42 Related-party disclosures Federal Republic of Germany and other related parties. The Federal Republic of Germany is both a direct and an indirect shareholder (via KfW Bankengruppe) and holds approximately 31.9 percent (December 31, 2017: 31.9 percent) of the share capital of Deutsche Telekom AG. In previous years, this resulted in the Federal Republic of Germany representing a solid majority at the shareholders’ meetings of Deutsche Telekom AG due to its level of attendance, giving it control over Deutsche Telekom. Thanks to higher levels of attendance, the Federal Republic has not had a majority of the voting rights at the shareholders’ meetings of Deutsche Telekom AG since 2016. As such, it is no longer deemed to have control over Deutsche Telekom, but rather only a significant influence. Therefore, the Federal Republic and the companies controlled and jointly controlled by the Federal Republic, but not the companies over which the Federal Republic can exercise a significant influence are classified as related parties of Deutsche Telekom. In the course of business, Deutsche Telekom deals directly with these companies, and with authorities and other government agencies as an independent party. Deutsche Telekom participates in the spectrum auctions of the Federal Network Agency. The acquisition of mobile spectrum through licenses may result in build-out requirements. The Federal Posts and Telecommunications Agency (Federal Agency) has been assigned certain tasks by law that affect cross-company issues at Deutsche Telekom AG, Deutsche Post AG, and Deutsche Postbank AG. The Federal Agency’s responsibilities include the continuation of the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse), the Recreation Service (Erholungswerk), the Deutsche Bundespost Institution for Supplementary Retirement Pensions for Salaried Employees and Wage Earners (Versorgungsanstalt der Deutschen Bundespost), and the Welfare Service (Betreuungswerk) for Deutsche Telekom AG, Deutsche Post AG, and Deutsche Postbank AG. The coordination and administrative tasks are performed on the basis of agency agreements. Up to and including the 2012 reporting year, Deutsche Telekom AG maintained a joint pension fund, Bundes-Pensions-Service für Post und Telekommunikation e.V., Bonn (Federal Pension Service for Post and Telecommunications – BPS-PT), together with Deutsche Post AG and Deutsche Postbank AG for civil-servant pension plans. The German Act on the Reorganization of the Civil Service Pension Fund (Gesetz zur Neuordnung der Postbeamtenversorgungskasse – PVKNeuG) transferred the functions of BPS-PT relating to civil-servant pensions (organized within the Civil Service Pension Fund) to the existing Federal Agency effective January 1, 2013. The civil-servant pension functions are therefore performed by the Civil Service Pension Fund as an integral part of the Federal Agency. This joint Civil Service Pension Fund works for the funds of all three companies and also handles the financial administration of the pension plan for the Federal Republic on a trust basis. For the 2018 financial year, Deutsche Telekom made payments in the amount of EUR 123 million (2017: EUR 94 million; 2016: EUR 84 million). Furthermore, payments are made to the Civil Service Pension Fund in accordance with the provisions of the Act on the Reorganization of the Civil Service Pension Fund (please also refer to Note 14 “Provisions for pensions and other employee benefits”). The Federal Republic and the companies controlled and jointly controlled by the Federal Republic, are customers or suppliers of Deutsche Telekom and as such have mutual contractual relationships with Deutsche Telekom. Deutsche Telekom Trust e.V. On March 23, 2018, the 12 percent stake in BT, which was worth EUR 3.1 billion at the time, was transferred to the Group’s own trust, Deutsche Telekom Trust e.V., where it will serve as plan assets to cover pension entitlements. Joint ventures. In March 2018, the shareholders of the joint venture Toll Collect GmbH, which was accounted for using the equity method until August 31, 2018, resolved to distribute a dividend, Deutsche Telekom’s share of which is EUR 0.1 billion. On May 16, 2018, Daimler Financial Services AG, Deutsche Telekom AG, and the Federal Republic of Germany reached an agreement to cease the Toll Collect arbitration proceedings. As it had announced in advance, the Federal Republic of Germany exercised its option as of September 1, 2018 to purchase 100 percent of the shares in the operating company, Toll Collect GmbH, when the operating agreement expired on August 31, 2018. Even after the acquisition of Toll Collect GmbH by the Federal Republic of Germany, the consortium Toll Collect GbR – comprising Deutsche Telekom AG, Daimler Financial Services AG, and Compagnie Financière et Industrielle des Autoroutes S.A. (Cofiroute) – continues to exist with an unchanged ownership structure. The bank guarantees for third parties for a maximum amount of EUR 100 million that were issued during the term of the operating agreement expired as scheduled on October 15, 2018. The equity maintenance undertaking entered into by the aforementioned consortium members under the operating agreement remained in place until the Federal Republic of Germany assumed full control of Toll Collect GmbH, and was replaced as of August 31, 2018 by a guaranteed equity base of at least EUR 50 million for Toll Collect GmbH, depending on the date of transfer. For further information, please refer to the section “Changes in the composition of the Group and other transactions”. Revenue generated with Toll Collect totaled EUR 67 million (2017: EUR 57 million; 2016: EUR 52 million), in particular from data processing and telecommunications services as well as consulting services. As of December 31, 2018, receivables amounted to EUR 0 million (December 31, 2017: EUR 15 million) and liabilities to EUR 350 million (December 31, 2017: EUR 1 million). There are otherwise no material revenue, receivables or liabilities from or to joint ventures. Related individuals. In the reporting period, expenses for short-term benefits payable to members of the Board of Management and the Supervisory Board amounted to EUR 17.7 million (2017: EUR 17.1 million) and expenses for other long-term benefits amounted to EUR 5.2 million (2017: EUR 5.3 million). Service cost of EUR 2.8 million (2017: EUR 3.6 million) was recorded for Board of Management benefits. In addition, expenses for share-based payment for Board of Management members were incurred in the amount of EUR 1.5 million (2017: EUR 1.3 million). EUR 0.0 million (2017: EUR 4.3 million) was paid for termination benefits and recognized as an expense. As of December 31, 2018, Deutsche Telekom recognized provisions for Board of Management and Supervisory Board compensation from short-term benefits of EUR 10.2 million (2017: EUR 7.2 million) and from other long-term benefits of EUR 11.3 million (2017: EUR 12.4 million). Furthermore, the present value of the defined benefit obligation (DBO) from the Board of Management pension amounts to EUR 23.9 million (2017: EUR 29.1 million). The compensation of the Board of Management and the Supervisory Board totaled EUR 30.4 million in the reporting year (2017: EUR 32.7 million). For further information, please refer to the “Compensation report” in the combined management report, and Note 43 “Compensation of the Board of Management and the Supervisory Board”. Employees elected to the Supervisory Board of Deutsche Telekom AG continue to be entitled to a regular salary as part of their employment contract. The amount of the salary is the adequate compensation for their job or activity within the Company. Besides this, no major transactions took place with related individuals. The members of the Board of Management and Supervisory Board of Deutsche Telekom AG are members of supervisory boards or management boards of other companies or are shareholders of other companies with which Deutsche Telekom AG maintains relations in the ordinary course of business. All related party transactions are performed on an arm’s length basis
