8 Right-of-use assets – lessee relationships

As a consequence of the first-time application of IFRS 16 as of January 1, 2019, the rights to use the underlying lease assets were recognized in the amount of the lease liability, adjusted by the amount of the prepaid or accrued lease payments. The remeasurement and reclassification effect reported amounted to EUR 16.2 billion as of January 1, 2019. This includes both rights to use lease assets recognized in the statement of financial position for the first time and rights to use assets arising from finance leases in the amount of EUR 2.5 billion that were previously disclosed under property, plant and equipment.

For further information on the application of the new accounting standard, please refer to the section “Initial application of standards, interpretations, and amendments in the financial year.”

In the reporting year, additions of EUR 5.5 billion relate to leases concluded in the reporting year for network technology and cell sites in the United States operating segment. Effects of changes in the composition of the Group of EUR 0.2 billion arising from the acquisition of Tele2 Netherlands, and positive exchange rate effects of EUR 0.2 billion, primarily from the translation of U.S. dollars into euros, increased the carrying amount. Depreciation and amortization totaling EUR 3.6 billion and disposals of EUR 0.4 billion had an offsetting effect.

For information on corresponding lease liabilities, please refer to Note 13 “Financial liabilities and lease liabilities.”

The right-of-use assets recognized in the statement of financial position relate in particular to leases for cell sites, network infrastructure, and real estate. The right-of-use assets for land and equivalent rights, and buildings including buildings on land owned by third parties include the right-of-use assets related to data centers with a carrying amount of EUR 103 million. The corresponding depreciation amounted to EUR 18 million in the reporting year. In addition, the right-of-use assets for technical equipment and machinery also include the right-of-use assets related to data centers with a carrying amount of EUR 17 million. The corresponding depreciation amounted to EUR 5 million in the reporting year.

Right-of-use assets in connection with sale and leaseback transactions mainly relate to office and technical facilities in the Group Headquarters & Group Services segment, with Group companies selling real estate and then leasing back the facilities and buildings required for business. No significant gains and losses from sale and leaseback transactions were recorded in the 2019 financial year.

Leases can include extension and termination options that can have a substantial impact on the period of depreciation of the right-of-use assets if it is deemed to be reasonably certain that extension options will be exercised or termination options will not be exercised.

For further information, please refer to the section “Summary of accounting policies – Accounting policies.”