Results of operations of Deutsche Telekom AG

The negative operating results improved by approximately EUR 1.3 billion year-on-year, due mainly to a year-on-year decrease in other operating expenses of EUR 1.4 billion and a decline in personnel costs of EUR 0.2 billion. A decrease in other operating income of EUR 0.3 billion and a decline of EUR 0.1 billion in net revenue had an offsetting effect.

Net revenue decreased by EUR 0.1 billion year-on-year, mainly due to lower intragroup cost allocations.

A decrease of EUR 0.5 billion in foreign currency translation gains and lower income from derivatives in connection with exchange rate hedges, a EUR 0.2 billion decrease in income from asset disposals, and a EUR 0.1 billion decline in income from cost transfers and reimbursements were the main drivers of the year-on-year decline in other operating income, which was down by EUR 0.3 billion overall. The write-ups on Hellenic Telecommunications Organization S.A. (OTE), Athens, in the amount of EUR 0.9 billion and on Ströer SE & Co. KGaA, Cologne, in the amount of EUR 0.1 billion that were required under German GAAP due to improved earnings prospects had a particularly positive effect in the reporting year. In the prior year, other operating income had included the write-ups on Deutsche Telekom Europe Holding GmbH, Bonn, of EUR 0.4 billion, and on T‑Mobile Global Zwischenholding GmbH, Bonn, of EUR 0.1 billion.

The year-on-year decrease in personnel costs of EUR 0.2 billion was largely attributable to a lower headcount due to the take-up of the early retirement program for civil servants and to other staff restructuring measures.

The year-on-year decrease of EUR 0.2 billion in other operating expenses of EUR 1.4 billion was mainly attributable to lower expenses from derivatives, EUR 0.1 billion to lower exchange rate losses, in each case in connection with exchange rate hedges, EUR 0.1 billion to lower rental and leasing expenses, and EUR 0.1 billion to lower other staff-related expenses. Expenses of EUR 0.6 billion arising from the settlement in the Toll Collect arbitration proceedings had been included in the previous year.

Net financial income decreased by EUR 3.4 billion year-on-year to EUR 3.1 billion, primarily as a result of a EUR 3.6 billion decrease in income related to subsidiaries, associated and related companies. A decrease in net interest expense of EUR 0.3 billion compared with the previous year had an offsetting effect.

Income related to subsidiaries, associated and related companies, which declined by EUR 3.6 billion compared with the prior year, was positively affected in the reporting year by profits transferred by Telekom Deutschland GmbH, Bonn, of EUR 3.7 billion (2018: EUR 3.7 billion), DFMG Holding GmbH, Bonn, of EUR 0.3 billion (2018: EUR 2.5 billion), and GMG General­mietgesellschaft mbH, Cologne, of EUR 0.2 billion (2018: EUR 0.1 billion). The transfer of the losses from Deutsche Telekom IT GmbH, Bonn, of EUR 0.7 billion (2018: EUR 0.7 billion), and from T‑Systems International GmbH, Frankfurt/Main, of EUR 0.2 billion (2018: EUR 0.3 billion), had an offsetting effect. Profits transferred by T‑Mobile Global Zwischenholding GmbH, Bonn, in the amount of EUR 1.6 billion were also included in the prior year.

Income related to subsidiaries, associated and related companies was impacted in particular by the operating business of the consolidated subsidiaries. In the prior year, income related to subsidiaries, associated and related companies had also included effects arising from reorganization measures and from a capital repayment based on fair values by T‑Mobile Global Holding GmbH, Bonn, plus the loss on the intragroup sale of the indirectly held stake in BT Group plc, London.

The decrease in the net interest expense of EUR 0.3 billion compared with the prior year was primarily the result of higher income from plan assets for pension obligations.

Income after income taxes was particularly impacted by the aforementioned effects and decreased by EUR 2.4 billion year-on-year in 2019.

Other tax expense of EUR 17 million combined with the aforementioned factors resulted in income after taxes of EUR 1,749 million in 2019. Taking into account EUR 3,711 million in unappropriated net income carried forward, unappropriated net income totaled EUR 5,460 million.