Financial position of the Group (XLS:) Download Condensed consolidated statement of financial positionmillions of € Dec. 31, 2018 Change Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 ASSETS CURRENT ASSETS 21,870 1,478 20,392 26,638 32,184 29,798 Cash and cash equivalents 3,679 367 3,312 7,747 6,897 7,523 Trade and other receivables 9,988 265 9,723 9,362 9,238 10,454 Contract assets 1,765 n. a. n. a. n. a. n. a. n. a. Non-current assets and disposal groups held for sale 145 (16) 161 372 6,922 5,878 Other current assets 6,293 (903) 7,196 9,157 9,127 5,943 NON-CURRENT ASSETS 123,505 2,562 120,943 121,847 111,736 99,562 Intangible assets 64,950 2,085 62,865 60,599 57,025 51,565 Property, plant and equipment 50,631 3,753 46,878 46,758 44,637 39,616 Capitalized contract costs 1,744 n. a. n. a. n. a. n. a. n. a. Investments accounted for using the equity method 576 (75) 651 725 822 617 Other non-current assets 5,604 (4,944) 10,548 13,765 9,252 7,764 TOTAL ASSETS 145,375 4,041 141,334 148,485 143,920 129,360 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES 29,144 1,778 27,366 33,126 33,548 28,198 Financial liabilities 10,527 2,169 8,358 14,422 14,439 10,558 Trade and other payables 10,735 (236) 10,971 10,441 11,090 9,681 Current provisions 3,144 (228) 3,372 3,068 3,367 3,517 Contract liabilities 1,720 n. a. n. a. n. a. n. a. n. a. Liabilities directly associated with non-current assets and disposal groups held for sale 36 36 0 194 4 6 Other current liabilities 2,982 (1,682) 4,664 5,001 4,648 4,436 NON-CURRENT LIABILITIES 72,794 1,296 71,498 76,514 72,222 67,096 Financial liabilities 51,748 2,577 49,171 50,228 47,941 44,669 Non-current provisions 8,793 (2,737) 11,530 11,771 11,006 10,838 Other non-current liabilities 11,668 870 10,798 14,515 13,275 11,589 Contract liabilities 585 n. a. n. a. n. a. n. a. n. a. SHAREHOLDERS’ EQUITY 43,437 967 42,470 38,845 38,150 34,066 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 145,375 4,041 141,334 148,485 143,920 129,360 Structure of the consolidated statement of financial position millions of € Total assets amounted to EUR 145.4 billion, up by EUR 4.0 billion against December 31, 2017. The mandatory first-time application of the new accounting standards IFRS 9 and IFRS 15 as of January 1, 2018 resulted in remeasurement and reclassification effects recognized directly in equity. For example, assets increased as of January 1, 2018 on account of contract assets of EUR 1.8 billion to be capitalized for the first time in accordance with IFRS 15 and contract costs to be capitalized of EUR 1.2 billion. By contrast, reclassifications and remeasurements were made from trade and other receivables, decreasing them by EUR 0.3 billion compared with December 31, 2017. Liabilities and shareholders’ equity also increased as of the date of first-time application as a result of the initial recognition of current and non-current contract liabilities amounting to EUR 2.5 billion. At the same time, current and non-current other liabilities decreased by a comparable amount. For further information on the effects of the first-time application of the new accounting standards IFRS 9 and IFRS 15, please refer to the section “Summary of accounting policies” in the notes to the consolidated financial statements. Cash and cash equivalents increased by EUR 0.4 billion year-on-year. For further information, please refer to the section “Consolidated statement of cash flows” and Note 34 “Notes to the consolidated statement of cash flows” in the notes to the consolidated financial statements. Trade and other receivables increased by EUR 0.3 billion to EUR 10.0 billion, mainly due to higher receivables in both the United States and Germany operating segments. In the United States operating segment, this increase was the result of the higher volume of receivables for terminal equipment sold under installment plans and the larger customer base. Exchange rate effects from the translation of U.S. dollars into euros also contributed to the increase, which was partially offset in particular by reclassification and remeasurement effects from the mandatory first-time application of the new accounting standards IFRS 9 and IFRS 15. Other current assets developed as follows until December 31, 2018: Other current financial assets decreased by EUR 0.5 billion to EUR 2.8 billion, due, among other factors, to the remeasurement as of the reporting date of derivatives. Exchange rate effects from the translation of U.S. dollars into euros had an offsetting effect. Inventories decreased by EUR 0.2 billion to EUR 1.8 billion, mainly due to the reduction in the stock levels of terminal equipment (in particular higher-priced smartphone models) in the United States operating segment; exchange rate effects, mainly from the translation of U.S. dollars into euros, had an offsetting effect. Income tax receivables increased by EUR 0.3 billion. Intangible assets grew by EUR 2.1 billion to EUR 65.0 billion, mainly due to additions totaling EUR 4.0 billion. They mainly comprised capital expenditures in the United States, Europe, and Germany operating segments and in the Group Headquarters & Group Services segment. Exchange rate effects of EUR 1.7 billion, particularly from the translation of U.S. dollars into euros, and effects of changes in the composition of the Group in the amount of EUR 1.5 billion resulting from the acquisition of the Austrian cable operator UPC Austria in the Europe operating segment and the online TV provider Layer3 TV in the United States operating segment, also increased the carrying amount. Depreciation and amortization of EUR 4.3 billion and impairment losses of EUR 0.7 billion reduced the carrying amount. In the Europe operating segment, the annual impairment test resulted in impairment losses on goodwill of EUR 0.6 billion in total in our national companies in Poland and Romania. The first-time application of IFRS 15 as of January 1, 2018 produced effects that reduced the carrying amount by EUR 0.1 billion. Property, plant and equipment increased by EUR 3.8 billion to EUR 50.6 billion. Additions of EUR 11.3 billion, primarily in the United States and Germany operating segments, increased the carrying amount. They included, in particular, capital expenditure in connection with the modernization of the T Mobile US network as well as for broadband and fiber-optic build-out, the IP transformation, and mobile infrastructure in the Germany operating segment. They also included EUR 0.9 billion for capitalized higher-priced mobile handsets in connection with the JUMP! On Demand business model at T-Mobile US, under which customers do not purchase the device but lease it. Changes in the composition of the Group, particularly the acquisition of UPC Austria and Layer3 TV, also increased the carrying amount by EUR 1.4 billion. Exchange rate effects, primarily from the translation of U.S. dollars into euros, increased the carrying amount by EUR 0.6 billion. By contrast, depreciation, amortization and impairment losses of EUR 8.8 billion overall, and disposals of EUR 0.6 billion reduced the carrying amount. Of these disposals, EUR 0.3 billion was attributable to terminal equipment returned by customers under the JUMP! On Demand model. Other non-current assets developed as follows until December 31, 2018: Other non-current financial assets decreased by EUR 4.1 billion to EUR 1.6 billion. On March 23, 2018, we transferred our 12 percent financial stake in BT, which was worth EUR 3.1 billion at the time, to the Group’s own trust, Deutsche Telekom Trust e.V., where it will serve as plan assets to cover pension entitlements. The impairment loss on the exchange-traded stake in BT – which was recognized in other comprehensive income for the period from January 1, 2018 until the date of transfer – reduced the carrying amount by EUR 0.7 billion. Negative effects from the remeasurement of derivative financial instruments as of the reporting date also reduced the carrying amount. Our current and non-current financial liabilities increased by EUR 4.7 billion compared with the prior year to EUR 62.3 billion in total. This was mainly due to the euro bonds with a total volume of EUR 3.4 billion issued by Deutsche Telekom International Finance B.V., U.S. dollar bonds with a total volume of EUR 1.5 billion (USD 1.75 billion), and pound sterling bonds with a total volume of EUR 0.3 billion (GBP 0.3 billion), as well as to the bonds issued by T-Mobile US with a volume of EUR 2.0 billion (USD 2.5 billion). In addition, OTE issued a euro bond with a volume of EUR 0.4 billion. The settlement agreed in the Toll Collect arbitration proceedings increased financial liabilities by EUR 0.6 billion. Payment of the first tranche of EUR 0.2 billion in the reporting year reduced financial liabilities. The early repayment of T-Mobile US’ debt instruments in the amount of EUR 2.7 billion (USD 3.4 billion) and regular repayments in the Group of euro bonds of EUR 1.1 billion and U.S. dollar bonds of EUR 0.7 billion (USD 0.85 billion) also decreased the carrying amount of financial liabilities. The initial recognition and measurement of forward-payer swaps with a total volume of USD 9.6 million in the United States operating segment gave rise to a remeasurement loss recognized directly in equity of EUR 0.4 billion. For further information on the development of financial liabilities, please refer to Note 12 “Financial liabilities” in the notes to the consolidated financial statements. Trade and other payables decreased from EUR 11.0 billion at the end of 2017 to EUR 10.7 billion. A decline in liabilities in the United States operating segment was offset by a slight increase in liabilities in the Germany operating segment. Exchange rate effects from the translation from U.S. dollars into euros had an increasing effect. Current and non-current provisions decreased substantially against the prior-year level by EUR 3.0 billion to EUR 11.9 billion, of which EUR 5.5 billion (December 31, 2017: EUR 8.4 billion) related to provisions for pensions and other employee benefits. The decrease is mainly due to the transfer of our stake in BT and the associated netting of these plan assets with the defined benefit obligations. At EUR 6.4 billion, other provisions were slightly lower than in the prior year. Shareholders’ equity increased from EUR 42.5 billion as of December 31, 2017 to EUR 43.4 billion. This increase was attributable in particular to the net profit of EUR 3.3 billion and to the transition to IFRS 9 and 15. The cumulative effect of this was an increase of EUR 1.5 billion in retained earnings (including shares attributable to non-controlling interests) recognized directly in equity as of January 1, 2018. Currency translation effects of EUR 1.0 billion recognized directly in equity and capital increases from share-based payments of EUR 0.4 billion, especially in our United States operating segment, also increased shareholders’ equity. By contrast, the carrying amount was reduced in particular by dividend payments for the 2017 financial year to Deutsche Telekom AG shareholders in the amount of EUR 3.1 billion and to non-controlling interests in the amount of EUR 0.2 billion. In addition, transactions with owners reduced shareholders’ equity by a further EUR 1.4 billion. These transactions include EUR 0.9 billion for T-Mobile US’ share buy-back program, EUR 0.3 billion for the acquisition of another 5 percent stake in the Greek subsidiary OTE, and EUR 0.2 billion for the T-Mobile US shares acquired by Deutsche Telekom in the first quarter of 2018. Furthermore, the subsequent measurement in other comprehensive income of equity instruments held reduced the carrying amount by EUR 0.6 billion; this figure includes the impairment loss of EUR 0.7 billion on the exchange-traded stake in BT that was recognized in other comprehensive income for the period from January 1, 2018 through March 23, 2018. (XLS:) Download Calculation of net debtmillions of € Dec. 31, 2018 Dec. 31, 2017 Change Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Financial liabilities (current) 10,527 8,358 2,169 14,422 14,439 10,558 Financial liabilities (non-current) 51,748 49,171 2,577 50,228 47,941 44,669 FINANCIAL LIABILITIES 62,275 57,529 4,746 64,650 62,380 55,227 Accrued interest (719) (692) (27) (955) (1,014) (1,097) Other (928) (781) (147) (1,029) (857) (1,038) GROSS DEBT 60,628 56,056 4,572 62,666 60,509 53,092 Cash and cash equivalents 3,679 3,312 367 7,747 6,897 7,523 Available-for-sale financial assets/financial assets held for trading 0 7 (7) 10 2,877 289 Derivative financial assets 870 1,317 (447) 2,379 2,686 1,343 Other financial assets 654 629 25 2,571 479 1,437 NET DEBT 55,425 50,791 4,634 49,959 47,570 42,500 Changes in net debt millions of € Our net debt increased by EUR 4.6 billion year-on-year to EUR 55.4 billion. The reasons for this are presented in the graphic above. Other effects of EUR 1.3 billion include, among other factors, liabilities for the acquisition of media broadcasting rights and financing options under which the payments for trade payables become due at a later point in time by involving banks in the process. Remeasurement losses from forward payer swaps recognized directly in equity are also included. Off-balance sheet assets and other financing formats. In addition to the assets recognized in the statement of financial position, we use off-balance-sheet assets. This primarily relates to leased property. For further information, please refer to Note 37 “Leases” and Note 38 “Other financial obligations” in the notes to the consolidated financial statements. Off-balance-sheet financial instruments mainly relate to the sale of receivables by means of factoring. Total receivables sold as of December 31, 2018 amounted to EUR 4.7 billion (December 31, 2017: EUR 4.7 billion). This mainly relates to factoring agreements in the United States and Germany operating segments. The agreements are used in particular for active receivables management. Furthermore, in the reporting year, we chose financing options totaling EUR 0.2 billion (2017: EUR 0.3 billion) which extended the period of payment for trade payables from operating and investing activities by involving banks in the process and which upon payment are shown under cash flows used in/from financing activities. As a result, we show these payables under financial liabilities in the statement of financial position. In 2018, we leased network equipment for a total of EUR 1.0 billion (2017: EUR 1.0 billion), primarily in the United States operating segment, which is recognized as a finance lease. In the statement of financial position, we therefore also recognize this item under financial liabilities and the future repayments of the liabilities in net cash from/used in financing activities. Finance management. Our finance management ensures our Group’s ongoing solvency and hence its financial equilibrium. The fundamentals of Deutsche Telekom’s finance policy are established each year by the Board of Management and overseen by the Supervisory Board. Group Treasury is responsible for implementing the finance policy and for ongoing risk management. The rating of Deutsche Telekom AG Standard & Poor’s Moody’s Fitch LONG-TERM RATING Dec. 31, 2014 BBB+ Baa1 BBB+ Dec. 31, 2015 BBB+ Baa1 BBB+ Dec. 31, 2016 BBB+ Baa1 BBB+ Dec. 31, 2017 BBB+ Baa1 BBB+ Dec. 31, 2018 BBB+ Baa1 BBB+ OUTLOOK CreditWatch negative Negative Stable SHORT-TERM RATING A–2 P–2 F2 (XLS:) Download Financial flexibility 2018 2017 2016 2015 2014 RELATIVE DEBT 2.4 x 2.3 x 2.3 x 2.4 x 2.4 x Net debt EBITDA (adjusted for special factors) EQUITY RATIO % 29.9 30.0 26.2 26.5 26.3 To ensure financial flexibility, we primarily use the KPI relative debt. This is a core component of our finance strategy and an important performance indicator for investors, analysts, and rating agencies. (XLS:) Download Condensed consolidated statement of cash flowsmillions of € 2018 2017 2016 NET CASH FROM OPERATING ACTIVITIES 17,948 17,196 15,533 Cash outflows for investments in intangible assets (excluding goodwill and before spectrum investment) and property, plant and equipment (Cash Capex) (12,223) (12,099) (10,958) Proceeds from disposal of intangible assets (excluding goodwill) and property, plant and equipment 525 400 364 FREE CASH FLOW (BEFORE DIVIDEND PAYMENTS AND SPECTRUM INVESTMENT) 6,250 5,497 4,939 NET CASH USED IN INVESTING ACTIVITIES (14,297) (16,814) (13,608) NET CASH USED IN FINANCING ACTIVITIES (3,259) (4,594) (1,322) Effect of exchange rate changes on cash and cash equivalents (17) (226) 250 Changes in cash and cash equivalents associated with non-current assets and disposal groups held for sale (8) 3 (3) Net increase (decrease) in cash and cash equivalents 367 (4,435) 850 CASH AND CASH EQUIVALENTS 3,679 3,312 7,747 Free cash flow. Free cash flow of the Group before dividend payments and spectrum investment grew from EUR 5.5 billion in the prior year to EUR 6.2 billion, with net cash from operating activities increasing by EUR 0.8 billion to EUR 17.9 billion. Exchange rate effects adversely affected the positive business trend in the United States operating segment. In addition, positive effects from factoring agreements – in particular in the Systems Solutions and Germany operating segments – on net cash from operating activities were EUR 0.3 billion lower than in the prior year. A EUR 0.1 billion increase in income tax payments compared with the prior year also had a negative impact. Furthermore, the comparable figure in the prior year included a EUR 0.1 billion higher dividend payment from BT (totaling EUR 0.2 billion), while the profit of EUR 0.1 billion distributed by Toll Collect GmbH was a key component in the reporting year. A decrease of EUR 0.8 billion in net interest payments compared with the prior year, mainly due to the fact that T-Mobile US has increasingly been financed internally since 2017, and that refinancing terms continue to be favorable, had a positive effect on the trend in net cash from operating activities. Cash capex (before spectrum investment) increased by EUR 0.1 billion compared with 2017. Capital expenditures were focused primarily on the United States, Germany, and Europe operating segments and went toward the build-out and upgrade of our networks. Adjusted for exchange rate effects, cash capex was significantly higher overall than in the prior year. For further information on the statement of cash flows, please refer to Note 34 “Notes to the consolidated statement of cash flows” in the notes to the consolidated financial statements. schließen IP - Internet Protocol Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.