Deutsche Telekom at a glance Net revenue We look back on a successful 2019 financial year and are well on track to meeting our growth forecast: Net revenue increased by 6.4 percent to EUR 80.5 billion. On a like-for-like basis, i.e., excluding exchange rate effects and effects of changes in the composition of the Group, net revenue was up by EUR 2.2 billion or 2.8 percent. Our United States operating segment posted an increase in revenue of 10.7 percent; also in U.S. dollars, the continuing success of our U.S. operations was evident in revenue growth of 5.0 percent. Our Europe operating segment recorded revenue growth of 2.4 percent and revenue in our Germany operating segment also edged up by 0.9 percent. The inclusion of Tele2 Netherlands also made a substantial contribution to the increase in revenue in our Group Development operating segment. Net revenue billions of € Adjusted EBITDA ALa Adjusted EBITDA AL rose by 7.2 percent to EUR 24.7 billion, with contributions from all operating segments. Adjusted for exchange rate effects and the slightly positive effects of changes in the composition of the Group, adjusted EBITDA AL rose by EUR 1.0 billion or 4.2 percent. Adjusted EBITDA AL in our United States operating segment increased by 10.4 percent. In U.S. dollars, this constituted growth of 4.7 percent in our U.S. operations. Our Europe operating segment recorded an increase in adjusted EBITDA AL of 5.0 percent and our Germany operating segment an increase of 2.4 percent. Substantial increases in adjusted EBITDA AL were likewise recorded by the Systems Solutions and Group Development operating segments – the latter also due to earnings contributed by the acquiree Tele2 Netherlands. At 30.7 percent, the Group’s adjusted EBITDA AL margin increased slightly against the prior-year level of 30.5 percent. The adjusted EBITDA AL margin was 39.8 percent in Germany, 32.9 percent in Europe, and 27.5 percent in the United States. Adjusted EBITDA ALa billions of € EBIT EBIT increased by EUR 1.5 billion to EUR 9.5 billion. EBITDA AL was negatively affected by special factors of EUR 1.6 billion compared to expenses of EUR 1.5 billion in the prior year. Higher special factors, relating mainly to the process of obtaining the necessary approvals for the business combination with Sprint, were offset by lower special factors in connection with staff-related measures. At EUR 17.7 billion, depreciation, amortization and impairment losses were EUR 3.8 billion higher than in the prior year. This substantial increase is primarily attributable to the depreciation charge for right-of-use assets required to be recognized as a result of the application of IFRS 16. Depreciation of property, plant and equipment and amortization of intangible assets were EUR 0.5 billion higher than in the prior year, which had contained depreciation and amortization on finance lease assets. Impairment losses had been EUR 0.3 billion higher in the prior year. EBIT billions of € Net profit Net profit increased by EUR 1.7 billion to EUR 3.9 billion. Our loss from financial activities decreased by EUR 0.7 billion to EUR 2.2 billion. Positive measurement effects from embedded derivatives at T‑Mobile US were offset by increased finance costs resulting from the application of IFRS 16. The prior year had also contained a negative effect of EUR 0.6 billion in connection with a settlement agreed in the Toll Collect arbitration proceedings. Tax expense amounted to EUR 2.0 billion, compared with EUR 1.8 billion in the prior year. Profit attributable to non-controlling interests increased year-on-year by EUR 0.2 billion to EUR 1.4 billion. Adjusted earnings per share increased to EUR 1.04 from EUR 0.96 in the prior year. Net profit billions of € a The new IFRS 16 “Leases” accounting standard has been applied since January 1, 2019. This led to a change in the definition of some of our financial performance indicators. Comparatives for 2018 were calculated on a pro forma basis for the redefined key performance indicators. No AL comparatives were calculated for 2017. Net debt Net debt increased from EUR 55.4 billion at the end of 2018 to EUR 76.0 billion. The recognition of lease liabilities in connection with the application of IFRS 16 raised net debt by EUR 15.6 billion. Further factors in this increase included in particular the dividend payments – including to other shareholders of subsidiaries – (EUR 3.6 billion), additions to liabilities in connection with leases (EUR 5.5 billion), the acquisition of spectrum (EUR 3.2 billion), exchange rate effects (EUR 0.7 billion), and the acquisition of Tele2 Netherlands (EUR 0.4 billion). The main factor reducing net debt was free cash flow of EUR 10.1 billion. Net debt billions of € Cash capex Cash capex (including spectrum investment) increased by EUR 1.9 billion to EUR 14.4 billion. In the reporting year, payments were made for mobile spectrum licenses in the amount of EUR 1.2 billion, primarily in the United States operating segment. Annual installments through 2030 were agreed for the spectrum licenses worth EUR 2.2 billion acquired in Germany in 2019; EUR 0.1 billion was paid in the reporting year. In the prior year, payments had been made for mobile spectrum licenses in the amount of EUR 0.3 billion, again primarily in the United States. Excluding the effects from the acquisition of spectrum, the increase in cash capex of EUR 0.9 billion is attributable in particular to the United States operating segment, and mainly relates to the accelerated infrastructure build-out for the 600 MHz spectrum, which also lays the groundwork for 5G. In the other operating segments, investments in building out and upgrading our networks remained at a sustained high level. Cash capex billions of € Free cash flow ALa(before dividend payments and spectrum investment) Free cash flow AL was up by EUR 0.9 billion to EUR 7.0 billion. Net cash from operating activities increased substantially as a result of the positive development of cash generated from operations, which benefited from the strong performance of our operating segments, especially in the United States. The year-on-year increase of EUR 0.9 billion in cash capex (excluding spectrum investment) had a negative impact on free cash flow AL. This increase related largely to the United States operating segment. Currency translation effects had an overall positive effect on the development of free cash flow AL. Free cash flow ALa(before dividend payments and spectrum investment) billions of € ROCE Our key performance indicator ROCE (return on capital employed) increased by 0.4 percentage points in the reporting year to 5.1 percent. This positive trend was due to a substantial increase in net operating profit after taxes (NOPAT), which posted stronger percentage growth year-on-year than the average amount of net operating assets (NOA). The positive development in NOPAT was driven primarily by the substantial increase in EBIT. The higher share of profit of associates and joint ventures accounted for using the equity method also had a positive effect; this item had been negatively impacted in 2018 due to the settlement in connection with ending the Toll Collect arbitration proceedings. Average NOA grew in 2019, primarily on the back of our spectrum acquisitions and the increase in operating working capital. The overall development of NOA reflects our consistently high investment volume. ROCE % For further information, please refer to the section “Development of business in the Group.” a The new IFRS 16 “Leases” accounting standard has been applied since January 1, 2019. This led to a change in the definition of some of our financial performance indicators. Comparatives for 2018 were calculated on a pro forma basis for the redefined key performance indicators. No AL comparatives were calculated for 2017. schließen 5G New communications standard, which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things – rollout starting 2020.