40 Financial instruments and risk management

For further information on financial instruments, please refer in particular to Note 2 “Trade and other receivables”, Note 10 “Other financial assets”, Note 12 “Financial liabilities”, Note 27 “Finance costs” and Note 29 “Other financial income/expense”.

Carrying amounts, amounts recognized, and fair values by class and measurement category
millions of €

 

 

 

 

Amounts recognized in the statement of financial position in accordance with IFRS 9

 

 

 

Measure­ment category in accor­dance with IFRS 9

Carrying amount Dec. 31, 2018

 

Amor­tized cost

Fair value through other compre­hensive income without recy­cling to profit or loss

Fair value through other compre­hensive income with recy­cling to profit or loss

Fair value through profit or loss

Amounts recog­nized in the state­ment of finan­cial position in accor­dance with IAS 17

Fair value Dec. 31, 2018a

a

The exemption provisions under IFRS 7.29a were applied for information on specific fair values.

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

AC

3,679

 

3,679

 

 

 

 

 

Trade receivables

 

 

 

 

 

 

 

 

 

At amortized cost

AC

4,280

 

4,280

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

5,703

 

 

 

5,703

 

 

5,703

At fair value through profit or loss

FVTPL

5

 

 

 

 

5

 

5

Other financial assets

 

 

 

 

 

 

 

 

 

Originated loans and other receivables

 

 

 

 

 

 

 

 

 

At amortized cost

AC

2,982

 

2,982

 

 

 

 

3,013

Of which: collateral paid

AC

299

 

299

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

0

 

 

 

 

 

 

0

At fair value through profit or loss

FVTPL

103

 

 

 

 

103

 

103

Equity instruments

 

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

324

 

 

324

 

 

 

324

At fair value through profit or loss

FVTPL

0

 

 

 

 

 

 

 

Derivative financial assets

 

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

597

 

 

 

 

597

 

597

Of which: termination rights embedded in bonds issued

FVTPL

99

 

 

 

 

99

 

99

Of which: energy forward agreements embedded in contracts

FVTPL

12

 

 

 

 

12

 

12

Derivatives with a hedging relationship

n. a.

273

 

 

 

5

268

 

273

Lease assets

n. a.

147

 

 

 

 

 

147

 

Cash and cash equivalents and trade receivables directly associated with non-current assets and disposal groups held for sale

AC

27

 

27

 

 

 

 

 

Equity instruments within non-current assets and disposal groups held for sale

FVOCI

34

 

 

34

 

 

 

34

LIABILITIES

 

 

 

 

 

 

 

 

 

Trade payables

AC

10,735

 

10,735

 

 

 

 

 

Bonds and other securitized liabilities

AC

49,033

 

49,033

 

 

 

 

51,736

Liabilities to banks

AC

5,710

 

5,710

 

 

 

 

5,749

Liabilities to non-banks from promissory note bonds

AC

497

 

497

 

 

 

 

578

Other interest-bearing liabilities

AC

1,878

 

1,878

 

 

 

 

1,927

Of which: collateral received

AC

404

 

404

 

 

 

 

 

Other non-interest-bearing liabilities

AC

1,608

 

1,608

 

 

 

 

 

Finance lease liabilities

n. a.

2,472

 

 

 

 

 

2,472

2,695

Derivative financial liabilities

 

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

n. a.

242

 

 

 

 

242

 

242

Of which: options granted to third parties for the purchase of shares in subsidiaries and associates

FVTPL

10

 

 

 

 

10

 

10

Of which: energy forward agreements embedded in contracts

FVTPL

52

 

 

 

 

52

 

52

Derivatives with a hedging relationship

n. a.

836

 

 

 

486

350

 

836

Trade payables directly associated with non-current assets and disposal groups held for sale

AC

36

 

36

 

 

 

 

 

Of which: aggregated by measurement category in accordance with IFRS 9

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Financial assets at amortized cost

AC

10,968

 

10,968

 

 

 

 

3,013

Financial assets at fair value through other comprehensive income with recycling to profit or loss

FVOCI

5,703

 

 

 

5,703

 

 

5,703

Financial assets at fair value through other comprehensive income without recycling to profit or loss

FVOCI

358

 

 

358

 

 

 

358

Financial assets at fair value through profit or loss

FVTPL

705

 

 

 

 

705

 

705

LIABILITIES

 

 

 

 

 

 

 

 

 

Financial liabilities at amortized cost

AC

69,497

 

69,497

 

 

 

 

59,990

Financial liabilities at fair value through profit or loss

FVTPL

242

 

 

 

 

242

 

242

Trade receivables include receivables amounting to EUR 1.7 billion (December 31, 2017: EUR 1.6 billion) due in more than one year. The fair value generally equals the carrying amount.

Carrying amounts, amounts recognized, and fair values by class and measurement category
millions of €

 

 

 

Amounts recognized in the statement of financial position in accordance with IAS 39

 

 

 

Measure­ment category in accor­dance with IAS 39

Carrying amount Dec. 31, 2017

Amor­tized cost

Cost

Fair value recog­nized in equity

Fair value through profit or loss

Amounts recog­nized in the state­ment of finan­cial position in accor­dance with IAS 17

Fair value Dec. 31, 2017b

a

For details, please refer to the derivatives table in this Note.

b

The exemption provisions under IFRS 7.29a were applied for information on specific fair values.

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

LaR

3,312

3,312

 

 

 

 

 

Trade receivables

LaR

9,553

9,553

 

 

 

 

 

Originated loans and receivables

LaR/n. a.

3,507

3,354

 

 

 

153

3,539

Of which: collateral paid

LaR

504

504

 

 

 

 

 

Other non-derivative financial assets

 

 

 

 

 

 

 

 

Held-to-maturity investments

HtM

5

5

 

 

 

 

 

Available-for-sale financial assets

AfS

4,216

 

187

4,029

 

 

4,029

Derivative financial assetsa

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

FAHfT

1,103

 

 

 

1,103

 

1,103

Of which: termination rights embedded in bonds issued

FAHfT

351

 

 

 

351

 

351

Of which: energy forward agreements embedded in renewable energy purchase agreements

FAHfT

0

 

 

 

 

 

 

Derivatives with a hedging relationship

n. a.

214

 

 

42

172

 

214

LIABILITIES

 

 

 

 

 

 

 

 

Trade payables

FLAC

10,934

10,934

 

 

 

 

 

Bonds and other securitized liabilities

FLAC

45,453

45,453

 

 

 

 

50,472

Liabilities to banks

FLAC

4,974

4,974

 

 

 

 

5,062

Liabilities to non-banks from promissory notes

FLAC

480

480

 

 

 

 

582

Liabilities with the right of creditors to priority repayment in the event of default

FLAC

0

0

 

 

 

 

0

Other interest-bearing liabilities

FLAC

1,598

1,598

 

 

 

 

1,629

Of which: collateral received

FLAC

569

569

 

 

 

 

0

Other non-interest-bearing liabilities

FLAC

1,443

1,443

 

 

 

 

0

Finance lease liabilities

n. a.

2,635

2,635

 

 

 

2,635

2,893

Derivative financial liabilitiesa

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

FLHfT

337

 

 

 

337

 

337

Of which: conversion rights embedded in Mandatory Convertible Preferred Stock

FLHfT

0

 

 

 

 

 

0

Of which: options granted to third parties for the purchase of shares in subsidiaries and associates

FLHfT

10

 

 

 

10

 

10

Of which: energy forward agreements embedded in renewable energy purchase agreements

FLHfT

46

 

 

 

46

 

46

Derivatives with a hedging relationship

n. a.

609

 

 

168

441

 

609

Derivative financial liabilities directly associated with non-current assets and disposal groups held for sale

FLHfT

0

 

 

 

 

 

0

Of which: aggregated by measurement category in accordance with IAS 39 Loans and receivables

LaR

16,219

16,219

 

 

 

 

3,386

Held-to-maturity investments

HtM

5

5

 

 

 

 

0

Available-for-sale financial assets

AfS

4,216

 

187

4,029

 

 

4,029

Financial assets held for trading

FAHfT

1,103

 

 

 

1,103

 

1,103

Financial liabilities measured at amortized cost

FLAC

64,882

64,882

 

 

 

 

57,745

Financial liabilities held for trading

FLHfT

337

 

 

 

337

 

337

The portfolio of financial assets by measurement category in accordance with IAS 39 is reconciled to the IFRS 9 measurement categories as follows:

Reconciliation of financial assets from IAS 39 to IFRS 9
millions of €

 

Carrying amount Dec. 31, 2017 (IAS 39)

Reclassi­ficationsa

Reclassi­fications to other compre­hensive income

Remeasure­mentsb

Carrying amount Jan. 1, 2018 (IFRS 9)c

Effect to be recog­nized in retained earnings Jan. 1, 2018d

a

Carrying amount under IAS 39 that must be reclassified from an IAS 39 category to a new IFRS 9 category.

b

Resulting difference from the remeasurement of an IAS 39 instrument under the new IFRS 9 category.

c

The allowances posted under trade receivables recognized at fair value through other comprehensive income were offset with the receivables. On initial presentation of the transition to IFRS 9 in the Interim Group Report for the period January 1 to March 31, 2018, these allowances were presented gross in other comprehensive income.

d

Effects include shares attributable to non-controlling interests.

AT FAIR VALUE THROUGH PROFIT OR LOSS

 

 

 

 

 

 

Ending balance in accordance with IAS 39

1,103

 

 

 

1,103

 

Additions to IFRS 9 – At fair value through profit or loss from IAS 39 – Loans and receivables or held-to-maturity investments

 

8

 

 

8

 

IAS 39 – Available-for-sale financial assets

 

12

 

 

12

 

 

1,103

20

 

 

1,123

 

AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

Ending balance in accordance with IAS 39

4,216

 

 

 

4,216

 

Additions to IFRS 9 – At fair value through other comprehensive income with recycling to profit or loss from IAS 39 – Loans and receivables or held-to-maturity investments

 

5,035

(101)

(2)

4,931

(97)

Disposals from IAS 39 – Available-for-sale financial assets to IFRS 9 – At amortized cost

 

(185)

 

 

(185)

 

IFRS 9 – At fair value through other comprehensive income with recycling to profit or loss

 

 

 

(1)

(1)

(1)

IFRS 9 – At fair value through profit or loss

 

(12)

 

 

(12)

 

 

4,216

4,838

(101)

(3)

8,950

(99)

AT AMORTIZED COST

 

 

 

 

 

 

Ending balance in accordance with IAS 39

16,226

 

 

 

16,226

 

Additions to IFRS 9 – At amortized cost from IAS 39 – Available-for-sale financial assets

 

185

 

 

185

 

Disposals from IAS 39 – Loans and receivables or held-to-maturity investments to IFRS 9 – At amortized cost

 

(313)

 

(60)

(371)

(61)

IFRS 9 – At fair value through other comprehensive income with recycling to profit or loss

 

(5,035)

 

 

(5,035)

 

IFRS 9 – At fair value through profit or loss

 

(8)

 

 

(8)

 

 

16,226

(5,170)

 

(60)

10,996

(61)

TOTAL CHANGE

21,544

(313)

(101)

(63)

21,069

(159)

The main reclassifications from the old IAS 39 measurement categories to the new IFRS 9 measurement categories relate to portfolios of trade receivables that are to be sold under a factoring agreement. Previously assigned to the category “Loans and receivables” and measured at amortized cost, these receivables are now measured – depending on the underlying business model – either at fair value through other comprehensive income with recycling to profit or loss, or at fair value through profit or loss. Trade receivables with a carrying amount of EUR 150 million were reclassified as contract assets in accordance with IFRS 15.

In addition, Deutsche Telekom reclassified all equity instruments previously recognized as available-for-sale financial assets to the IFRS 9 category “At fair value through other comprehensive income without recycling to profit or loss.”

Under IFRS 9, debt instruments previously assigned to the categories “Available-for-sale financial assets,” “Held-to-maturity investments,” and “Loans and receivables” are reclassified – depending on the underlying business model and the cash flow characteristics of each instrument – to the new categories “At amortized cost,” “At fair value through other comprehensive income with recycling to profit or loss,” or “At fair value through profit or loss.”

The allocation of financial liabilities to IFRS 9 measurement categories does not result in any changes. The names of the measurement categories were updated to reflect the wording of the new standard.

Subsidiaries that are not included in the consolidated financial statements due to their subordinate significance, and which were previously recognized under IAS 39 at amortized cost as available-for-sale financial assets, are recognized under other assets as of the 2018 financial year and were reclassified as of January 1, 2018 with a carrying amount of EUR 177 million.

The table below shows the classes of financial assets and liabilities under IFRS 9 along with their previous and current measurement categories and carrying amounts:

Classes of financial instruments in accordance with IFRS 9
 

 

Measurement categories

Carrying amounts Dec. 31, 2017/Jan. 1, 2018

 

IAS 39

IFRS 9

IAS 39

IFRS 9

Difference

a

Carrying amount in accordance with IAS 17.

ASSETS

 

 

 

 

 

Cash and cash equivalents

Loans and receivables (LaR)

Amortized cost (AC)

3,312

3,312

0

Trade receivables

Loans and receivables (LaR)

 

9,400

 

 

At amortized cost

Amortized cost (AC)

4,323

(5,077)

At fair value through other comprehensive income

Fair value through other comprehensive income (FVOCI)

4,919

4,919

At fair value through profit or loss

Fair value through profit or loss (FVTPL)

6

6

Other financial assets Originated loans and other receivables

 

 

 

 

 

At amortized cost

Loans and receivables (LaR) or held-to-maturity investments (HtM) or available-for-sale financial assets (AfS)

Amortized cost (AC)

3,512

3,361

(151)

Of which: collateral paid

Loans and receivables (LaR)

Amortized cost (AC)

504

504

0

At fair value through profit or loss

Available-for-sale financial assets (AfS)

Fair value through profit or loss (FVTPL)

14

14

0

Equity instruments At fair value through other comprehensive income

Available-for-sale financial assets (AfS)

Fair value through other comprehensive income (FVOCI)

4,202

4,029

(173)

At fair value through profit or loss

Available-for-sale financial assets (AfS)

Fair value through profit or loss (FVTPL)

0

0

0

Derivative financial assets

 

 

 

 

 

Derivatives without a hedging relationship

Financial assets held for trading (FAHfT)

Fair value through profit or loss (FVTPL)

1,103

1,103

0

Of which: termination rights embedded in bonds issued

Financial assets held for trading (FAHfT)

Fair value through profit or loss (FVTPL)

351

351

0

Derivatives with a hedging relationship

n. a.

n. a.

214

214

0

Lease assetsa

n. a.

n. a.

153

153

0

LIABILITIES

 

 

 

 

 

Trade payables

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

10,934

10,934

0

Bonds and other securitized liabilities

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

45,453

45,453

0

Liabilities to banks

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

4,974

4,974

0

Liabilities to non-banks from promissory notes

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

480

480

0

Other interest-bearing liabilities

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

1,598

1,598

0

Of which: collateral received

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

569

569

0

Other non-interest-bearing liabilities

Financial liabilities measured at amortized cost (FLAC)

Amortized cost (AC)

1,443

1,443

0

Finance lease liabilities

n. a.

n. a.

2,635

2,635

0

Derivative financial liabilities
Derivatives without a hedging relationship

Financial liabilities held for trading (FLHfT)

Fair value through profit or loss (FVTPL)

337

337

0

Of which: options granted to third parties for the purchase of shares in subsidiaries andassociates

Financial liabilities held for trading (FLHfT)

Fair value through profit or loss (FVTPL)

10

10

0

Of which: energy forward agreements embedded in contracts

Financial liabilities held for trading (FLHfT)

Fair value through profit or loss (FVTPL)

46

46

0

Derivatives with a hedging relationship

n. a.

n. a.

609

609

0

The allowances on financial assets in accordance with IAS 39 are being reconciled to the IFRS 9 requirements as follows:

Allowances on financial assets
millions of €

 

Trade receiv­ables

Contract
assets

Originated loans and other receiv­ables

Total

Measurement categories

 

 

 

 

 

in accordance with IAS 39

LaR

LaR

n. a.

LaR

 

in accordance with IFRS 9

AC

FVOCI

n. a.

AC

 

Allowances

 

 

 

 

 

Amount in accordance with IAS 39 (Dec. 31, 2017)

1,303

334

0

19

1,657

Additions resulting from change in measurement category

45

99

28

 

172

Disposals resulting from change in measurement category

 

 

 

(13)

(13)

Amount in accordance with IFRS 9 (Jan. 1, 2018)

1,348

433

28

6

1,816

DIFFERENCE IN RETAINED EARNINGS (DEBIT (CREDIT))

45

99

28

(13)

159

Roaming
Refers to the use of a communication device or just a subscriber identity in a visited network rather than one’s home network. This requires the operators of both networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play when cell phones and smartphones are used across national boundaries.