Group Headquarters & Group Services

Development of operations

For information on changes in the organizational structure, please refer to the section “Group organization” and Note 35 “Segment reporting” in the notes to the consolidated financial statements.

Total revenue

Total revenue in our Group Headquarters & Group Services segment in 2018 decreased by 6.8 percent year-on-year. This decline was mainly due to the fact that, as of January 2016, the costs of intragroup development services newly commissioned from Deutsche Telekom IT in Germany are no longer charged internally. Other reasons for the decrease were lower revenues from land and buildings, largely due to the ongoing optimization of space, and the forgone revenue from DeTeMedien following the completion of its sale in June 2017. Higher intragroup revenue at Deutsche Telekom IT from the licensing of the Group-wide ERP system had a positive effect.

EBITDA, adjusted EBITDA

Adjusted EBITDA at our Group Headquarters & Group Services improved by EUR 146 million year-on-year in the reporting year, mainly due to higher revenue at Deutsche Telekom IT from the licensing of the Group-wide ERP system, which does not impact on earnings at Group level. The reduction in headcount brought about by ongoing restructuring of the Vivento workforce also had a positive effect. By contrast, lower revenue from land and buildings had a negative impact on adjusted EBITDA.

Overall, negative net special factors of EUR 322 million affected EBITDA in the reporting year. Expenses for staff-related measures were partially offset by the positive effect of the reversal of provisions for legal risks in connection with the Toll Collect arbitration proceedings. In the prior year, negative net special factors totaled EUR 119 million and mainly comprised expenses for staff-related measures on the one hand and income from the sale of DeTeMedien on the other.

EBIT

EBIT declined by EUR 225 million year-on-year largely as a result of the same effects described under EBITDA and a EUR 168 million increase in depreciation, amortization and impairment losses. This increase was due, in particular, to higher depreciation and amortization caused by increased levels of capitalization at Deutsche Telekom IT. The latter were attributable to the fact that the costs of newly commissioned intragroup development services in Germany are no longer charged internally. This development was partially offset by lower depreciation, amortization and impairment losses from land and buildings as a result of our continued optimization of the real estate portfolio.

Cash capex

Cash capex increased by EUR 73 million year-on-year, primarily owing to increased investment in technology and innovation, mainly for development activities. In addition, cash capex for vehicles and the procurement of licenses increased, offset partially by lower investments in real estate-related construction and project services.