34 Notes to the consolidated statement of cash flows

Net cash from operating activities

Net cash from operating activities increased by EUR 0.8 billion year-on-year to EUR 17.9 billion. Exchange rate effects adversely affected the positive business trend in the United States operating segment. During the reporting year, factoring agreements were concluded concerning monthly revolving sales of trade receivables. However they did not have a significant impact on net cash from operating activities in the reporting year. The effect from factoring agreements of EUR 0.3 billion had a positive effect in the prior year. A EUR 0.1 billion increase in income tax payments compared with the prior year also had a negative impact. The prior-year figure 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.

Deutsche Telekom’s working capital measures are focused on improvements in the area of liabilities as well as in the management of receivables and inventories. However, they are not used for active liquidity management. The negative effect on the change in assets carried as working capital can be attributed to the acquisition of mobile devices in connection with the JUMP! On Demand business model and to the increase in trade receivables as a result of net customer additions in the United States, mainly from agreements under the Equipment Installment Plan (EIP). In addition, an increase in trade receivables in the Germany operating segment also had a negative effect on working capital. By contrast, working capital was positively impacted by the reduction of stock levels of new terminal equipment models introduced in the United States at the end of 2017. For further information on individual assets carried as working capital, please refer to Note 2 “Trade and other receivables”, and Note 4 “Inventories”. Liabilities carried as working capital decreased mainly as a result of the reduction in trade payables, especially in the United States. For further information, please refer to Note 13 “Trade and other payables”.

Cash capex decreased by EUR 7.0 billion to EUR 12.5 billion. In the reporting year, mobile spectrum licenses were acquired for a total of EUR 0.3 billion, compared with a total of EUR 7.4 billion in the prior year. In both years, these payments related almost exclusively to the United States operating segment. Cash capex (excluding spectrum investment) was up EUR 0.1 billion year-on-year in the Europe operating segment due to the network upgrade/expansion. By contrast, in the United States operating segment, this item decreased by EUR 0.2 billion, primarily due to currency translation effects. Adjusted for exchange rate effects, and excluding capital expenditure on mobile spectrum licenses, cash capex was substantially higher than in the prior year. Interest payments (including capitalized interest) of EUR 3.6 billion (2017: EUR 4.0 billion, 2016: EUR 3.6 billion) were made in the 2018 financial year. Capitalized interest was reported within cash capex in net cash used in investing activities, together with the associated assets.

Non-cash transactions in the consolidated statement of cash flows

In the 2018 financial year, Deutsche Telekom chose financing options totaling EUR 0.2 billion under which the payments for trade payables from operating and investing activities primarily become due at a later point in time by involving banks in the process (2017: EUR 0.3 billion). These payables will subsequently be recognized under financial liabilities in the statement of financial position. As soon as the payments have been made, they are disclosed under net cash used in/from financing activities.

In 2018, Deutsche Telekom leased network equipment recognized as a finance lease for a total of EUR 1.0 billion (2017: EUR 1.0 billion) in particular in the United States operating segment. This lease is now also shown under financial liabilities in the statement of financial position. Future repayments of the liabilities will be recognized in net cash used in/from financing activities.

Consideration for the acquisition of broadcasting rights will be paid by Deutsche Telekom in accordance with the terms of the contract on the date of its conclusion or spread over the term of the contract. Financial liabilities of EUR 0.3 billion were recognized in the 2018 financial year for future consideration for acquired broadcasting rights (2017: EUR 0.4 billion). As soon as the payments have been made, they are disclosed under net cash used in/from financing activities.

In the United States operating segment, mobile devices amounting to EUR 0.9 billion (2017: EUR 1.0 billion) were recognized under property, plant and equipment in the reporting year. These relate to the terminal equipment lease model JUMP! On Demand at T-Mobile US under which customers do not purchase the device but lease it. The payments are presented under net cash from operating activities.

Following the transfer of the financial stake in the BT Group to Deutsche Telekom Trust e.V. in the first quarter of 2018, a non-cash transfer of EUR 3.0 billion to plan assets was made in order to increase external capital funding; this reduced the provisions for pensions recognized in the statement of financial position.

The carrying amounts of the financial liabilities disclosed in net cash used in/from financing activities, divided into carrying amount changes having and not having an effect on cash flows, developed as follows in the reporting year:

Total carrying amount changes having an effect on cash flows disclosed in net cash used in/from financing activities of EUR 1.5 billion deviate from the net cash used in financing activities of EUR 3.3 billion due in particular to the dividend entitlements of Deutsche Telekom AG shareholders having an effect on cash flows and the T-Mobile US share buy-back program begun in December 2017. Other carrying amount changes not having an effect on cash flows mainly relate to additions to financial liabilities in connection with the recognition of leased network equipment of EUR 1.0 billion and of broadcasting rights of EUR 0.3 billion. This item also includes additions to financial liabilities of EUR 0.2 billion relating to selected financing options under which payments for trade payables become due at a later point in time by involving banks in the process. For further information, please refer to the section “Non-cash transactions in the consolidated statement of cash flows”.