Results of operations of Deutsche Telekom AG

The negative operating results increased by approximately EUR 0.1 billion year-on-year, due mainly to EUR 0.3 billion higher other operating expenses and a EUR 0.1 billion lower operating income compared with the prior year. Lower personnel costs of EUR 0.2 billion and a decline of EUR 0.1 billion in depreciation, amortization and write-downs had an offsetting effect.

Net revenue remained more or less unchanged from the prior-year level.

A decrease of EUR 0.4 billion in foreign currency translation gains and lower income from derivatives in connection with U.S. dollar contracts, and a decrease of EUR 0.2 billion in income from asset disposals were the main drivers of the year-on-year decline in other operating income, which was down by EUR 0.1 billion overall. By contrast, the write-ups on Deutsche Telekom Europe Holding GmbH, Bonn, of EUR 0.4 billion, and on T-Mobile Global Zwischenholding GmbH, Bonn, of EUR 0.1 billion, had a positive effect on other operating income.

The increase of EUR 0.3 billion in other operating expenses was mainly attributable to an expense of EUR 0.6 billion in connection with the agreement in the Toll Collect arbitration proceedings, an increase of EUR 0.1 billion in derivatives in connection with U.S. dollar contracts, and an increase of EUR 0.1 billion in other employee-related expenses. These effects were offset by a decrease of EUR 0.6 billion in foreign currency transaction losses resulting in particular from U.S. dollar contracts.

The year-on-year decrease in personnel costs of EUR 0.2 billion is mainly attributable to lower expenses arising from the early retirement program for civil servants.

Net financial income declined by EUR 0.7 billion to EUR 6.5 billion, primarily as a result of a EUR 1.5 billion decrease in income related to subsidiaries, associated and related companies. A decrease in write-downs on financial assets of EUR 1.0 billion compared with the previous year had an offsetting effect.

Income related to subsidiaries, associated and related companies, which declined by EUR 1.5 billion compared with the prior year, was positively affected in the reporting year by profits transferred by Telekom Deutschland GmbH, Bonn, of EUR 3.7 billion (2017: EUR 3.9 billion), DFMG Holding GmbH, Bonn, of EUR 2.5 billion (2017: EUR 3.8 billion), and T-Mobile Global Zwischenholding GmbH, Bonn, of EUR 1.6 billion (2017: EUR 1.4 billion). The transfer of the losses from Deutsche Telekom IT GmbH, Bonn, of EUR 0.7 billion (2017: EUR 0.5 billion) and T-Systems International GmbH, Frankfurt/Main, of EUR 0.3 billion (2017: EUR 0.3 billion), had an offsetting effect.

In addition to the operating business of the consolidated subsidiaries, the income related to subsidiaries, associated and related companies resulted from effects arising from reorganization measures as well as from an equity repayment, calculated at fair value, by T-Mobile Global Holding GmbH, Bonn. The loss arising from the intragroup sale, based on a valuation report, of the indirectly held interests in the BT Group plc, London, United Kingdom, had a negative effect on income related to subsidiaries, associated and related companies.

The increase in the net interest expense of EUR 0.2 billion compared with the prior year was primarily the result of an increase in expenses in connection with the interest added back on noncurrent accruals.

Income after income taxes was particularly impacted by the aforementioned effects and decreased by EUR 0.7 billion year-on-year in 2018.

Other tax expense of EUR 13 million combined with the aforementioned factors resulted in income after taxes of EUR 4,186 million in 2018. Taking into account EUR 2,845 million in unappropriated net income carried forward, unappropriated net income totaled EUR 7,031 million.