41 Capital management

Disclosures on capital management. The overriding aim of Deutsche Telekom’s capital management is to strike a balance between the contrasting expectations of the following four stakeholders:

• Shareholders
• Providers of debt capital
• Employees
• “Entrepreneurs within the enterprise”

For further information, please refer to the section “Management of the Group” in the combined management report.

An important key performance indicator for the capital market communication with investors, analysts, and rating agencies is relative debt, i.e., net debt to adjusted EBITDA. This ratio stood at 2.4x at December 31, 2018 (December 31, 2017: 2.3x). The target corridor for relative debt has shifted from 2.00 to 2.50x to 2.25 to 2.75x on account of the mandatory first-time application of the IFRS 16 accounting standard as of January 1, 2019. Net debt is a non-GAAP figure not governed by International Financial Reporting Standards, and its definition and calculation may vary from one company to another. A further essential key performance indicator is the equity ratio, i.e., the ratio of shareholders’ equity to total assets as shown in the consolidated statement of financial position. The equity ratio was 29.9 percent as of December 31, 2018 (December 31, 2017: 30.0 percent). The target corridor remains unchanged between 25 and 35 percent. In addition, Deutsche Telekom maintains a liquidity reserve covering all maturities of the next 24 months.