9. Q&A C. Illek, T. Langheim, T. Höttges – Deutsche Telekom's Capital Markets Day 2021 #DTCMD21

And with Jim, so I ask you to please join me here on this couch. Just maybe while they are coming, you know acceleration is the word you've heard it or how Srini called it yesterday, but schlonegonk right? So it's about being reliable and perchlor negoc. So acceleration here we go. So let's see if we have some questions. I've seen quite a few guys already on the screen and we start with Akil.

Yeah, of course. Good afternoon. I've got one strategic one and then two hopefully very quick financial ones. I think in Tim's presentation he talked through the fact that obviously one of the biggest value creation events for Deutsche in the last five, six years has obviously been T-Mobile US and the decision to stay in that market and then merge with Sprint. I guess the question was if we look going forward, do you see any other transformational strategic decisions on the horizon that you're thinking through in terms of the Deutsche equity story, or do you think the story going forward is much more operationally driven instead? So that was the first strategic one. And then the two financial ones: Christian, in your presentation you talked about the target of a six and a half percent right? I think in Srini's presentation he talked about Germany going from six percent to nine percent. The US I assume will have a very good return given the high cash generation. Can you maybe help us bridge why the total is only six and a half if Germany's nine and I presume the US is very good? And then the final bit was just on the dividend. I think there's no doubt the dividend growth is attractive and I think is very healthy. But I guess even at the high end, the dividend's about a four billion euro dividend, whereas your guidance basis cash flow is 18 billion and that's about 11 billion proportionate, so it's about a third of your cash flow generation. So just if you can maybe comment on how you think about that in terms of what the residual cash would probably be useful if you think about midterm and what your priorities would be. Thanks a lot. I guess who wants to start?

It really is about the balance, isn't it? And we'll strike the right balance. And the other point I think that you rightly pointed out, it's nice to have these choices because your free cash flow per share is over two euros in a few years, right? So that's good. Next question is from George at CT. Please, thank you, Akil.

Sir, good afternoon, guys. A couple of questions for me, mostly focus on towers. The first question is to just get an understanding of how you are thinking about your tower value crystallization. Price not being the determining factor, and let's say similar price, would you have a preference for a clean exit or to still maintain exposure in any deal you agree? And my second question linked to that is whether you believe in market synergies within towers, and particularly in Germany because there are some limitations perhaps that don't exist in some of the other countries. And then my second question again on towers is a bit more of a long-term question about your overall network infrastructure. And you spoke yesterday about cloud native networks. I think Srini also mentioned the importance that telcos could play in edge cloud. So I'm just trying to understand whether you believe these investments are better done from a tower perspective or from an operator level, and how that could change your view of the strategic importance of towers versus the edge cloud. Thank you.

Yeah, all right. Preference for a clean exit or to maintain exposure in a deal, and whether we believe in market synergies. Look, first of all, we have learned a lot over the last three years. We've teamed up with Cellnex for the Sunrise towers in Switzerland. What did we learn? We learned a lot about that the Cellnex management team is certainly one of the smartest I have met in this sector. Second, how you make money in this game, and it's all about build to suit, especially for the number three and number four in the market. But this also becomes build to suit for the number one or number two in the market in the future. Second, of course, in-market consolidation of assets that you own is something that creates a lot of value for Tawaku. Cross-border synergies are limited, as we all know, also in the tower sector. But this is not to say that the management team was a smart headquarters and a very smart M&A hat is able to add a lot of value. I think Cellnex speaks for itself of how rolling up towers in different countries can create a lot of value for investors. Second, in terms of the preference, I don't have any preference, neither has this management team right now. We're just saying we are open to a lot of options. We've looked at a lot of stuff. We know what the pitfalls are and what the pros and cons are. And as Tim is always saying, let's attack and see. And I like that. I was thinking about just putting my cell phone number in front of the page and said we are now open for business. We are in a different state than two or three years ago, or over the last two and three years, because we've recognized that the valuations have moved to a place where it makes sense for us to engage. And most importantly, where the MLA structures provide enough protection for us to further differentiate. And that is a key thing for us because we also see the tower model in the US. Keep in mind, we sold our towers or part of our towers in 2013 to Crown Castle, and we know how it is to deal with tower companies in the US. We know what we have to avoid. And therefore we are open for business now. And there will be, yeah, I'm excited to what may happen over the next, call it one and a half to two years until the next Capital Markets Day.

I think the next one is for you now. I guess it plays to networks of networks and how we orchestrate that.

Well, I think you know it does, so let me answer it because I think it is in the context of what Tim presented yesterday: the networks of networks. We have the capability to orchestrate this, and we will not always be the owner of this network in every place, but we'll put it together in the best possible way for our customers. So I think, yeah, I think what we wanted to say, and I don't want to repeat what I said and what Claudia had said as well, you know the idea is this ecosystem is changing. And in this changing ecosystem, we should be adaptive, adaptive to all the developments which we see. And we should not do that naively, but we should do it. And you know, I know a lot of partners are watching the Capital Markets Day. They sent me notes, being the Microsoft people, being it, let's say, my friends at Cisco and other companies. So these people, you know, they're not competitors, but sometimes they even not friends. So you know, we have to find the right doses on partnering with them that we create win-win situations in this digital ecosystem. It's a very complex one, but we have opened our doors to partnerships. And by the way, that's not something new. Remember the first Capital Markets Day was about win with partners. And now I think we've grown up in this ecosystem. And when it comes to the architecture of our networks, when it comes to the softwareization of all the functionalities which we talked about, both on the consumer and use case side, but as well from the way how we organize our businesses, we have to embrace that. And that is what we're doing. And how we then share the trough, how we share then the value chain, that is something which we have to then negotiate. But I would say the last years taught me that's a win-win and that we were more winning from these partnerships than losing.

Great, excellent. So thank you, Tim. And the next question then is from Josh at Exxon. Josh?

Thanks, guys. A few quick ones hopefully from my side. And first one is just following up on the towers question. So what percentage of your German towers today do you consider to be genuinely strategic and differentiating that you might want to retain some kind of reserve control over in any future tower structure? The second one is a slightly annoying one about cash conversion. So one of the things we often get asked about with DT is what's the real post-everything else free cash flow? And maybe just if you could give us direction of how you think things like finance leases, vendor financing, etc. would trend over the next few years as well would be helpful. And then the final question is just regarding your comfort range on leverage. Because I think a lot of the last two days has been talking about why DT, partly through its European operations, also US, is you know a different kind of telco given its higher growth and exposure in assets. So the question is, what would you need to see happen in your performance to raise your comfort level or comfort range for leverage? And at what point do you think you could say this is a business that should be levered more at two and a half to three times than the 2.2 to 2.7 you talked about today? Thanks.

Just one sentence here on that. I think what is one thing that is kind of noteworthy is that leverage is good for equity holders as long as you are EBITDA and free cash flow growth. And obviously we are also in a different environment than 10 years ago where interest rates were much higher than today. You see that we are also as a team discussing these kind of topics. We feel much more relaxed today than maybe five years ago when the leverage ratio was lower. But this is not to negate what Christian was just saying, just an observation.

Second one on towers. Yeah, of course there are some strategic towers. I cannot give you a kind of sensor. Maybe it's five, maybe it's ten percent. It's much less than you think, because it's no longer a coverage game. In Germany we still have an advantage there, but given the license requirements, also the other guys have to move up. And we are open for business on co-location. But we have some juicy rooftops that in any case we cannot share, by the way. But these are differentiating things for us. So the old discussion that you had in the past about oh how many strategic sites you have is much less than a lot of people are thinking.

So with that, we move on. Thank you, Josh. To Jacob at Credit Suisse.

Thanks for taking the questions. So I had a few hopefully fairly straightforward questions. Firstly, I mean you said you think DT is a sort of 20-plus euro stock, but also you won't buy back stock in the next two or three years. Can you just help us understand why don't you want to buy back stock? I appreciate you're growing the dividend, but why do buybacks make sense for T-Mobile US but not for DT? Secondly, in Torsten's slides, you showed that you rejected two mergers with a European tower co and a 50-50 JV with a European tower co. Was that purely about price or can you maybe just sort of help us understand the rationales behind those decisions just to help understand how you think about this sort of concept of monetizing tower co valuation? And then just finally, I mean it sort of sounds like you've become more flexible around your ownership of mobile assets and also on the fixed line side where, as Srini mentioned yesterday, you expect to own 60 to 70 percent of the fiber assets long term. So I guess the question is, could you look at broader monetization of fixed line down the road? Could the German fiber network sit in group development in a few years? I'm just sort of interested in how you think about that. Thank you.

Let me add two topics. The first one, by the way, I'm totally with Torsten with you: why not doing earnings per share buybacks on the stock? My first observation in this regard is there's a difference between the US and Europe when it comes to buybacks. In the European environment, I always see it a little bit like a lack of strategy if somebody is doing a buyback. And now I would not say that we have a lack of strategy, but I think we have a lack of communication and conviction. And therefore, that we're holding a nine-hour Capital Markets Day, that we're constantly on the road, that we are trying to convince you guys on Deutsche Telekom stock, this is let's say our answer on this one. So rather than buying back our stocks, we are trying to attract investors into our stocks. So that's my approach on this one. And dividend is for me a more sustainable instrument which shows our conviction into the future prospects. And rather than doing one or two times share buyback on our stocks to just be happy with the price we see, but the undervaluation is for us is obvious and we have a lot of bets about that one in our team here. My second thing is about ownership on assets. I think we are in principle an infrastructure company and therefore we should own the network. We are not a service provider, we are not a servco, we are an infrastructure company in a netco. And therefore our ownership on fixed and mobile gives us as well the credibility in this business. We have to run the networks, we have to build and run the infrastructure. And by the way, I even believe we do it better than a lot of other people are doing it. So therefore the majority of our infrastructure should be under our control. This gives us much more flexibility, even from the technical solutions which we are providing. Nevertheless, if you can't fight the dragon, ride the dragon. Our balance sheet is stretched, so therefore you know, and our capacities as well, and therefore you know we cannot go for 100%, impossible. Nobody is able to do so. And if you can't fight it, then you have to ride it. And therefore our logical step is then to say, okay guys, there are others who have maybe the same issue of utilization of the infrastructure. There are others you know who have good technologies in areas where we have weaknesses. Let's partner, let's create a win-win. It's coming back to my earlier point that we are open to this one. And this gives us much more credibility. It's by the way good for the consumers because the extension of the infrastructure is broader and the monetization of that infrastructure as well. So therefore I think this is the change in our thinking. And by the way, you're tapping a very important point because our network guys, our technology people, they love to own it 100%, they love to control the whole value chain. But that is not how the world is developing. And therefore we have changed this paradigm successfully. And I think there's more to come.

I would add one additional point when it comes to separation complexity. We looked at this quite intensively a couple of years ago. And it's not like that you open up a zipper and the left-hand side is the go-to-market organization and the right-hand side is your network. It's a complex undertaking to really separate out a fixed network out of an integrated telco. And take a look what has happened in New Zealand, not through with it. So it's a very complex project with questionable financial results. Well, this makes sense.

Yeah, and if I may add one thing, I think Sweeney talked about this yesterday. It's actually, you know, there's a lot of execution capability or opportunity and optionality in how you run the value chain and fixed line networks. Right? I mean, ideally you can let others build some stuff that you really don't want to build, and you get onto the chain of the value where the money is, and then you use joint ventures and so on. So it's a whole range of opportunities and models that you have to orchestrate. And I think that's where a lot of the value creation will be in doing this in the right way in Germany in particular.

So next, thanks Jacob. And the next one is from Robert at Deutsche Bank. Robert, here you go.

Yes, hi. Thank you very much. I loved the vision and drama over the last two days. It's been the best box set I have seen all month. Going back to the romp discount if I might. Either investors don't like the US, which is clearly not true, or they think the X-US part is worse than other telcos, which cannot be true, which leaves the interface which is the problem and relates to intergroup cash flows and how cash gets back to shareholders. One issue causing confusion is the buyback versus the dividend from T-Mobile US. Are they fully fungible and make no difference to you guys in your thinking and how you take benefits? I'd like a comment on that. And going back to the payout ratio, having a payout of earnings is entirely logical as a proportionate measure, but compared to non-telcos, Deutsche Telekom has a high DNA versus capex. The dividend did get cut and interest rates are rising, yet it seems you are still cautious, especially at the low end. So from the previous comments, it seems that it is the leverage target. So if you monetize some of your portfolio, will that directly release cash for distribution and we can expect the payout to move up the range? Thank you.

Okay, hope that's a good answer. And let's move on to, thanks Robert, to Polo again. Here we go. Bordeaux? Yeah, hi, thanks for taking the questions.

So you've got three quick ones hopefully. The first one is really just about German politics and also the EU recovery fund. So most of the German political parties have published their election manifestos and the Green Party, SPD, FDP all seem to be proposing increased investment in broadband infrastructure. So how do you think this will impact the evolution of the German broadband market? And could further government subsidies lower German capex for DT going forward? And also how should we think about the impact of the EU recovery fund on the German communications market? Second question is really just about German headcount because Christian had a slide showing 85,000 FTEs in the German region. But with digitalization and also an acceleration in the number of people retiring, how should we think about German headcount in the longer term? And my final question is really just about risks and opportunities. Because it's clear that the main message from the Capital Markets Day is about accelerating growth. But if you look at your 2024 objectives, what is the one area for this question for you, Tim? What's the one area that you're most excited about or what do you see as the biggest opportunity? Similarly, what do you see as the main risk to achieving your targets?

First thing, by the way, it's interesting that we had only one question on regulation so far from doing all this nine hours. And that shows me that we all perceive the regulation is relaxing and it's getting better. When I talk for Germany specifically on the regulation side, and I was preparing myself here for this session, I was thinking about what is good and what is bad and what is open. And what is good is you know the new telecommunication law is opening up better ways of building infrastructure in Germany. It is an excellent regulation. It supported all our wholesale deals which we had with the partners. The name cost in privilege has fallen. Okay, you can complain that it takes a few years too long, but in principle it is decided. We had not an increase of wholesale prices, the opposite is taking place. And the regulation in principle is supporting this. The national roaming is not over yet, but it is still there with regard to yarns and heinz, but the likelihood that that is legally enforced is not there. So in principle, I would say the regulator in Europe and in Germany are very much on a track to ease the situation than worsening the situation, which is a good signal. On top of that, Europe has 750 billion funds available for the recovery, and Germany on top of that 140 billion only for Germany which are standing there. We have reacted on this one. We have built an own organizational unit analyzing this different pots here and applying to this one appropriately. Honestly, I think the biggest problem is not the money, the biggest problem is the application process. And therefore I have even personally initiated at the BDE, which is the industrial association in Germany, an independent support that private partnerships get built, that we find methods that this money is getting into the system quickly. In this organizational unit, we found out that something like 25% of the whole money is relevant for us as Deutsche Telekom including T-Systems business. And for this money, we are now organizing ourselves to apply for that one. To give you a few relevant examples: schooling and the digitization of schools. I'm not only talking about fiber, I'm talking as well about the cloud, talking about the running of the system. That is one of the elements. Second, we have seen all the things around the Corona app, we have seen the relevance about the exchange server. Deutsche Telekom is the one providing the global vaccine passport. We have seen initiatives about more subsidization for rural areas for connectivity. By the way, they're not part of the German program because the money was available already before that. You should add them on top of that one. And we have a discussion about Gaia-X. Money is available for that one. We have money for Open RAN. Deutsche Telekom with partners has opened up in Berlin an Open RAN lab where in the field people can test it. So the money is flowing already today. We are applying in a very professional manner to this one. Our involvement, and you see that I can talk an hour for that one, is high. I'm personally involved into a lot of debates on how to allocate best the business that digitization is leapfrogging in Germany. And that is the way going forward. We will see that over the next years now how it comes into the system. And the application is the challenge which we see today.

Great. I think I'm maybe a veteran already in this scene here. And especially when it goes to the city, there's this narrative that when you think about Germany, headcount reduction is impossible. We are anyhow not cost disciplined because we always want high quality and we are not able to reduce headcount. And if you see the constant decrease in our organization, if you see that we have over delivered on the 1.5 billion cost savings which we have promised, I think this narrative is wrong. And you have to do it in a right way. You know, it doesn't make sense to make that very loud and noisy and announce big programs. I think in Germany, the culture is to do that in a kind of competition and joined effort with our works council. And there's no way that this is stopping. And with Srini on Germany, you know you have a no-bullshitter sitting on there. That's business. And he has started, by the way, in alliance with the unions, to think about how many SG&A, how many quality assurance, how many administrative people do we need in our organization. And that is even a new push which came to the organization from that angle. So I think when it comes to our three to five percent EBIT, you know that there is more cost discipline in every element needed to achieve it.

Excellent. And there are some greater signs in front of some of the targets. Okay, thank you, Paulo. And next is Andrew. Hey Andrew, hi everyone. Thanks for the last kind of 24 hours of answers that they answered a lot of our questions. I had one on Torsten's slide 22.

Which is one we've all been struggling with. What gets DT to 20 euro plus stock? And specifically the T-Mobile US valuation in DT. So you guys obviously read analyst reports and speak to investors and loads of people have highlighted that the DT European stub is cheap. Lots of people have highlighted it, but it hasn't really made any difference. Maybe DT Europe's super cheap. You know what it looks like is that DT investors aren't paying the right value for T-Mobile US within the DT share price, or at least not the same value as T-Mobile US investors are paying for the T-Mobile US listing. So the question is, why do you think this valuation discount exists? And outside of buybacks, is there anything you can do to make sure the DT shares better reflect the value you highlighted in T-Mobile US and for DT overall? Great if you could also explain what you mean by 'seeing is believing.' Thank you.

Thanks Tim. And just to repeat some of the numbers: greater than 175 in 2024. Christian said it's going to go there in a basically straight line. So next year earnings are up over 2 euros free cash flow per share, proportionate free cash flow per share in 2024. It's not a J curve; it's a straight line. So that gives us confidence, and it's not a jam-the-future story.

Okay, so let's move on. Thank you Andrew, and move on to Usman.

Hey, Usman here. Thanks for the opportunity again. I have two questions, please. Firstly, on the special factors, cash outs in the ex-US business. You spoke about some of the reasons why the cash flow guidance in the ex-US business was a bit lower than the CMD in 2018. One of the factors I can see is that the special factors cash is slightly higher, 100 to 200 million higher than expected. I just wanted to understand what happened there and what is the outlook to 2024. I know in the CMD 2018 presentation there was a kind of chart showing the special practice cash items going down to around 700 million. Is that still the outlook or is it different, and if so, why? The second question is for Torsten. Just on pushing back on what is in Group Development and what isn't at the moment. T-Mobile Netherlands is obviously doing really well, fiber uptake happening in the Netherlands, so they are a high-growth market. Why should it not go back into DT's ownership rather than wanting to monetize that asset? And related to that, is there any scope in T-Systems, where I know a deal was attempted with IBM in the past, to do anything that can better surface the value of that business?

With the Netherlands, I need a tissue because I'm so moved. Well, first of all, it's a very fair point. It's our crown jewel in the European portfolio. But having said that, it's mobile only in Europe in a market where you have two converged players. So this is something that doesn't fit into our long-term European strategy of owning FMC converged operators. That's the reason why we took it apart from the group in 2017, not only to focus and intensify care on this. I don't say this word again – chicken eggs, turning it into chicken salad – and I think now it's a cucumber. No, I didn't say that. So from that perspective, it's now the time to crystallize the value. But don't get me wrong: if the value that someone is offering us for the next five years of journey with this fantastic team and fantastic company, we may not sell it. It's just that we put it out there so that you see that on the sum-of-the-parts value, there is something that has a value of about 6 billion. According to your guesstimates, it gives us not huge deleveraging because we also lose some free cash flow, but it gives us an opportunity to do other stuff that we may want to do, which I don't want to talk about for obvious reasons. Flexibility is king. You know how much I like optionality, picking in different buckets and seeing how we want to play around. So we cannot say all in everything. We have good ideas what we want to do, and as much as I love the company, management team, and employees, sometimes you have to do stuff and relocate your focus. In terms of T-Systems, I think it's the same: you need to fix an asset first. Adele started on a tough journey in 2018, and then ran into corona before you can think about doing something with these assets.

Okay, thank you, Torsten. So next we have Ottavio at SocGen. Please.

Hi, thank you for taking the question and congratulations on the results so far. The first one is on the leverage and it's for Christian. What I appreciate about Deutsche is that your targets have always been very consistent and clear. Could you give a bit more detail on the assumptions behind them? You have room around your targets; you don't really go very straight to what you can achieve. Can you tell us about the assumptions you have baked in regarding the participation in the T-Mobile US payback, if you do any segment of the SoftBank options? I believe you assume only cash despite your option of delivering DT shares in case. Also, you mentioned the renewal of the tower leases with Crown Castle and SBA Comms in the US. Do you have anything in those targets or assumptions aligned? So if you can talk around the assumptions behind the clear target and commitment. The second question is for Torsten: your preferred partner in the tower space has been Cellnex, but what management of Cellnex keeps saying is that the value is not on the towers per se but on the size and future cash flow guaranteed by tenants. What is the contractual relationship between GD Towers and DT at the moment, particularly on the length of contracts, any savings granted to DT if new colocation contracts are signed, and any escalator in these contracts? And the third is again to Torsten: when you talk about market-leading third-party share revenues, does the 23% ratio you show in the slides only reflect the revenue from hosting the antenna or also additional services such as backhaul services provided to third parties like Telefónica Deutschland? And when you talk about modernization, do you also plan to crystallize the value of the backhaul? That's a big differentiation for Deutsche in Germany and I guess other markets. Thank you.

Of course it will be us. Jose and Alex are right when they say the value is not determined by the number of towers but the size and cash flow profile from the tenants. Absolutely. And of course we do have a market standard MLA in place between Group Development and not Group Development but our tower operations and nTDG. It wouldn't be a good use of our time if I now dwell on what are the terms because in a deal this will be started from scratch; you discuss the things that are important to us and important to them, and that is where you see that a lot of things have changed – renewal clauses, all-or-nothing, or the kind of thing where as a number one or number two in the market you may or may not like if a tower company is offering something. You could do that today, but most likely we are not going to offer a very low price to get someone else on the tower, so this needs to be negotiated and balanced out. I found it very interesting the MLA terms on the last two transactions in Europe, and we'll cross that bridge when we get there. In principle, it's absolutely right: the size, cash flow profile, and commitment as an anchor tenant on the build-to-suit program that the tower company wants to offer. We have an attractive company because the cash flow is very interesting that the tower company would get because we are going to build out a lot of towers over the next three years. This year alone we are building out about 1,500 towers. In terms of third-party share revenues, 23%? Yes, that's revenues from other tower companies; it's not hosting of any additional services. There's a little bit of broadcasting in there, but that's not significant, and there's no backhaul. Bruno was always knocking on my door saying 'hey, can we do this as well?' No, it's not, and it's also not planned to monetize this.

Great, thank you, Torsten. We've got two more questions. Time for two more questions. So the next one is from James at New Street.

Hi everyone. Can you hear me? Hello, yes. Great. Thank you. Yes, I know two questions, please. The first one is a bit of a follow-up from our tower views just now for Christian. I'd love to go into more detail about the thinking on how you might be allocating cash towards T-Mobile US. I'm a big fan of your decision today to push the leverage target out from 2023 to 2024. On my numbers, that would seem to give you flexibility to exercise that SoftBank option before 2023, which might not have been there before. So given you've announced the moving out of that target by a year, why are you also not announcing today exercising the SoftBank option? Presumably if you're bullish on the T-Mobile share price going up, it'll be in your interest to exercise sooner rather than later. It's interesting to understand more about the factors you're thinking about there. Similarly with the buyback, Torsten suggested you might sell pro rata, you might not. Assuming you're bullish on the asset and wanting to increase your stake, what would be the thinking on selling shares into a buyback which might be seen as slightly contradictory if you're bullish on the long-term view? And a question for Tim. I know Tim you were bemoaning the fact there were no questions about regulation, so here goes: we've lived through probably 10 years of returns on capital declining in European telecoms and now we're seeing clear signs of it going up. In your discussions with regulators, how is that metric coming into play? Do regulators have ideas of where returns on capital should be in the industry? Do you think regulators are happy with where you're targeting returns to go? Do you see scope for further upside in returns beyond that before regulators might intervene again? Thank you.

I do not want to be disrespectful, but there is no politician in the world who knows what the IRR is. Maybe Thierry Breton understands EBITDA and the definition, but internal rate of return? I even had a discussion where I talked about market capitalization and they were questioning what that is. So this is not something which is in the school books of politicians in Europe and Germany. Make it simple. Talk about what's going on. The pitch we constantly do is: look, it's good that we have connectivity as a human right and we understand it should come cheap, and people don't have to overpay on communication expenses. But if it's too cheap, we might reduce costs, so allow synergies. But if you don't allow synergies because you don't want to see intra-market consolidation beyond what we have today, then you have to do something to ensure enough funds available to invest into higher fiber deployments and 5G. This wheel, this flywheel we showed has to work. In Germany, this flywheel works better than in other markets like Spain or others. Now talking to Thierry Breton, the German Chancellor's office, and the ministers here, my feedback is that they have changed horses. Their horse is: how can we create digital sovereignty, especially from China? How can we guarantee security of infrastructure going forward? How can we create innovation in Europe and enable digitization of businesses? What is your contribution to this? How can you create an ecosystem for venture capitalists and cloudify this world? Gaia-X is a high topic for political leaders wherever you are. I had a session with the vice chancellor where she was talking to the industry on ID management. There's a super big initiative in Germany on ID management, which shows that these guys are more on the use cases now than on classical infrastructure. This shows that ex-ante regulation is not that they are trying to steer it from a political angle, but they leave it to the industries. I can tell you, we will hear a lot of noise this year in Germany because every party will guarantee something to the citizen regarding bandwidth, coverage, and other topics. We'll see how this turns out at the end of the day. How it's getting financed, nobody's talking about that, but they think it's needed. That is the opening for us to say: we are willing to do so, we need that for our society, we are a big enabler for digitization and future wealth. We need your support. Then you know, IRR and amortization rate can be explained. So I think the balance of consumer prices to sustainable investments is getting into a much better equilibrium.

Thank you, Tim. Okay, good. So it's all about equilibrium. And in Germany, since the first of April, bit stream fees are no longer ex-ante regulated. They are subject to commercial regulation and general cartel law. Okay, thank you, James. Let's move on to Steve at Redmond.

Hey, yeah, good afternoon guys. Thanks again for the excellent presentations. I'll go for three if I can. I want to come back on towers, but I actually want to ask Srini, not Torsten, who understandably has garnered most of the attention. Hello, I'm hoping Srini's there to answer the question. Yes, it's good, Srini, come on. You've been on both sides of the fence, running challenger operators in India, now running an incumbent in Germany. I'd like your thoughts on the importance of tower ownership in Germany vis-à-vis other markets you've operated in, and how active the discussion is between you and Torsten on the future of towers within the German unit. That'd be super interesting. Then a question for Torsten. Clearly a lot of infrastructure models out there on the wireline side; you can goose the numbers in different ways, but what's most important tends to be market penetration or network, how many customers you can get onto your fiber infrastructure. I'm curious how you'll make a return in Holland where T-Mobile has less than 10% retail share on fix. You're building to 80% of the country. How are you thinking you'll make a return on that investment? And a couple of detailed ones on the earnings guidance: can you confirm we should assume 50% stake in T-Mobile in the 175, and Christian, did you effectively place a ceiling on that stake at 50 in your last comment? Also, the tax rate you're assuming for the next three or four years in that guidance would be very helpful. Thanks.

Let me start. Steve, you know, I want to hire you for my finance organization because you know your face is always looking that serious and grumpy. I think you are very much qualified for our finance department. After that charm offensive – awakening grumpy trumpian focus. So Steve, rather disappointingly, I agree with a lot of what Christian said. It's a lot more fun when I disagree, but let me give you a couple of perspectives on things that I agree with. First, on Germany itself, I think Christian's right: there's a smaller than you think number of strategic sites, and those ones I'm absolutely interested in making sure we keep those golden sites. Second, from my experience in India on towers compared to more mature markets: there are two different tower plays – one is a pure financing play exploiting arbitrage, which you do when your balance sheet needs it; the other is a more interesting structural play bringing in genuine expertise to manage towers and create real value by getting more tenancy. My instinct is always on the second side. When we do stuff with the crown jewel asset, you will see us focused on creating genuine economic value and exposure to an asset class that will grow with time. I hope that answers some of your questions.

Okay, we can't hear you, Steve. Ernie, okay, so let me let me go ahead.

Very good. And Steve, let me say, you know, I work in the finance department of Deutsche Telekom and I'd love to welcome you as a colleague. Okay, let's work on that. Before I pass on to Tim for his closing statement, let me just thank you all for your kind and patient attention, the many good questions we have had. Also thank the management team and all those who supported in preparing these presentations. I like to thank my team for their dedication and hard work. I hope you take something away from this Investor Day that reflects what we wanted to convey: our spirit of acceleration and excitement about the future, this very significant, highly visible, and great earnings growth that is ahead, and how we will balance our capital allocation for the maximum benefit of our shareholders. With that, I pass on to Tim for his closing statement. Thank you.

Yeah, thank you very much, everybody. Before I go into the very short summary, let me say thank you as well. I'd like to thank Hannes for making this Capital Markets Day possible again and for all the content. I can tell you, you cannot believe how much work we put into that. I'd like to thank his investor relations team and our strategy team for bringing everything together. I'd like to thank my board colleagues and the US team for making this event happen. It feels a little bit like X-Factor because we have been sitting for nine hours in one studio together. Always when somebody comes off stage, we do this or that. There's one guy who is going into extra time: Torsten. Real Madrid against Bayern Munich is nil-nil, so he has to work on his presentation style, especially on the pictures of me. I'd like to thank everybody who made this event possible in a COVID-safe working environment. You cannot believe how difficult it was, and hopefully it was the last time we had these difficulties. Even the technical stuff – I'm proud of the technicians, camera people, and all in the studios because it showed digitization and the virtual world really works. There was no slippage; our network was always stable. Great work. Now, summary. I do that quickly because I know you are tired. I'd like to thank you for listening to us for nine hours. I was thinking about a picture: you sitting at your home offices watching us for nine hours. Think about watching nine hours of a Netflix series – how you feel after this binge-watching of Deutsche Telekom. I feel sorry for that. This was the fourth episode of binge-watching Capital Markets Days of Deutsche Telekom. I'm a main actor, still alive – that's surprising in a Netflix series, but that's good. The rest of the team is there. Thank you for nine hours of binge-watching. I hope you got something. I have to say, there's one colleague who didn't join us today: Birgit Bohle, our Head of HR. She deserves appreciation because she was listening for nine hours to her team here. We can compensate for that: we'll make an extra episode of nine hours of HR – you will really enjoy that. Now, coming to some serious comments. Remember on the last Capital Markets Days, I was on stage at the end talking about the European single market, regulation improving, opportunities of digitization, opportunities in the US with a deal, and growth. At that point, I was sharing a lot of optimism in an industry in dire state. Now, four years down the road, we delivered. I will do that again because I'm optimistic about the opportunities around digitization, the setup of Deutsche Telekom in its portfolio, the team, the attitude, and the culture. I hope we were able to share that optimism. We have a right to play and should be the pick you choose in the telco industry. Deutsche Telekom is not a one-bet company; we are a multi-bet opportunity from all angles – the US with synergies, Germany with fiber attack, 5G deployment, B2B opportunities. This is a multi-bet opportunity. Now, if the cameras are off, I will tell my team one thing: do you believe everything you have said? This leading premium – we are the best, outperforming all others. I promise you, we come down to earth. This is what we strive for; we may get feedback. Only the paranoid survive. Leading is not static; it's dynamic. Leading is not a benchmark; it's an attitude – the way we strive to do the best for this company. I cannot promise we will deliver on all these ambitious targets, but I can promise one thing: we have the attitude to achieve what we committed over the last nine hours. This is our playbook for the future. The world is not going to be easier. We have the conflict between China and the Americas, supply chain challenges, market volatility, indebtedness after COVID, nationalism, political unrest. The purpose of trying to help societies become better, enable future wealth, be sustainable – this is a big driver for energy. Telecom will be a lighthouse for society. That releases additional energy to fulfill our commitments. It's about passion for our brand and for our purpose. We are the transatlantic telco, playing in one hemisphere. We hope to convince more buyers into our stock, more people who trust in Deutsche Telekom, the transatlantic leader. Thank you very much for joining, and hope to see you soon, healthy.