in Q1 2022. Revenues were up by 4.5%. EBITDA was growing by 4.6%. I think we're well on track when it comes to T-Systems to meet our annual targets. That would be the end of my operational review, and let's focus on some financials. What you see is on the revenue, obviously we're growing, but we're not growing at the same pace as we have grown in the past. That is obviously because of the lower equipment sales, which I just mentioned. There's some phasing in there. Don't forget, there's a deconsolidation element of GD Towers because GD Towers is only being reflected for 1 month in our Q1 numbers. As I mentioned GD Towers, GD Towers is obviously the biggest impact on the net profit number, which came in at EUR 50.4 billion because the deconsolidation result was EUR 12.9 billion on day 1 for GD Towers, which drove up that number. You can later on see it in the decline of our net debt. It brings me to the next chart, free cash flow. Free cash flow is slightly below below the previous years, basically driven by 2 effects. One is we had higher lease payments, you know that the U.S. has basically did a $1 billion prepayment in 2021, which obviously helped in 2022, but it's not repeating in 2023. Therefore, we have the higher lease payments. We have some front loading of the CapEx, but again, we're keeping our CapEx guidance, don't expect that there's something popping up in the upcoming months. Again, Tim said it before, we're expecting a greater than 40% free cash flow increase for this year. On adjusted net profit, roughly $2 billion. What you see here is, there were some positive effects, especially in Q1 2022. This came down to the option value. That came down to the appreciation of the value of the forward. That came down to the release and provisions for some pensions. That effect was, in that EUR 2.2 billion number, roughly EUR 700 million. In this given quarter, the one-off effect is only EUR 100 million. If you basically take it out, you see an underlying growth of 19% EPS growth on an annual basis. Last chart is the deleveraging chart. What you see is obviously we have delivered by without leases, by close to EUR 11 billion. You see the impacts by the free cash flow, but also from the tower transaction where we received a EUR 10.7 billion cash in. We had some favorable Forex movements which helped us as well. That brings us now to a ratio, a net leverage ratio without leases to 2.31, coming from 2.58. Also we're meaningfully below three when it comes to the leverage ratio, including leases. I like this chart so much, you can't believe it. With that, I hand it over to Tim. Yeah. Thank you, Christian. Let me wrap up this call by reiterating some takeaways from my side here. I think, you know, we had a good start to the year despite the fact that we have ongoing high inflation, we have ongoing high interest rates, we have a more intense infrastructure competition here in Germany, and on top of that, we see as well that the geopolitical situation is not relaxing. The stability anchor, and what we wanna be, at least, you know, we are able to confirm first quarter, and we are very optimistic with regard to the reminder of the year. Our commercial performance was outstanding strong. I like to even, you know, appreciate what Germany achieved on their customer growth sites, both on fixed line and on mobile. We have continuously growing EBITDAs. 26 quarters in Germany, 21 success quarters of organic EBITDA growth in Europe. In the US, you know the results. This is very solid and I like to even appreciate T-Systems' first quarter here. We are on track ex US guidance, and we raised the guidance for TMUS and the group guidance. You know, this is good in times where uncertainty is high. We now own more than 50% of T-Mobile US, I think it was 50.4%, which brings us closer to our stable ownership here. We are happy that, you know, the leverage has stepped down significantly, and you see now the benefit and the relevance and as well the brilliance of this tower deal and its valuation. EUR 10.7 billion reduction of our debts 2.3x ex leases by the end of March. We remain well on track with regards to our capital markets targets. I think they are almost all green on their way going forward. Growth is the area I'm focusing on in every area. I think it's encouraging to see customer growth everywhere, but I can tell you, I wanna see more of this in the upcoming quarters. That is what we are working on. With this, we're looking forward to your question. Thank you. Thank you, Tim. Now the answer to the T-Mobile question is 33. Okay? 33 quarters of consecutive EBITDA growth on a like-for-like basis in the US. Ahead of Germany, but not as far as ahead as you would think. The answer comes a little bit late, but it's okay, Hannes, I accept it. It's good to have a good answer, even if it's late. Good news can wait. Thank you very much, Tim, by the way, for those remarks, and Christian. Now we can start with the Q&A part. I think I can already see Josh, but before we go there, just to repeat the instructions, you can ask question via the Webex. You have to press the lift hand function. If you want to cancel, please press lift hand again. On the telephone, via the telephone, please press star 3. If you wanna cancel, press star 3 again. I will announce your name when it's your turn. As usual, I would be grateful if you could restrict yourself to two questions. Now, with that, Josh, it's your turn, please. Thanks, Hannes. Hopefully you can hear me. Two questions from me. First one on pricing and the second one on Huawei. On pricing, in the last few months, we've seen discounts being removed, some front book price rises, including from yourself, and also the first back book price rise from Vodafone. The question is, firstly, how your price rises have landed in April on the broadband side, and secondly, whether you're starting to see better customer inflows given the price rises from your competitors. On the second question around Huawei, which I know can be sometimes a contentious topic, but in recent months, we've seen a lot more press attention about the potential for a ban. There's now an ongoing government review into the rol e which Huawei will play into the networks. The question is, you could use this format to maybe lay out your position regarding the role of Huawei both in the core and the RAN network and how you're approaching this topic with the government. Thank you. Okay. let me start with the first one. I think on the pricing, we had different elements on the mobile pricing in this in the first part of the year. We saw some aggressive moves from O2 in the first, you know, quarters. We have seen, you know, a little bit, let's say, taking dynamic out of the pricing from Vodafone. By the way, we are not participating on the mobile side in any kind of price competition here. We have launched a total new portfolio of mobile pricing, which is the next Magenta, which is the family offers which we have in the market, and that is what we are focusing on. That is not about, let's say, pricing here and there. It's about, let's say, bring the families together and the communities into one thing. I think there is no tendency of a decline here on prices. It's more a stability of the price environment here, if you ask me from how I look on the situation. On the broadband side, we have seen that the entire competition has relaxed a bit, that everybody's trying to pass through the higher costs. We did the same. For our tariffs in the entrance tariffs here, we have this price increases, and as well, we have taken out some promotions here from months for free. I would say everybody's trying to reimburse his higher costs, which they're facing from the build-out cost. That is, I think everybody is in the same camp in this regard, trying to pass through some of the inflation. When it comes to Huawei, look, this is speculative territory. What Deutsche Telekom and what the other carriers are doing is we are just following the law and we are just following the political guidance on this area. There is no ban here of Huawei and I even don't see a ban coming. For Deutsche Telekom speaking, the last components in the core nets were moved out where Chinese equipment were used. We are now mainly using antennas of Huawei, which is the access node side. There is a report to the security authorities about which kind of Chinese equipment we're using and which kind of part of the infrastructure. There were no reclamations or criticisms from the security authorities towards the pieces we are using. We have always a process inside of the company about a plan B about when something might change radically, how we are then proceeding and what that would mean. We are anyhow more working on a de-risking than on a decoupling scenario going forward. The volume of Huawei, which is our only provider, you know, got reduced already in the past and Open RAN will help us as well in this regard. I would say it's more a little bit, let's say, a degrading here and a focus on a de-risking, than, you know, working towards a total ban of Huawei RAN. George, just to add to the first question you asked about current trading impact. We are not commenting on current trading at this stage. I think you should normally expect a normal quarter in the second quarter of this year. Okay, with that, moving on over to George at Citi, please. George, you can hear us? Yes. Thank you guys. Thank you for taking my questions. I have two questions. The first one is also on regulation, there's been obviously some discussions about the 800 MH spectrum as usual, also some demands from one of your competitors for potentially some 5G roaming arrangements to be mandated. I'd be interested to hear your thoughts on whether you think there is any, let's say, support for some of these proposals from the authorities that you discuss with. My second question is on towers. It's almost 10 months now since the time of the announcement of the deal. At the time you used the expression, "After the game is before the game." Now one of your competitors also played their game in hand. I was wondering whether the conditions are right for you to look at the next stage of your tower monetization, crystallization journey, whether you still want to play a bigger role in consolidation in Europe or not. And any indications on the timing of these kind of considerations would be great. Thank you. Good. Look, it's funny, very funny, entertaining funny that, you know, now after 30 years of telecommunication and mobile competition, we are now starting to start a discussion about national roaming in the market. I do it even as global, a single market where national roaming is part of the regulation. But, you know, it seems to be a German disease that we like to discuss everything. I think, you know, there is no substantial or legal justification for such a request. And the statements I heard from Vodafone and as well from O2 are the same than mine here I haven't talked to these guys, but, you know, we are all sitting then, it's a little bit absurd. Mr. Dommermuth, you know, he has a national roaming. By the way, he negotiated with all operators on this kind of stuff, and he decided to sign a national roaming with Telefónica Deutschland. He has one with O2 here in Germany. Therefore, that he's now asking for a regulation on this one, that is a little bit, let's say, surprising for me. On top of that, I think, you know, this super roaming, as we call it, you know, getting access to every network at the same time. You know, this is something think about that one. Why should somebody invest into an infrastructure if he can always, you know, aggregate the best of all? I think this is counterproductive for investments. It's counterproductive. It's totally unfair compared to the other telcos and the network operator. Therefore, I'm relaxed on this attempt here. I think, you know, it might deviate from other discussions here, but I do not wanna go into this here at that point in time. Let's keep a focus on it. At least you know, marketing wise, it has created some astonishing moments here. Okay. Let me comment on your spectrum question. Not surprisingly, George, a similar answer which you have received in the past. Obviously we are in favor of prolongation, but the agreement on a prolongation requires consent from everybody. If this is not being achieved, obviously we're ready for the auction, we always set this so we can go also for the auction. There's preferred scenario, which is obviously the prolongation, but we're not scared of entering an auction if there's no deal to be made. The second one on towers. Look, we just closed on February first, right? I know that there's a lot of flux in the tower market, whether it's being Vantage with the ownership change or whether it's going to be Cellnex with this new strategic orientation as we're seeing it. Look, we're continuously carving our towers in our portfolio, and if there's a good opportunity, we will look into this, that's for sure. There is no plan for another big deal, at the horizon. Thanks, guys. With that, we move on to James at New Street. Yes, good afternoon. Can you hear me okay? Great. Yes. Thank you. Yeah, two questions. The first one, please, was regarding the upcoming changes with bulk housing association contracts. I mean, I think there's obviously a big change coming up next summer on that. Some of these bulk contracts have already started to change in the market. I think Tele Columbus said there was one in the fourth quarter where they only managed to keep about just over 50% of their TV customers as a result of that. What I'm really interested in hearing from you, if possible, is on some of these contracts that are already being renegotiated now, what early indications are you seeing on TV customers you're picking up from those, and more importantly, broadband customers? Are you actually starting to pick up some broadband share in those contracts? The second question I had, please, was just regarding the T-Mobile US's share buyback. I mean, I think you said you're not planning to participate in that up until the end of September. That is starting to approach now. I was just wondering if you'd give us any updated thinking on what your attitude towards participating in that buyback could be beyond the end of September. Thank you. As you know, the abolition of the rental privilege in December 2021 still only affects newly built in-home networks. For existing networks, the majority of the homes in Germany, the abolishing of the rental privilege will come into force in July 2024. We see the end of this rental privilege as a big beneficial element for the competition here. It will provide for us a better level playing field for our own TV product and getting access to the large housing associations. We cannot be withheld access to in-house fiber infrastructure, which is super critical for our monetization of the build-out which we are driving today. As for the TV opportunity, customers no longer have to pay double if they choose our TV product. This gives us an advantage as well. We estimate this impacts about 12 million households here by 2025 or roughly one quarter of the German homes here. As of the fiber opportunity, we are focused on in-house fiber agreements with housing associations. In 2022 we ended already in such agreements for an additional of 2 million homes. We are continuing this at pace, at this pace. This is, let's say a little bit. To be honest, I know about very encouraging negotiations which we have. I cannot call them, you know, signed yet or, you know, announceable yet. There is a shift in the mindset of housing associations to get the latest and most modern fiber technology in the buildings. This is where we are coming into play, because we are by far the biggest builder of fiber here in Germany these days. This is opening up new opportunities. On top of that, we have the TV opportunity next year, which is starting, by the way, end of the year with the European Championship. You know that we have the exclusive rights on them and we will use this as well to sell more TV into this volume search of mobile therefore. I'm very optimistic, more optimistic than I ever was on this subject. Let's see how the numbers are developing then throughout the year. Okay. On the share buyback question, you know that we have agreed upon that share buyback of up to EUR 14 billion until end of September. As you see from the daily run rates, it's actually tracking well. It doesn't look like right now that we need until this time, but in any case, the authorization will end at these EUR 14 billion. This is subject to a board decision, whether we continue this year or whether we continue next year and to what degree. The second factor is that we always have to watch the true up development because, you know that our overarching target is obviously to secure a safe majority in the U.S., and this one has to be watched as well. Therefore, I think. To see how this plays out, and this is why we're giving you our guidance always that we're saying we wanna have a share ownership of in the low fifties, because we need that bigger room depending on external factors which may or may not kick in. Okay. James, does that, you have a further question? Well, just gonna, just to push on that a little bit. I mean, Christian, does that mean you're thinking about participating in the buyback, or the flip side is you could exercise the SoftBank options instead to increase your stake? That will be a discussion which we have to have internally. First of all, beyond the authorization there is no authorization beyond the 11 in this year or 14 in total. This is going to be a separate board discussion which has to be hold. The second one is obviously we have more, and we said this, we have more levers than we need. That was one of the reasons why in Q1, we basically closed the forward because we didn't need that insurance anymore. Obviously we will take advantage of the fixed price options because we're getting the shares at $101. That's for sure. That's going to be executed in any case. To what extent we are then selling in a potential new share buyback needs to be discussed, and it's too early to comment on this one yet. Okay, next question is from Polo at UBS, please. Yeah. Hi. Thanks for taking the questions. I have two. The first one is just about EC regulation. The EC have proposed a package of reforms, including the Gigabit Infrastructure Act, the Gigabit Recommendation, and there's also discussions about a fair share contribution by the largest traffic generators. In your view, what do you think the impact will be on both Deutsche Telekom and the sector, and how soon could we see changes? Second question is bigger picture in terms of artificial intelligence. This has been a big discussion topic for investors in recent weeks across the whole market. What is your view on how it impacts both Deutsche Telekom and also the sector, if at all? Thanks. I start with the second one, with the AI. I said it this morning, having the press call here. There was never in the last, you know, 20 years since I recall that, you know, a technology which had so much impact on thinking in management, but as well in the organization as AI had and the announcement of ChatGPT and OpenAI had. This is really a game changer in the way how we look at it. The curiosity and the adaptation rate within the company is super high. We have a program which consists out of three elements. The first element is, we have built a so-called AI Competence Center, which is working together with OpenAI and working on implementing LLM and ChatGPT, including fine-tuning and all the elements of it, our foundation in the customer service arena. This is, let's say, the big game changer. We used it already in the past, but we will now trying to exponentially develop the area of chatbots, the center, the call center support, and the network optimization, other areas where big data is affected. The second thing, where we are using AI now more intensively with the new tools in the market is the area of software development, led by T-Systems people. There's a big central initiative because, you know, we have a shortage of people and you know, how critical software development is these days. What can we do to optimize the costs and the time to market here. The third element is more a kind of, you know, big central support function, which we call AI Competence Center, so AICC. The AICC is offering not only the tools, they are the Q&A and the teaching unit for the rest of the organization. Every unit, function, or segment, you know, has to come up with ideas. What are the top, you know, ideas, the 5- 10 ideas, and what is the impact of implementing AI within these specific areas? This is something we have triggered, I haven't seen the results out of that. Might be network optimization, reduced energy consumption, predictive maintenance areas, time to market, optimizing productivity, preventive marketing, preventive maintenance, all these kind of things. I'm expecting now feedback from my organization, which will help us to improve our cost situation. With all, let's say, excitement about Deutsche Telekom's results, and where we are, I think, you know, the element of higher costs and IDCs and as well interest here in the company, and the build out costs, we have to work on the productivity and cost efficiency here. This will probably help us. Three elements, just, you know, here in a nutshell, how we drive AI within Deutsche Telekom and more to come. Let me unusually take the fair share question. You test me on the quality. Okay. Look, you know that the top six tech giants generate about 50% of our total traffic in our networks. We have two independent studies who are clearly indicating that we as an industry in Europe, have to invest about EUR 15 billion to just keep up with that traffic volume on an annual basis. This is why we actually welcome the consultation within the European Commission, whether the OTT shall contribute, yes or no. It seems to us, on a positive note, it's more a question on how, not a question on if. At least this is how we reading this. There's obviously a lot of pushback, especially from the OTTs against this. I think the basis why we're asking for this is very clear. It's the invest which is being triggered by the OTTs. Therefore, we are hopeful that we're getting to a conclusion which actually helps us as an industry to increase our returns. Maybe just also on the Gigabit Recommendation and the Gigabit Infrastructure Act, we're not expecting massive, you know, impact on the regulatory landscape in Germany because we have a fairly new regulatory framework that, you know, we are comfortable with. You know, we also have commercially agreed prices, wholesale prices that we have, you know, agreed with our main partners for a duration of 10 years plus extension. It's unlikely that the regulator will want to interfere with that on the basis of the EU recommendation. I think directionally helpful, but it's unlikely that they would impact the, let's say, the main wholesale prices in Germany, as it stands. Okay? By the way, let me add one sentence here. The first sentence is, guys, we have to work. It is totally stupid that none of these, few companies in the valley are incentivized to optimize the traffic in our infrastructure. You know, they can push every traffic into the network without any cost to it. You know, think about the environmental and the ESG element of this one. You know, because we are building capacity for nothing just to provide, you know, that the advertising models and all this kind of. A lot of waste in the network is distributed, and therefore we have to find anyhow mechanisms from an environmental perspective that we are, you know, creating this kind of traffic which is needed and rather, you know, accepting any kind of digital waste. That is one of the elements. The second element which I like to add, is, you know, we do not know where the money, whatever compensation is being negotiated, where the money is flowing. Is it going into an EU fund or is it going into, let's say, directly into the telco model, and as a kind of per use and per capacity? This is a negotiation which we, which we are having these days in the consultation phase. The last one is, you know, what is the traffic-driven contribution? You know, is it based on the whole infrastructure or only based on the backhauling? If you are focusing on the backhauling only, you know, we are talking maybe about EUR 2 billion or whatever, or EUR 3 billion. If you talk about including the last mile, the contribution must be beyond EUR 4 billion-EUR 5 billion. Therefore, this is the spot we are looking at. It's at least, you know, a big business to discuss. Thanks, guys. Now we move on to David at Bank of America, please. Okay. Thank you very much, and I hope you can hear me. Yeah, the fair share argument is interesting. I did notice both of you talked about the OTTs pushing data, which of course they don't. It's your consumers that pull it. It always feels to me that that's where the argument is a little compromised. I wanted to go a little bit more onto AI, if possible, because I know there are already benefits and some very impressive benefits being enjoyed by Deutsche with the use of AI and, you know, some of the best examples are with the network provisioning, which I think has supported some of your ambitions to raise the fiber to the home build, you know, targets in the past sort of 12 months or so. I guess we have the CMD 2024 targets out there. To what extent do you feel like they're influenced at all by this technology? Do you think this is really something that could be additive across the board, whether it be driving better margins, driving reduced CapEx, et cetera? Have you know, even started to look at any kind of, you know, more extreme iterations of this, for instance, closing down retail infrastructure, et cetera? You gave a great introduction, Tim, but as ever, it feels like you guys are ahead of the game on this. Any more thoughts would be really appreciated. David, if I might, you know, I like to disagree on this first one. Customers are not pulling for it, you know. It is pushed, you know. Most of the advertising which I'm getting, you know, I'm not asking for it. I just get it, you know. It is on my screens. It's coming with my search. It is all over the place, and I'm not asking for that one. By the way, there's a lot of even, you know, copies in the network, not being needed. I think we have to work on the efficiency of the internet and rather, you know, satisfying every kind of demand, without knowing what it's for. Coming back to your AI question, I think very relevant question, David. I do not know where other telcos are. We have some exchange with our partner SK on this one. For me, one of the question is there is another platform created, which is AI. Because at the end of the day, the computational power can only be paid by a few players. Therefore, we see already a bifurcation of this market because only a few companies in this world can afford these technologies and the infrastructure which is required. Which is definitely Google with Bard, which is definitely Microsoft supporting now the OpenAI model. I'm not sure whether Llama on Facebook is already the right size and whether Apple is gonna be in the position to develop an own model. For us, we are in the renting logic. We are using software from others and the infrastructure of others and fine-tuning it with our data. Now, is this the right approach? To be honest, we don't have an alternative because we don't have the capacity and the financial resources to do that on our own. We're simply too small for that. Nevertheless, an alignment of telcos in this regard as something like this would maybe make us more independent from big platforms which are already, let's say, get it created while we are sitting here. There will be definitely a game changer of AI to whatever you know you mentioned. The network optimization, CapEx efficiency, the predictive services, maintenance, the build-out and planning, the churn predictions, the financial tools, the legal requirements. I can tell you on and on and on. I'm totally convinced, even on the ESG side, it will help us big time, to improve the way how we operating. It's too early now to communicate that. I wanna understand that in depth. The only guarantee I can give you, David, is that we are taking it very serious. Christian, myself, we are working on a project on this regard, and we will give you more details, step-by-step then in the upcoming calls. It's a little bit too early for us to judge. Tim, I would say the approach which we're choosing is that we don't run a central process, but that we let the functions and the responsible executors try something to figure out what's the return is the right way. We're in a testing and experimentation phase right now, and obviously then we will lean in on the big return areas, whether it's being call center or everything which you basically mentioned. It's very early in the process. I think, David, you have written a very nice report on AI, where you're basically indicating what are the key application areas. This is where everyone is looking into this. For me, AI is. It's part of the whole digitization effort which we're doing in our company, and it gives you more capabilities, and we will test and try what's actually beneficial to us. We have 1,000 partners in our partner ecosystem. We have a partner management which have identified 1,000 companies supporting AI and mainly the LLM models. The AI Competence Center is now bringing the operations, the segment, and the functions together with specific, you know, knowledge of these companies which we don't have. This is what we do outside. A lot of things are happening, exciting to see, and it will have an impact to our business model, yes. Okay, thank you. Now we move on to Robert at Deutsche Bank, please. Yeah, hi there. Assume you can hear me okay. Thank you. I see Deutsche Telekom is bidding with Orange to run the EC's IRIS² satellite constellation. Is it possible to order of magnitude scope the extent of any contribution to the private funding of this big project, please? Are there synergies with your existing business or is it more a standalone opportunity? The second is, clearly strong KPIs in Germany and Europe this quarter. Is there any change in momentum either B2C or B2B in Q2 so far, given ongoing tough economic conditions across the footprint? Thanks. First, you know, we are bidding very much on the support and the development of software for this satellite company than rather, you know, considering our own, you know, participation or ownership in the satellite constellation. I think there is more software support here than really, let’s say, a commitment towards, you know, becoming a satellite operator. I think the press might have overstated that a bit. Second, yes, totally right. We have a very strong momentum on customers. Europe, we had it already for some time, but I'm very happy about the results in Germany. I mentioned that. By the way, you can look wherever you want. The next Magenta tariff scheme is starting very nicely. The family program which we have played out. Because for me, it's more important to look, are we making progress with our own brand postpaid? As we call it, let's say, The Magenta product and the momentum on the postpaid side is mainly or entirely coming from this tarrif. On the B2B side, you're seeing that the fiber build out and our great network on the Vectoring side is supporting growth here as well. Apart from the 75,000, you know, new net adds, which is nice, I think it can be more. What I found encouraging is the more than almost 5% growth, which we have on the service revenue in this regard. This is encouraging because it's helping us to get the funds for the build out of the broadband infrastructure. Both sides, Srini and his team doing a great job, and I hope that they can continue throughout the year. Robert, from a macro side, we don't see a lot of changes. Obviously, I think inflation is a little bit more resilient than we hoped it to be. I think that's one of the effects. Whether it's coming to bad debt or any insolvencies or something like this, we don't see anything accelerating. Macro appears to be fairly stable. Next up, we have Ottavio at Société Générale, please. Hi, good afternoon. I have a couple of questions before we go towards Christian. The first one is on leases. It's a significant components of your debt. Now, when you announced GD Towers, the guidance was for capitalizing these leases to impact on a net, so therefore, after the ground leases by around EUR 4 billion-4.5 billion. But when I look at the flow chart of your net debt before leases removed this quarter, I only see around EUR 3 billion increase coming from the transaction. That is a pretty significant difference of EUR 1.5 billion. I was wondering, do you change any assumption underlying how you do the capitalization? Are there any other reasons or the different impact? The second one, it's in a comment you made earlier. It's basically related to you had a number of positive developments in domestic business. The only exception was the wholesale. You say that on the wholesale to expect improvements going into the future quarters. If you can elaborate a bit where these improvements will come from and what to expect towards the year-end. We go back to growth or just stabilization? Thanks. Okay. good catch, Ottavio. The reason is that the discount rate or the interest rate has been increased for the leases. Originally in the signing case, I think we had something in the vicinity of 7%. Now it's been discounted at 8%. That leaves you with lower lease liabilities, and the impact is, if I'm not mistaken, roughly EUR 1.5 billion, which we have as less lease liabilities. The second piece is that the Q1 result in wholesale was dragged by a one-timer, and this one-timer will disappear. We don't expect any kinda changes in the momentum of the business. I think it will carry on. We're gonna see price increases over the course of the year. The one-timer is obviously dragging on the current results. There's no, I would say, change in how we run the business and what we expect from the business. Thanks, Christian. Next up is Andrew at Goldman, please. Good afternoon, everyone. I had a question just around your fiber rollout. Could you give us an update, first of all, on the cost per home of rolling out fiber to the home? Where If that's gone up as, you know, I suspect it has and will be over the next year or so, where are you saving the money to say, within your CapEx envelope? Is that, you know, roll out pace or in other areas? The second question is just, given the changing economics of fiber build, which you referred to very clearly in your comments on the last results call, is it changing your strategic approach to covering Germany with fiber? You know, for example, is it changing your attitude to maybe buying in JVs or buying in, you know, structurally challenged overbuilders? Just any comments you could give around how the, you know, big change in economics for fiber builders in general is shifting your strategy. Thank you. On the fiber build, Andrew, we're obviously seeing cost inflation, especially in the construction cost. This is something which we have to fight against by other, I would say, efficiency levers. We can always switch the mix towards more urban where the CapEx per homes passed is lower. We're still targeting at the 1,000 EUR per homes passed on average. We're working on the cost reduction on the other cost components aside from construction costs. I think this is something which we will see over the course of the year. As I said early on, we will not change the CapEx umbrella. We will basically have other levers on how we get there. The cost inflation is something which is hitting us, but it's hitting everyone. Does that answer your question? I'm seeing you on the video, but I'm not sure whether you're persuaded. no, that's helpful. I mean, at one point you were thinking you could get down to, you know, EUR 950, EUR 900. I suppose that's off the table for now. obviously, as you mentioned at the end of your answer, that's affecting lots of people, lots of fiber builders. Wondering on your, how your strategy in terms of covering Germany fiber may have changed. Mm-hmm. in terms of bringing on board, buying in JVs that you have and the timing on that and bringing on board... Yeah. On the latter part, look, we love owner economics, and we're absolutely committed, and we will deliver the 10 million homes passed target by 2024 based on home build-out and some of the JVs. I think we've just founded last year GlasfaserPlus. I think we have to scale this business up and get to the run rates which we're anticipating to be. We'll see if there's something popping up. Obviously, we are open-minded to look into this. There's no plan that we're now basically offsetting CapEx by founding additional JVs in order to offset the cost inflation. Mm-hmm. There's not a, at this stage, not a massive change in the overbuild, let's say development relative to our plans. Yes, you've seen some people exiting the market, but there's still, you know, quite a few players out there. I think in terms of the competitive scenario, it's pretty much what we expected and therefore our plans are what they are. We have this one big JV, and then we have lots of collaborations, especially in metropolitan areas where we work with the utilities. That's sort of the same setup. There's no discussion to change that at this point in time. Next we move to Mathieu at Barclays, please. Yes, good afternoon. Can you hear me well? Hello? Yes, we can hear you well. Merci. Thank you. Two simple questions for me. With regards to FTTH, thank you for disclosing the take-up. I was wondering how aggressively are you pushing these products to your customers? You did mention that your Vectoring solution was already very good. I was wondering if it was more What was the strategy in terms of pushing it in store? Considering also that obviously the CapEx related to connecting a home is can be quite high. The second one was on wage negotiations. Now, I understand that for 2023, you had already negotiated that some time ago. I was wondering when you would start the negotiations for 2024 and beyond. Thank you. Mathieu, on your first question, look, this is actually beneficial to us. What I said is, what's dragging down the utilization in fiber, it's the strength of the Vectoring network. We're not pushing customers into something they don't need. You see that we have a gradual increase of customers, who have at least 100 megabit bandwidth per second. This is, I think, a beautiful path to more for more upselling. We will use fiber as in the same direction. This is the one thing. As long as Vectoring is that strong, we're not pushing a customer in that direction or the other. That may change if we have a dense fiber network, in conjunction with a Vectoring network that we then say, "Okay, we're only selling fiber products anymore," to basically have an earlier switchover. This is the one piece. The second one is the time gap, as I mentioned it earlier on, by the way. There's an industry problem between homes passed and homes connect. These are the 550,000 customers which are basically staying in our backlog and waiting to be finally connected. That all drags down a bit the utilization. On the other hand, you can view it in a positive manner and say we have a very, very long runway in order to upsell customers from the current 100- 250- 500- 1 gig, which basically confirms our upselling story in the German broadband market. Let me try to answer your question on the wage negotiations. We had wage increases by between 2.7% and 3.1% as of August 2022. There will be another further increase by 2.1% by first of June 2023. Overall, it's something in the vicinity of 4-5%, which we have seen, and comparing this with all other industries, you know, I think we can say that was a reasonable outcome out of this negotiation. We are now in a period until mid of 2024, where nothing is gonna change. We have paid an Energiegeld as well, which is a one-off energy cost, a supported payment of EUR 1,000 to our employees with an annual income below EUR 75,000. By the way, this amount is totally digested in the first quarter. Maybe that's a good message for you to know, because we were able to digest this one-timer entirely in the first quarter. Until mid of 2024, we are now in this appeasement time where nothing is, you know, is gonna happen between the partners here. We will have another round. To be honest, I do not speculate at that point in time about what the outcome of that's gonna be. We have to see where is the inflation at that point in time. What is, let's say, the market environment doing until then. Therefore, we have very reasonable social partners here to negotiate these things. They're always reflecting realities. You know, we have to even, you know, keep our capacity for the investments always in mind because, you know, the infrastructure of fiber and 5G is the future of that company, and we always have to be in the position to build that. Thanks. With that we move on to Steve at Redburn, please. Thanks, Hannes. I'm gonna carry on the fiber theme if that's okay. First, thanks for the slides. That was really useful to see the numbers and obviously we know the homes passed. It seems like to degree you're victims of your own success here in the Vectoring understandable. I guess as we sort of, you know, think further out about your future fiber investments, I mean, clearly you don't wanna build a network that doesn't get used properly or fully. You're about 13%, 14% penetration at the moment. I mean, what is a good penetration number when you hit your 10 million homes in 2024? Also on the fiber front. Then help us think about, you know, future investments. Where you're targeting and, you know, what penetration numbers you should be thinking of. Maybe that gets helped by the end of rental privilege. That would be also useful to know. And then on the fiber, when you're selling those lines, can you give us an idea of the sort of relative premium in terms of of our help. Thanks. Steve, to be honest, the question is very difficult. We are now talking about an investment here which is with amortizations between 15 and 20 years. We are building this 10 million households. We are trying to increase the productivity of the build-out. We are trying to gain and kind of keep the market share which we have today. Knowing that, you know, we have overbuilders in some areas and knowing that some of the overbuilders are making their calculation based on our market shares as well. What I would say is, you know, the current situation of, you know, 13-14% is not sufficient. We have to drive it up. My understanding is that the current share is already beyond 20%. At least to know that was the last discussion I had with Srini on the penetration of the new FTTH homes. Keep in mind that we have more than 500,000 customers waiting. Yeah. Where we are now in construction here on the ground to enable these customers. They are, you know, they want to have it. They would immediately take it, but it's an element of the construction. We have to go into the high 30s. That would be saying where I would be satisfied in 2024 with regard to the utilization. This comes now up from my stomach, yeah, or my, maybe my memories here. This is the area where we're going. In the area of the 40s, I would be very happy with my German team. Knowing that we are in a specific situation with the Vectoring and Super-vectoring market share which we have in. Perspectively, we have to find a way that we can shut down our copper network. We are working on this with the regulator. The moment where we can migrate all our customers into the FTTH network, that would definitely help us from the utilization amortization big time. As well from the energy cost and other things. This would be the game changer for us. It's too early to speculate when that is taking place. We are discussing and when some pilots here in Germany, how this migration can take place. What is the question about the ARPU and the prices we are trying to get, you know, the money back which we are investing. You see that we are driving the ARPU up. It's not decreasing. It's not easy to say it's a 5 or 10 bucks on top of that. Christian has here the tariffs open. I have the tariff tracker in front of me. Yeah. because I don't have it out of my, out of my mind. Everyone is pricing a gigabyte at a very high premium. Our price is 87. The red guys from Düsseldorf are at 82. O2 is at 84. Right now everyone's trying to protect the price premium for a gigabyte line and don't discount it down. I think that's a rational behavior. You're on mute. You're on mute. You're on mute. Okay. Next, thanks, Steve. Next we move on to Emmett at Morgan Stanley, please. Talk about during the late fifties. Yeah. Hello, everybody. Hope you can hear me well. Yes. I've got two questions please on your German business. The first question is just as a follow on to James' question on your TV business. Today, your TV business is a very, very high RPU business. I think the RPUs are roughly EUR 55, including MagentaEINS. You've got roughly 4 million subs. I guess as Srini thinks about preparing his slides for the next capital markets day, how should we think about that business, I would say, five years from now? Is this likely to be a much larger, scaled business in terms of the amount of subscribers and maybe a lower RPU business? My second question, please, is on wholesale. Maybe it's one more for you, Christian. Obviously the wholesale revenues in Germany are trending at -3%. Can you maybe just give us a little bit of an idea of what's going on beneath the hood? 'Cause you've kinda given guidance for the revenues to be flat this year. What's driving the improvement for the remainder of the year? How should we think about wholesale revenue growth in 2024, which is the last year of your CMD guidance, and what's driving that obviously significantly higher? Thank you. Emmett, let me start with the TV question. I think there's a good run rate which we have seen in recent years, which is around 200,000 net adds. in a given year. I think that is the aspiration if you're going for a going concern case. The way how we manage TV is obviously we're also managed on margin. It's actually a very profitable business. What is the big unknown is the retirement of the rental privilege and whether we're getting a much bigger traction in the housing association with our product, either through retail or by having. A contract with the housing association. I think that's too early to tell. If you basically apply a going concern, in the vicinity of 200,000 every year, that is obviously something which we have achieved in the past and which we're intending to achieve in the future. The wholesale question. Hannes, can you help me on that one? Yeah. We have, I mean, we have kind of answered it because we have said that in the later periods of the year, we expect stable to growing revenues, and we will have stable to growing revenues for the year as a whole. We have also provided the CMD guidance, which is for stable wholesale access revenues between 2020 and 2024, and that's remains our guidance, so there's no change. As we said, there is nothing fundamental in this number in the first quarter. This is purely a one-off that we have incurred. And, and- Sorry. Let me add something because, you know, we should be, here, honest. The Capital Markets Day guidance is, you know, that we are going towards stable wholesale. Yes. So far, we were negative. There is the change of the contingent model into the commitment model, which is an issue. We were facing as well that there was expected volume losses because Vodafone and others using their own infrastructure. This was driving the negative development forward. What we are expecting, that is, by the way, a very good question, Emmett, we all have to look on this one. In 2024, this is the year where we are seeing this turnaround, significantly turn around. We will offset these losses by ARPU accretion from the upselling and from the price increases which we have on the infrastructure which we sell to the partners. Mainly higher bandwidth and fiber. This is our strategy. You're totally right. So far, we were not able to deliver on this, on this target here. To be very open on that one. The second thing on the TV stuff. Look, we have to go up from 4 million customers, you know, significantly up. I would say being at 50% or whatever, you know, on the customer base is our expectation. Always depending on the, on the planning cycle which you're looking at. For us, next year is a big game changer because we bought the European Championship rights for 2024 for Germany exclusively. All games will be distributed over our TV. From this angle, we expect as well more TV customers on the spot, on the MagentaSport side. This will hopefully help us. We are working on the proposition, which is starting by the end of this year, which will help us then to make another step functions in the German TV market. Next year, and I said that earlier, mid of 2024, the privilege is falling so that we then, you know, that the customer who lives in a wohnung, in a Wohnungswirtschaft, in a housing association, can switch from cable to us without paying for the, for the cable rental anti anymore. That's another important change in the regulatory environment, which will hopefully help us to increase the volumes on the TV side. Very good. just on a boring point, just to be absolutely clear that the ARPU that you cited is not the TV ARPU, it's the triple play ARPU. Okay? it's the triple play ARPU, and the TV component is the very much smaller part of it. with this, I think we are at the end of the conference. Thank you, everybody. Thank you, everybody, who participated. Thank you, Tim and Christian. Should you still have further questions, please kindly contact the investor relations department. We're looking forward to hearing from you again soon. Goodbye. Thank you, and goodbye. Thank you, guys.