Development of business at Deutsche Telekom AG

Deutsche Telekom AG prepares its annual financial statements in accordance with the principles of German GAAP, as specified in the German Commercial Code (Handelsgesetzbuch – HGB) and the German Stock Corporation Act (Aktiengesetz – AktG).

As the Headquarters of the Deutsche Telekom Group, we perform strategic and cross-segment management functions and provide services for other Group companies. The profits and losses of our subsidiaries and Group financing measures have a material effect on our financial position and results of operations. Revenue in our home market was up slightly from the prior-year level, due in particular to an increase in service and terminal equipment revenues in the mobile business. Higher IT and broadband revenues were not sufficient to completely offset the decrease in fixed-network revenue (primarily from voice components). Total revenue in our Systems Solutions operating segment was down slightly year-on-year. The upward revenue trend in our growth areas (in particular public cloud, security, and health) was not sufficient to make up for the declines in traditional IT and telecommunications business. Despite persistent intensive competition in some countries in our Europe operating segment, total revenue increased. Here, the main driver of growth was the fixed-network business. In the United States operating segment, revenue increased due to higher service revenues, primarily attributable to the increase in the average number of customers. This increase resulted from continued growth in existing and greenfield markets, new customer segments and rate plans, as well as connected devices.

Deutsche Telekom AG reported income after taxes for the 2019 financial year of EUR 1.7 billion. In addition to the operating business, the development of business in the reporting year was influenced by a number of very different factors, including the write-ups on Hellenic Telecommunications Organization S.A. (OTE), Athens, which were required under German GAAP (HGB) law due to improved earnings prospects, as well as on Ströer SE & Co. KGaA, Cologne, dividend payments from subsidiaries, associated, and related companies, the extension of the early retirement program for civil servants, and lower net income related to subsidiaries, associated and related companies.