41 Financial instruments and risk management

For further information on financial instruments, please refer in particular to Note 2 “Trade receivables,” Note 11 “Other financial assets,” Note 13 “Financial liabilities and lease liabilities,” Note 28 “Finance costs,” and Note 30 “Other financial income/expense.”

Carrying amounts, amounts recognized, and fair values by class and measurement category

millions of €

 

 

 

 

 

 

 

 

 

Amounts recognized in the statement of financial position in accordance with IFRS 9

 

Measurement category in accordance with IFRS 9

Carrying amount Dec. 31, 2019

Amortized cost

Fair value through other comprehensive income without recycling to profit or loss

Fair value through other comprehensive income with recycling to profit or loss

Fair value through profit or loss

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

AC

5,393

5,393

 

 

 

Trade receivables

 

 

 

 

 

 

At amortized cost

AC

5,452

5,452

 

 

 

At fair value through other comprehensive income

FVOCI

5,390

 

 

5,390

 

At fair value through profit or loss

FVTPL

4

 

 

 

4

Other financial assets

 

 

 

 

 

 

Originated loans and other receivables

 

 

 

 

 

 

At amortized cost

AC

4,282

4,282

 

 

 

Of which: collateral paid

AC

637

637

 

 

 

Of which: publicly funded projects

AC

1,350

1,350

 

 

 

At fair value through other comprehensive income

FVOCI

0

 

 

0

 

At fair value through profit or loss

FVTPL

121

 

 

 

121

Equity instruments

 

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

293

 

293

 

 

At fair value through profit or loss

FVTPL

22

 

 

 

22

Derivative financial assets

 

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

893

 

 

 

893

Of which: termination rights embedded in bonds issued

FVTPL

630

 

 

 

630

Of which: energy forward agreements embedded in contracts

FVTPL

0

 

 

 

0

Derivatives with a hedging relationship

n.a.

1,439

 

 

287

1,152

Lease assets

n.a.

197

 

 

 

 

Cash and cash equivalents and trade receivables directly associated with non-current assets and disposal groups held for sale

AC

0

0

 

 

 

Equity instruments within non-current assets and disposal groups held for sale

FVOCI

35

 

35

 

 

LIABILITIES

 

 

 

 

 

 

Trade payables

AC

9,431

9,431

 

 

 

Bonds and other securitized liabilities

AC

51,644

51,644

 

 

 

Liabilities to banks

AC

6,516

6,516

 

 

 

Liabilities to non-banks from promissory note bonds

AC

699

699

 

 

 

Other interest-bearing liabilities

AC

4,369

4,369

 

 

 

Of which: collateral received

AC

1,273

1,273

 

 

 

Other non-interest-bearing liabilities

AC

1,476

1,476

 

 

 

Lease liabilities

n.a.

19,835

 

 

 

 

Finance lease liabilities

n.a.

n.a.

 

 

 

 

Derivative financial liabilities

 

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

325

 

 

 

325

Of which: options granted to third parties for the purchase of shares in subsidiaries and associates

FVTPL

7

 

 

 

7

Of which: energy forward agreements embedded in contracts

FVTPL

146

 

 

 

146

Derivatives with a hedging relationship

n.a.

1,319

 

 

1,253

66

Trade payables directly associated with non-current assets and disposal groups held for sale

AC

29

29

 

 

 

Of which: aggregated by measurement category in accordance with IFRS 9

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Financial assets at amortized cost

AC

15,127

15,127

 

 

 

Financial assets at fair value through other comprehensive income with recycling to profit or loss

FVOCI

5,390

 

 

5,390

 

Financial assets at fair value through other comprehensive income without recycling to profit or loss

FVOCI

328

 

328

 

 

Financial assets at fair value through profit or loss

FVTPL

1,040

 

 

 

1,040

LIABILITIES

 

 

 

 

 

 

Financial liabilities at amortized cost

AC

74,164

74,164

 

 

 

Financial liabilities at fair value through profit or loss

FVTPL

325

 

 

 

325

millions of €

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts recognized in the statement of financial position in accordance with IFRS 9

 

 

 

Amounts recognized in the statement of financial position in accordance with IFRS 16

Fair value Dec. 31, 2019a

Measure­ment category in accordance with IFRS 9

Carrying amount Dec. 31, 2018

Amor­tized cost

Fair value through other compre­hensive income without recycling to profit or loss

Fair value through other compre­hensive income with recycling to profit or loss

Fair value through profit or loss

Amounts recognized in the statement of financial position in accordance with IAS 17

Fair value Dec. 31, 2018a

a

The practical expedient under IFRS 7.29a was applied for information on specific fair values.

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

AC

3,679

3,679

 

 

 

 

 

Trade receivables

 

 

 

 

 

 

 

 

 

 

At amortized cost

 

 

AC

4,280

4,280

 

 

 

 

 

At fair value through other comprehensive income

 

5,390

FVOCI

5,703

 

 

5,703

 

 

5,703

At fair value through profit or loss

 

4

FVTPL

5

 

 

 

5

 

5

Other financial assets

 

 

 

 

 

 

 

 

 

 

Originated loans and other receivables

 

 

 

 

 

 

 

 

 

 

At amortized cost

 

4,317

AC

2,982

2,982

 

 

 

 

3,013

Of which: collateral paid

 

 

AC

299

299

 

 

 

 

 

Of which: publicly funded projects

 

 

AC

 

 

 

 

 

 

 

At fair value through other comprehensive income

 

 

FVOCI

0

 

 

 

 

 

0

At fair value through profit or loss

 

121

FVTPL

103

 

 

 

103

 

103

Equity instruments

 

 

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

 

293

FVOCI

324

 

324

 

 

 

324

At fair value through profit or loss

 

22

FVTPL

0

 

 

 

 

 

 

Derivative financial assets

 

 

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

 

893

FVTPL

597

 

 

 

597

 

597

Of which: termination rights embedded in bonds issued

 

630

FVTPL

99

 

 

 

99

 

99

Of which: energy forward agreements embedded in contracts

 

0

FVTPL

12

 

 

 

12

 

12

Derivatives with a hedging relationship

 

1,439

n.a.

273

 

 

5

268

 

273

Lease assets

197

 

n.a.

147

 

 

 

 

147

 

Cash and cash equivalents and trade receivables directly associated with non-current assets and disposal groups held for sale

 

 

AC

27

27

 

 

 

 

 

Equity instruments within non-current assets and disposal groups held for sale

 

35

FVOCI

34

 

34

 

 

 

34

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

AC

10,735

10,735

 

 

 

 

 

Bonds and other securitized liabilities

 

56,357

AC

49,033

49,033

 

 

 

 

51,736

Liabilities to banks

 

6,572

AC

5,710

5,710

 

 

 

 

5,749

Liabilities to non-banks from promissory note bonds

 

799

AC

497

497

 

 

 

 

578

Other interest-bearing liabilities

 

4,506

AC

1,878

1,878

 

 

 

 

1,927

Of which: collateral received

 

 

AC

404

404

 

 

 

 

 

Other non-interest-bearing liabilities

 

 

AC

1,608

1,608

 

 

 

 

 

Lease liabilities

19,835

 

n.a.

n.a.

 

 

 

 

 

 

Finance lease liabilities

 

 

n.a.

2,472

 

 

 

 

2,472

2,695

Derivative financial liabilities

 

 

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

 

325

FVTPL

242

 

 

 

242

 

242

Of which: options granted to third parties for the purchase of shares in subsidiaries and associates

 

7

FVTPL

10

 

 

 

10

 

10

Of which: energy forward agreements embedded in contracts

 

146

FVTPL

52

 

 

 

52

 

52

Derivatives with a hedging relationship

 

1,319

n.a.

836

 

 

486

350

 

836

Trade payables directly associated with non-current assets and disposal groups held for sale

 

 

AC

36

36

 

 

 

 

 

Of which: aggregated by measurement category in accordance with IFRS 9

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Financial assets at amortized cost

 

4,317

AC

10,968

10,968

 

 

 

 

3,013

Financial assets at fair value through other comprehensive income with recycling to profit or loss

 

5,390

FVOCI

5,703

 

 

5,703

 

 

5,703

Financial assets at fair value through other comprehensive income without recycling to profit or loss

 

328

FVOCI

358

 

358

 

 

 

358

Financial assets at fair value through profit or loss

 

1,040

FVTPL

705

 

 

 

705

 

705

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Financial liabilities at amortized cost

 

68,234

AC

69,497

69,497

 

 

 

 

59,990

Financial liabilities at fair value through profit or loss

 

325

FVTPL

242

 

 

 

242

 

242

Trade receivables include receivables amounting to EUR 1.8 billion (December 31, 2018: EUR 1.7 billion) due in more than one year. The fair value generally equals the carrying amount.

Disclosures on fair value

When determining the fair value, it is important to maximize the use of current inputs observable in liquid markets for the financial instrument in question and minimize the use of other inputs (e.g., historical prices, prices for similar instruments, prices on illiquid markets). A three-level measurement hierarchy is defined for these purposes. If prices quoted in liquid markets are available at the reporting date for the respective financial instrument, these will be used unadjusted for the measurement (Level 1 measurement). Other input parameters are then irrelevant for the measurement. One such example is shares and bonds that are actively traded on a stock exchange. If quoted prices on liquid markets are not available at the reporting date for the respective financial instrument, but the instrument can be measured using other inputs that are observable on the market at the reporting date, a Level 2 measurement will be applied. The conditions for this are that no major adjustments have been made to the observable inputs and no unobservable inputs are used. Examples of Level 2 measurements are collateralized interest rate swaps, currency forwards, and cross-currency swaps that can be measured using current interest rates or exchange rates. If the conditions for a Level 1 or Level 2 measurement are not met, a Level 3 measurement is applied. In such cases, major adjustments must be made to observable inputs or unobservable inputs must be used.

Financial instruments not measured at fair value, the fair values of which are disclosed nevertheless

millions of €

 

 

 

 

 

 

 

 

 

Dec. 31, 2019

Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

Level 1

Level 2

Level 3a

Total

Level 1

Level 2

Level 3

Total

a

Separation of embedded derivatives; the fair value of the entire instrument must be categorized as Level 1.

ASSETS

 

 

 

 

 

 

 

 

Originated loans and receivables

 

4,317

 

4,317

 

3,013

 

3,013

LIABILITIES

 

 

 

 

 

 

 

 

Financial liabilities measured at amortized cost

40,460

27,144

630

68,234

41,342

18,548

100

59,990

Of which: bonds and other securitized liabilities

40,460

15,267

630

56,357

41,342

10,294

100

51,736

Of which: liabilities to banks

 

6,572

 

6,572

 

5,749

 

5,749

Of which: liabilities to non-banks from promissory notes

 

799

 

799

 

578

 

578

Of which: liabilities with the right of creditors to priority repayment in the event of default

 

0

 

0

 

0

 

0

Of which: other interest-bearing liabilities

 

4,506

 

4,506

 

1,927

 

1,927

Finance lease liabilities

 

 

 

 

 

2,695

 

2,695

Financial instruments measured at fair value

millions of €

 

 

 

 

 

 

 

 

 

Dec. 31, 2019

Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

ASSETS

 

 

 

 

 

 

 

 

Trade receivables

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

 

 

5,390

5,390

 

 

5,703

5,703

At fair value through profit or loss

 

 

4

4

 

 

5

5

Other financial assets – Originated loans and other receivables

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

 

 

 

0

 

 

 

0

At fair value through profit or loss

114

 

7

121

93

 

10

103

Equity instruments

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

 

 

328

328

 

 

358

358

At fair value through profit or loss

22

 

 

22

 

 

 

0

Derivative financial assets

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

 

263

630

893

 

486

111

597

Derivatives with a hedging relationship

 

1,439

 

1,439

 

273

 

273

LIABILITIES

 

 

 

 

 

 

 

 

Derivative financial liabilities

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

 

172

153

325

 

180

62

242

Derivatives with a hedging relationship

 

1,319

 

1,319

 

836

 

836

Of the equity instruments measured at fair value through other comprehensive income and recognized under other financial assets, the instruments presented in the different levels constitute separate classes of financial instruments. In each case, the fair values of the total volume of equity instruments recognized as Level 1 are the price quotations at the reporting date.

The listed bonds and other securitized liabilities are assigned to Level 1 or Level 2 depending on the market liquidity of the relevant instrument. Consequently, issues denominated in euros or U.S. dollars with relatively large nominal amounts are to be classified as Level 1, the rest as Level 2. The fair values of the instruments assigned to Level 1 equal the nominal amounts multiplied by the price quotations at the reporting date. The fair values of the instruments assigned to Level 2 are calculated as the present values of the payments associated with the debts, based on the applicable yield curve and Deutsche Telekom’s credit spread curve for specific currencies.

The fair values of liabilities to banks, liabilities to non-banks from promissory notes, and other interest-bearing liabilities are calculated as the present values of the payments associated with the debts, based on the applicable yield curve and Deutsche Telekom’s credit spread curve for specific currencies.

Since there are no market prices available for the derivative financial instruments in the portfolio assigned to Level 2 due to the fact that they are not listed on the market, the fair values are calculated using standard financial valuation models, based entirely on observable inputs. The fair value of derivatives is the price that Deutsche Telekom would receive or have to pay if the financial instrument were transferred at the reporting date. Interest rates of contractual partners relevant as of the reporting date are used in this respect. The middle rates applicable as of the reporting date are used as exchange rates. In the case of interest-bearing derivatives, a distinction is made between the clean price and the dirty price. In contrast to the clean price, the dirty price also includes the interest accrued. The fair values carried correspond to the full fair value or the dirty price.

The equity instruments measured at fair value through other comprehensive income comprise a large number of investments in strategic, unlisted individual positions. Deutsche Telekom considers the chosen measurement through other comprehensive income without recycling to profit or loss to be appropriate because there are no plans to use the investments for short-term profit-taking. At the date of disposal of an investment, the total cumulative gain or loss is reclassified to retained earnings. Acquisitions and disposals are based on business policy investment decisions.

Investments in equity instruments at fair value through other comprehensive income

millions of €

 

 

 

2019

2018

FAIR VALUE AS OF DECEMBER 31

328

358

Dividends recognized in profit/loss

 

 

on investments divested in the reporting period

0

 

on investments still held at the reporting date

0

3

Fair value at the derecognition date of instruments divested in the reporting period

225

91

Cumulative gains reclassified in the reporting period from other comprehensive income to retained earnings

82

 

Of which: from the disposal of investments

60

 

Of which: from the conversion of preference shares into common shares

22

 

Cumulative losses reclassified in the reporting period from other comprehensive income to retained earnings

0

47

Of which: from the disposal of investments

0

47

Development of the carrying amounts of the financial assets and financial liabilities assigned to Level 3

millions of €

 

 

 

 

 

Equity instruments at fair value through other comprehensive income

Derivative financial assets at fair value through profit or loss: termination rights embedded in bonds issued

Derivative financial assets at fair value through profit or loss: energy forward agreements embedded in contracts

Derivative financial liabilities at fair value through profit or loss: energy forward agreements embedded in contracts

Carrying amount as of January 1, 2019

358

99

12

(52)

Additions (including first-time categorization as Level 3)

96

0

0

0

Decreases in fair value recognized in profit/loss
(including losses on disposal)

 

(66)

(20)

(113)

Increases in fair value recognized in profit/loss
(including gains on disposal)

 

594

8

20

Decreases in fair value recognized directly in equity

(29)

 

 

 

Increases in fair value recognized directly in equity

128

 

 

 

Disposals

(225)

0

0

0

Currency translation effects recognized directly in equity

0

3

0

(1)

CARRYING AMOUNT AS OF DECEMBER 31, 2019

328

630

0

(146)

The equity instruments assigned to Level 3 that are measured at fair value through other comprehensive income and carried under other financial assets are equity investments with a carrying amount of EUR 313 million measured using the best information available at the reporting date. As a rule, Deutsche Telekom considers transactions involving shares in those companies to have the greatest relevance. Transactions involving shares in comparable companies are also considered. The proximity of the relevant transaction to the reporting date, and the question of whether it was conducted at arm’s length, are relevant for deciding which information is used for the measurement. Furthermore, the degree of similarity between the object being measured and comparable companies must be taken into consideration. Based on Deutsche Telekom’s own assessment, the fair values of the equity investments at the reporting date could be determined with sufficient reliability. For the development of the carrying amounts in the reporting period, please refer to the table above. At the reporting date, investments with a carrying amount of EUR 35 million were held for sale, while there were no plans to sell the remaining investments. In the case of investments with a carrying amount of EUR 190 million, transactions involving shares in these companies took place at arm’s length sufficiently close to the reporting date, which is why the share prices agreed in the transactions were to be used without adjustment for the measurement as of December 31, 2019. In the case of investments with a carrying amount of EUR 71 million, an analysis of operational indicators (especially revenue, EBIT, and liquidity) revealed that the carrying amounts were equivalent to current fair values. Due to better comparability, previous arm’s-length transactions involving shares in these companies are preferable to more recent transactions involving shares in similar companies. In the case of investments with a carrying amount of EUR 52 million, for which the last arm’s length transactions relating to shares in these companies took place some time ago, a measurement performed more recently relating to shares in similar companies provides the most reliable representation of the fair values. Here, multiples to the reference variable of expected revenue (ranging between 3.3 and 8.4) were taken. The 25 percent quantile, the median, or the 75 percent quantile was used for the multiples depending on the specific circumstances. If other values had been used for the multiples and for the expected revenue amounts, the fair values calculated would have been different. These hypothetical deviations (sensitivities) are shown in the table below. In addition, non-material individual items with a carrying amount of EUR 15 million (when translated into euros) are included with differences in value of minor relevance.

For the development of the carrying amounts in the reporting year, please refer to the table above.

The derivatives without a hedging relationship assigned to Level 3 and carried under derivative financial assets relate to options embedded in bonds issued by T‑Mobile US with a carrying amount of EUR 630 million when translated into euros. The options, which can be exercised by T‑Mobile US at any time, allow early redemption of the bonds at fixed exercise prices. Observable market prices are available regularly and also at the reporting date for the bonds as entire instruments, but not for the options embedded therein. The termination rights are measured using an option pricing model. Historical interest rate volatilities of bonds issued by T‑Mobile US and comparable issuers are used for the measurement because these provide a more reliable estimate at the reporting date than current market interest rate volatilities. The absolute figure used for the interest rate volatility at the current reporting date was between 1.0 and 1.9 percent. The spread curve, which is also unobservable, was derived on the basis of current market prices of bonds issued by T‑Mobile US and debt instruments of comparable issuers. The spreads used at the current reporting date were between 1.3 and 2.3 percent for the maturities of the bonds and between 0.5 and 1.0 percent for shorter terms. For the mean reversion input, which is likewise unobservable, 10 percent was used. In our opinion, the values used constitute the best estimate in each case. If other values had been used for interest rate volatility, spread curve or mean reversion, the fair values calculated would have been different. These hypothetical deviations (sensitivities) are shown in the table below. In the reporting period, net income of EUR 528 million when translated into euros was recognized under Level 3 in other financial income/expense for unrealized gains for the options in the portfolio at the reporting date. Please refer to the table above for the development of the carrying amounts in the reporting period. The changes in value recognized in profit or loss in the reporting period were mainly attributable to fluctuations in the interest rates and historical interest rate volatilities in absolute terms that are relevant for measurement. Due to their distinctiveness, these instruments constitute a separate class of financial instruments.

For the development of the carrying amounts in the reporting year, please refer to the table above.

Sensitivitiesa of the carrying amounts of the financial assets and financial liabilities assigned to Level 3 depending on unobservable inputs

millions of €

 

 

 

 

Equity instruments at fair value through other compre­hensive income

Derivative financial assets at fair value through profit or loss: termination rights embedded in bonds issued

Derivative financial liabilities at fair value through profit or loss: energy forward agreements embedded in contracts

a

Change in the relevant input parameter assuming all other input parameters are unchanged.

b

Interest rate volatility shows the magnitude of fluctuations in interest rates over time (relative change). The larger the fluctuations, the higher the interest rate volatility.

c

The spread curve shows, for the respective maturities, the difference between the interest rates payable by T‑Mobile US and the interest rates on U.S. government bonds.

d

Mean reversion describes the assumption that, after a change, an interest rate will revert to its average over time. The higher the selected value (mean reversion speed), the faster the interest rate will revert to its average in the measurement model.

e

Renewable energy credits is the term used for U.S. emission certificates.

Multiple next-level-up quantile

6

 

 

Multiple next-level-down quantile

(16)

 

 

Expected revenues +10%

4

 

 

Expected revenues -10%

(4)

 

 

Interest rate volatilityb +10%

 

9

 

Interest rate volatilityb -10%

 

(10)

 

Spread curvec +100 basis points

 

(269)

 

Spread curvec -100 basis points

 

335

 

Mean reversiond +100 basis points

 

(4)

 

Mean reversiond -100 basis points

 

1

 

Future energy prices +10%

 

 

62

Future energy prices -10%

 

 

(63)

Future energy output +5%

 

 

4

Future energy output -5%

 

 

(5)

Future prices for renewable energy creditse +100%

 

 

21

Future prices for renewable energy creditse from zero

 

 

(21)

With a carrying amount of EUR -146 million when translated into euros, the derivatives without a hedging relationship assigned to Level 3 and carried under derivative financial liabilities relate to energy forward agreements embedded in contracts entered into by T‑Mobile US. These agreements consist of two components: the energy forward agreement and the acquisition of renewable energy credits by T‑Mobile US. The contracts have been entered into with energy producers since 2017 and run for terms of between 12 and 20 years from the commencement of commercial operation. In the case of two energy forward agreements, commercial operations have already begun; with the others, commercial operations are set to begin between 2020 and 2021. The respective settlement period of the energy forward agreements, which are accounted for separately as derivatives, also starts when the facility begins commercial operation. Under the energy forward agreements, T‑Mobile US receives variable amounts based on the facility’s actual energy output and the then current energy prices, and pays fixed amounts per unit of energy generated throughout the term of the contract. The energy forward agreements are measured using valuation models because no observable market prices are available. The value of the derivatives is materially influenced by the facility’s future energy output, for which T‑Mobile US estimated a value of 2,899 gigawatt hours per year at the reporting date. The value of the derivatives is also significantly influenced by future energy prices, which are not observable for the period beyond around five years. Further, the value of the derivatives is materially influenced by the future prices for renewable energy credits, which are also not observable. For the unobservable portion of the term, T‑Mobile US used on-peak energy prices of between EUR 13.23/MWh and EUR 59.64/MWh when translated into euros and off-peak prices of between EUR 9.01/MWh and EUR 39.67/MWh when translated into euros. An average on-peak/off-peak ratio of 47 percent was used. In our opinion, the values used constitute the best estimate in each case. If other values had been used for future energy prices, future energy output, or future prices of renewable energy credits, the fair values calculated would have been different. These hypothetical deviations (sensitivities) are shown in the table above. In the reporting period, a net expense of EUR 104 million (when translated into euros) was recognized under the Level 3 measurement in other operating income/expense for unrealized losses for the derivatives.

Please refer to the corresponding table for the development of the carrying amounts in the reporting period.

The market-price changes in the reporting period were largely attributable to changes in observable and unobservable energy prices and to interest rate effects. Due to their distinctiveness, these instruments constitute a separate class of financial instruments. In the view of T‑Mobile US, the contracts were entered into at current market conditions, and the most appropriate parameters for the unobservable inputs were used for measurement purposes. The transaction price at inception was zero in each case. Since the unobservable inputs have a material influence on the measurement of the derivatives, the respective amount resulting from initial measurement was not carried on initial recognition. Instead, these amounts are amortized in profit or loss on a straight-line basis over the period of commercial energy generation (for a total amount of EUR 13 million per year when translated into euros). This amortization adjusts the effects from measuring the derivatives in each accounting period using the respective valuation models and updated parameters. All amounts from the measurement of the derivatives are presented in net terms per contract in the statement of financial position (derivative financial assets/liabilities) and in the income statement (other operating income/expenses). The difference yet to be amortized in the income statement developed as follows during the reporting period:

Energy forward agreements

millions of €

 

 

 

Development of the not yet amortized amounts

 

 

 

 

2019

2018

Measurement amounts on initial recognition

151

112

Measurement amounts on initial recognition (additions during the reporting period)

27

39

Measurement amounts amortized in profit or loss in prior periods

(3)

0

Measurement amounts amortized in profit or loss in the current reporting period

(6)

(3)

Currency translation adjustments

3

0

MEASUREMENT AMOUNTS NOT AMORTIZED AS OF DECEMBER 31

172

148

For the trade receivables, loans issued, and other receivables assigned to Level 3, which are measured either at fair value through other comprehensive income or at fair value through profit or loss, the main factor in determining fair value is the credit risk of the relevant counterparties. If the default rates applied as of the reporting date had been 1 percent higher (lower) with no change in the reference variables, the fair values of the instruments would have been 1 percent lower (higher).

The financial liabilities measured at fair value through profit or loss and assigned to Level 3 include derivative financial liabilities with a carrying amount of EUR 7 million resulting from an option granted to third parties for the purchase of shares in an associate of Deutsche Telekom. The option was granted in connection with a sale of shares in this associate, and no notable fluctuations in value are expected. Due to their distinctiveness, the instruments assigned to Level 3 and described above constitute a separate class of financial instruments in each case.

Net gain/loss by measurement category

millions of €

 

 

 

 

 

 

 

 

 

 

Recognized in profit or loss from interest and dividends

Recognized in profit or loss from subsequent measurement

Recognized directly in equity from subsequent measure­ment

Recognized in profit or loss from derecog­nition

Net gain (loss)

 

 

 

At fair value

Currency translation

Impairments/allowances

At fair value

 

 

Debt instruments measured at amortized cost

2019

23

n.a.

662

(165)

n.a.

(41)

479

2018

27

n.a.

1,059

(80)

n.a.

(145)

861

Debt instruments measured at fair value through profit or loss

2019

14

1

n.a.

n.a.

n.a.

6

21

2018

10

0

n.a.

n.a.

n.a.

(3)

7

Debt instruments measured at fair value through other comprehensive income

2019

0

n.a.

n.a.

(257)

(26)

0

(283)

2018

0

n.a.

n.a.

(322)

23

51

(248)

Equity instruments measured at fair value through profit or loss

2019

0

(6)

n.a.

n.a.

n.a.

(2)

(8)

2018

0

0

n.a.

n.a.

n.a.

0

0

Equity instruments measured at fair value through other comprehensive income

2019

1

n.a.

n.a.

n.a.

99

n.a.

100

2018

2

n.a.

n.a.

n.a.

(620)

n.a.

(618)

Derivatives measured at fair value through profit or loss

2019

n.a.

363

n.a.

n.a.

n.a.

n.a.

363

2018

n.a.

(382)

n.a.

n.a.

n.a.

n.a.

(382)

Financial liabilities measured at amortized cost

2019

(1,768)

n.a.

(678)

n.a.

n.a.

n.a.

(2,446)

2018

(1,820)

n.a.

(963)

n.a.

n.a.

n.a.

(2,783)

 

2019

(1,729)

358

(16)

(422)

73

(37)

(1,774)

2018

(1,781)

(382)

96

(402)

(597)

(97)

(3,163)

Interest from financial instruments is recognized in finance costs, dividends in other financial income/expense (income from investments).

For further information, please refer to Note 28 “Finance costs” and Note 30 “Other financial income/expense.”

The other components of the net gain/loss are recognized in other financial income/expense, except for allowances on trade receivables that are classified as debt instruments measured at amortized cost and debt instruments measured at fair value through other comprehensive income, which are reported under other operating expenses.

For further information, please refer to Note 2 “Trade receivables.”

The net gain from the subsequent measurement for financial instruments allocated to the measurement category at fair value through profit or loss (EUR 358 million) also includes interest and currency translation effects. The net currency translation gains on financial assets classified as debt instruments measured at amortized cost (EUR 662 million) are primarily attributable to the Group-internal transfer of foreign-currency loans taken out by Deutsche Telekom’s financing company, Deutsche Telekom International Finance B.V., on the capital market. These were offset by corresponding currency translation losses on capital market liabilities of EUR 678 million. These include currency translation gains from derivatives that Deutsche Telekom used as hedging instruments for hedge accounting in foreign currency (EUR 179 million; 2018: EUR 143 million). Finance costs from financial liabilities measured at amortized cost (expense of EUR 1,768 million) primarily consist of interest expense on bonds and other (securitized) financial liabilities. The item also includes interest expenses from the accumulation of interest added back and interest income from interest discounted from trade payables. However, it does not include the interest expense and interest income from interest rate derivatives Deutsche Telekom used in the reporting year to hedge the fair value risk of financial liabilities.

For further information, please refer to Note 28 “Finance costs.”

Principles of risk management. Deutsche Telekom is exposed in particular to risks from changes in exchange rates, interest rates, and market prices that affect its assets, liabilities, and forecast transactions. Financial risk management aims to limit these market risks through ongoing operational and finance activities. Selected derivative and non-derivative hedging instruments are used for this purpose, depending on the risk assessment. However, Deutsche Telekom only hedges the risks that affect the Group’s cash flow. Derivatives are exclusively used as hedging instruments, i.e., not for trading or other speculative purposes. To reduce the credit risk, hedging instruments are generally only concluded with leading financial institutions whose credit rating is at least BBB+/Baa1. In addition, the credit risk for derivatives with a positive market value is generally minimized through collateral agreements with all core banks. Furthermore, the limits for deposits are also set and monitored on a daily basis depending on the rating, share price performance, and credit default swap level of the respective counterparty.

The fundamentals of Deutsche Telekom’s financial policy are established by the Board of Management and overseen by the Supervisory Board. Group Treasury is responsible for implementing the financial policy and for ongoing risk management. Certain transactions require the prior approval of the Board of Management, which is also regularly briefed on the severity and amount of the current risk exposure.

Group Treasury regards effective management of the market risk as one of its main tasks. The main risks relate to foreign currencies and interest rates.

Currency risks. Deutsche Telekom is exposed to currency risks from its investing, financing, and operating activities. Risks from foreign currencies are hedged to the extent that they influence the Group’s cash flows. Foreign-currency risks that do not influence the Group’s cash flows (i.e., the risks resulting from the translation of assets and liabilities of foreign operations into the Group’s reporting currency) are generally not hedged, however. Deutsche Telekom may nevertheless also hedge this foreign-currency risk under certain circumstances.

Foreign-currency risks in the area of investment result, for example, from the acquisition and disposal of investments in foreign companies. Deutsche Telekom hedges these risks. If the risk position exceeds EUR 100 million, the Board of Management must make a special decision on how the risk shall be hedged. If the risk position is below EUR 100 million, Group Treasury performs the currency hedging itself. At the reporting date, Deutsche Telekom was not exposed to any significant risks from foreign-currency transactions in the field of investments.

Foreign-currency risks in the financing area are caused by financial liabilities in foreign currency and loans in foreign currency that are issued to Group entities for financing purposes. Group Treasury hedges these risks in full. Cross-currency swaps and currency derivatives are used to convert financial obligations and intragroup loans denominated in foreign currencies into the Group entities’ functional currencies.

At the reporting date, the foreign-currency liabilities for which currency risks were hedged mainly consisted of bonds in U.S. dollars and pounds sterling. On account of these hedging activities, Deutsche Telekom was not exposed to any significant currency risks in the area of financing at the reporting date.

The Group entities predominantly execute their operating activities in their respective functional currencies. Payments made in a currency other than the respective functional currency result in foreign-currency risks in the Group. These mainly relate to payments for telecommunications services (procurement of network technology and mobile communications equipment as well as payments to international telecommunications companies and for the provision of connection services) and IT services (procurement of IT hardware, software, and services). Deutsche Telekom generally uses currency derivatives for hedging purposes. On account of these hedging activities, Deutsche Telekom was not exposed to any significant exchange rate risks from its operating activities at the reporting date.

For the presentation of market risks, IFRS 7 requires sensitivity analyses that show the effects of hypothetical changes of relevant risk variables on profit or loss and shareholders’ equity. In addition to currency risks, Deutsche Telekom is exposed to interest rate risks and price risks in its investments. The periodic effects are determined by relating the hypothetical changes in the risk variables to the balance of financial instruments at the reporting date. It is assumed that the balance at the reporting date is representative for the year as a whole.

Currency risks as defined by IFRS 7 arise on account of financial instruments being denominated in a currency that is not the functional currency and being of a monetary nature; differences resulting from the translation of financial statements into the Group’s presentation currency are not taken into consideration. Relevant risk variables are generally all non-functional currencies in which Deutsche Telekom has contracted financial instruments.

The currency sensitivity analyses are based on the following assumptions: Major non-derivative monetary financial instruments (liquid assets, receivables, interest-bearing securities and/or debt instruments held, interest-bearing liabilities, lease liabilities, non-interest-bearing liabilities) are either directly denominated in the functional currency or are transferred to the functional currency through the use of derivatives. Exchange rate fluctuations therefore have no effects on profit or loss, or shareholders’ equity.

Non-interest-bearing securities or equity instruments held are of a non-monetary nature and therefore are not exposed to a currency risk as defined by IFRS 7.

Interest income and interest expense from financial instruments are also either recorded directly in the functional currency or transferred to the functional currency using derivatives. For this reason, there can be no effects on the variables considered in this connection.

In the case of fair value hedges designated to hedge currency risks, the changes in the fair values of the hedged item and the hedging instrument attributable to changes in exchange rates balance out almost completely in the income statement in the same period. As a consequence, these financial instruments are not exposed to currency risks with an effect on profit or loss, or shareholders’ equity, either.

Cross-currency swaps are always assigned to non-derivative hedged items, so these instruments do not have any currency effects, either.

Deutsche Telekom is therefore only exposed to currency risks from specific currency derivatives. Some of these are currency derivatives that are part of an effective cash flow hedge for hedging payment fluctuations resulting from changes in exchange rates in accordance with IFRS 9. Volatility in exchange rates of the currencies on which these transactions are based affects the hedging reserves in shareholders’ equity and the fair value of these hedging instruments. Others are currency derivatives that are neither part of one of the hedges defined in IFRS 9 nor part of a natural hedge. These derivatives are used to hedge planned transactions. Changes in exchange rates of the currencies on which such financial instruments are based affect other financial income or expense (net gain/loss from remeasurement of financial assets and liabilities to fair value).

If the euro had gained (lost) 10 percent against all currencies at December 31, 2019, the hedging reserves in shareholders’ equity and the fair values of the hedging instruments before taxes would have been EUR 4 million higher (lower) (December 31, 2018: EUR 14 million higher (lower)). The hypothetical effect of EUR 4 million on profit or loss primarily results from the currency sensitivities EUR/USD: EUR 12 million and EUR/GBP: EUR -8 million. If the euro had gained (lost) 10 percent against all currencies at December 31, 2019, other financial income and the fair value of the hedging instruments before taxes would have been EUR 52 million higher (lower) (December 31, 2018: EUR 40 million lower (higher)). The hypothetical effect of EUR 52 million on profit or loss primarily results from the currency sensitivities EUR/GBP: EUR 69 million, EUR/USD: EUR -18 million, and EUR/HUF: EUR 1 million.

Interest rate risks. Deutsche Telekom is exposed to interest rate risks, mainly in the euro zone and in the United States. The interest rate risks are managed as part of the interest rate management activities. For the debt position in euros a maximum variable percentage is set on an annual basis. The debt position of T‑Mobile US in U.S. dollars is primarily determined through fixed-income securities with issuer cancellation rights. The composition of the liabilities portfolio (ratio of fixed to variable) is managed by issuing primary (non-derivative) financial instruments and, where necessary, also deploying derivative financial instruments. Regular reports are submitted to the Board of Management and Supervisory Board.

Including derivative hedging instruments, an average of 57 percent (2018: 63 percent) of the debt position denominated in euros had a variable rate of interest in 2019. In U.S. dollars, the variable-rate percentage decreased compared with 2018 from 17 percent to 16 percent. There were no significant fluctuations in the course of the reporting year.

Interest rate risks are presented by way of sensitivity analyses in accordance with IFRS 7. These show the effects of changes in market interest rates on interest payments, interest income and expense, other income components, and, if appropriate, shareholders’ equity. The interest rate sensitivity analyses are based on the following assumptions: Changes in the market interest rates of non-derivative financial instruments with fixed interest rates only affect income if these are measured at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortized cost are not subject to interest rate risk as defined in IFRS 7.

In the case of fair value hedges designated for hedging interest rate risks, the changes in the fair values of the hedged item and the hedging instrument attributable to changes in interest rates balance out almost completely in the income statement in the same period. This means that interest-rate-based changes in the measurement of the hedged item and the hedging instrument largely do not affect income and are therefore not subject to interest rate risk.

In the case of interest rate derivatives in fair value hedges, however, changes in market interest rates affect the amount of interest payments. As a consequence, they have an effect on interest income and are therefore included in the calculation of income-related sensitivities.

Changes in the market interest rate regarding financial instruments that were designated as hedging instruments in a cash flow hedge to hedge payment fluctuations resulting from interest rate movements affect the hedging reserve in shareholders’ equity and are therefore taken into consideration in the equity-related sensitivity calculations.

Changes in market interest rates affect the interest income or expense of non-derivative variable-interest financial instruments, the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks. As a consequence, they are included in the calculation of income-related sensitivities.

In addition, changes in the market interest rate had an impact on the carrying amount of trade receivables recognized at fair value and originated loans and other receivables. However, these changes in value are not managed.

Changes in the market interest rate regarding interest rate derivatives (interest rate swaps, cross-currency swaps) that are not part of a hedging relationship as set out in IFRS 9 affect other financial income or expense and are therefore taken into consideration in the income-related sensitivity calculations. Currency derivatives are not exposed to interest rate risks and therefore do not affect the interest rate sensitivities.

If the market interest rates had been 100 basis points higher at December 31, 2019, profit or loss before taxes would have been EUR 553 million (December 31, 2018: EUR 23 million) lower. If the market interest rates had been 100 basis points lower at December 31, 2019, profit or loss before taxes would have been EUR 617 million (December 31, 2018: EUR 70 million) higher. This simulation includes the effects from the financial instruments assigned to Level 3 described above. The hypothetical effect of EUR 617 million/EUR -553 million on income primarily results from the potential effects of EUR 585 million/EUR -521 million from interest rate derivatives, and EUR 32 million/EUR -32 million from non-derivative, variable-interest financial liabilities. Potential effects from interest rate derivatives are partially balanced out by the contrasting performance of non-derivative financial instruments, which cannot, however, be shown as a result of applicable accounting standards. If the market interest rates had been 100 basis points higher (lower) at December 31, 2019, the hedging and revaluation reserves in equity before taxes would have been EUR 1,201 million higher (EUR 1,272 million lower) (December 31, 2018: EUR 673 million higher (EUR 672 million lower)).

Other price risks. As part of the presentation of market risks, IFRS 7 also requires disclosures on how hypothetical changes in risk variables affect the price of financial instruments. Important risk variables are stock exchange prices or indexes.

Aside from the value-creating factors in the financial instruments assigned to Level 3 described above, there were no other price risks at the reporting date.

Deutsche Telekom is exposed to a credit risk from its operating activities and certain financing activities. As a rule, transactions with regard to financing activities are only concluded with counterparties that have at least a credit rating of BBB+/Baa1, in connection with an operational credit management system. At the level of operations, the outstanding debts are continuously monitored in each area, i.e., locally. Credit risks are taken into account through individual allowances and allowances calculated at portfolio level. The solvency of the business with corporate customers, especially international carriers, is monitored separately. In terms of the overall risk exposure from the credit risk, however, the receivables from these counterparties are not so extensive as to justify extraordinary concentrations of risk.

Maximum credit risk of financial assets

millions of €

 

 

 

Classes of financial instruments (IFRS 7)

Measurement category (IFRS 9)

2019

2018

Originated loans and other receivables

AC

4,282

2,952

FVOCI

0

0

FVTPL

121

103

Cash and cash equivalents

AC

5,392

3,679

Trade receivables

AC

5,452

4,280

FVOCI

5,390

5,699

FVTPL

4

5

Contract assets (IFRS 15)

n.a.

1,874

1,764

Lease receivables

n.a.

196

147

Development of allowances

millions of €

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General approach

Simplified approach

 

12-month expected credit losses

Life­time expected credit losses

 

Stage 1 – No change in credit risk since initial recognition

Stage 2 – Significant increase in credit risk since initial recognition, not credit-impaired

Stage 3 – Credit-impaired at the reporting date (not purchased or originated credit-impaired)

 

 

 

 

 

Cash and cash equiv­alents

Originated loans and other receivables

Cash and cash equiv­alents

Originated loans and other receivables

Cash and cash equiv­alents

Originated loans and other receivables

Trade receivables

Contract assets

Lease assets

 

AC

AC

FVOCI

AC

AC

FVOCI

AC

AC

FVOCI

AC

FVOCI

n.a.

n.a.

January 1, 2019

0

(4)

0

0

0

0

0

0

0

(1,465)

(277)

(26)

0

Reclassification due to a change in business model

 

 

 

 

 

 

 

 

 

66

(65)

0

 

Additions

 

 

 

 

 

 

 

(8)

 

(384)

(242)

(20)

 

Use

 

 

 

 

 

 

 

 

 

342

10

(1)

 

Reversal

 

 

 

 

 

 

 

 

 

186

22

11

 

Other

 

 

 

 

 

 

 

 

 

(59)

 

 

 

Foreign currency effect

 

 

 

 

 

 

 

 

 

 

 

 

 

DECEMBER 31, 2019

0

(4)

0

0

0

0

0

(8)

0

(1,314)

(552)

(36)

0

There were no material transfers in the general approach.

Credit rating of financial assets measured at amortized cost or at fair value through other comprehensive income

millions of €

 

 

 

 

 

 

 

 

 

 

 

Dec. 31, 2019

Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Contractual obligations fulfilled to date

Disrup­tions in perfor­mance already occurred

Non-perform­ing

Total

Depre­ciation, amorti­zation and im­pairment losses

Contractual obligations fulfilled to date

Disrup­tions in perfor­mance already occurred

Non-perform­ing

Total

Depre­ciation, amorti­zation and im­pairment losses

GENERAL APPROACH (SHORT TERM)

 

 

 

 

 

 

 

 

 

 

12-month expected credit losses (stage 1)

8,224

 

 

8,224

 

6,167

 

 

6,167

 

Lifetime expected credit losses

 

 

 

 

 

 

 

 

 

 

Significant increase in credit risk, but not credit-impaired (stage 2)

 

103

 

103

 

 

9

 

9

 

Credit-impaired at the reporting date, but not purchased or originated credit-impaired (stage 3)

 

 

28

28

(4)

 

 

30

30

 

 

8,224

103

28

8,355

(4)

6,167

9

30

6,206

0

GENERAL APPROACH (LONG TERM)

 

 

 

 

 

 

 

 

 

 

12-month expected credit losses (stage 1)

1,326

 

 

1,326

 

455

 

 

455

 

Lifetime expected credit losses

 

1

 

1

 

 

 

 

 

 

Significant increase in credit risk, but not credit-impaired (stage 2)

 

 

0

0

 

 

 

 

0

 

Credit-impaired at the reporting date, but not purchased or originated credit-impaired (stage 3)

 

 

 

0

 

 

 

 

0

 

 

1,326

1

0

1,327

0

455

0

0

455

0

SIMPLIFIED APPROACH

 

 

 

 

 

 

 

 

 

 

Trade receivables

11,083

434

1,159

12,676

(100)

8,759

448

776

9,983

(98)

Contract assets

1,901

1

7

1,909

(7)

1,757

8

0

1,765

(2)

Lease receivables

197

 

 

197

 

130

14

3

147

0

 

13,181

435

1,166

14,782

(107)

10,646

470

779

11,895

(100)

FINANCIAL ASSETS THAT ARE PURCHASED OR ORIGINATED CREDIT-IMPAIRED

 

 

 

 

 

 

 

 

 

 

Receivables

4

 

 

4

 

 

 

 

0

 

 

22,735

539

1,194

24,468

(111)

17,268

479

809

18,556

(100)

Gain/loss on full write-off of trade receivables

millions of €

 

 

 

 

2019

2018

2017

Expenses for full write-off of receivables

53

139

81

Income from recoveries on receivables written off

11

20

105

Offsetting of financial instruments

millions of €

 

 

 

 

 

 

 

 

 

Dec. 31, 2019

Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

Trade receivables

Trade payables

Derivative financial assets

Derivative financial liabilities

Trade receivables

Trade payables

Derivative financial assets

Derivative financial liabilities

Gross amounts subject to enforceable master netting arrangements or similar agreements

202

208

1,702

1,491

376

424

759

1,016

Amounts set off in the statement of financial position in accordance with IAS 32.42

(98)

(98)

 

 

(137)

(137)

 

 

Net amounts presented in the statement of financial position

104

110

1,702

1,491

239

287

759

1,016

Amounts subject to enforceable master netting arrangements or similar agreements and not meeting all offsetting requirements in accordance with IAS 32.42

(37)

(37)

(1,653)

(1,000)

(27)

(27)

(733)

(618)

Of which: amounts related to recognized financial instruments

(37)

(37)

(446)

(446)

(27)

(27)

(333)

(333)

Of which: amounts related to financial collateral (including cash collateral)

 

 

(1,207)

(554)

 

 

(400)

(285)

NET AMOUNTS

67

73

49

491

212

260

26

398

Offsetting is applied in particular to receivables and liabilities at Deutsche Telekom AG and Telekom Deutschland GmbH for the routing of international calls via the fixed network and for fees in the mobile network.

In line with the contractual provisions, in the event of insolvency all derivatives with a positive or negative fair value that exist with the respective counterparty are offset against each other, leaving a net receivable or liability. The net amounts are normally recalculated every bank working day and offset against each other. When the netting of the positive and negative fair values of all derivatives was positive from Deutsche Telekom’s perspective, the counterparty provided Deutsche Telekom with cash pursuant to the collateral contracts mentioned in Note 1 “Cash and cash equivalents.” The credit risk was thus further reduced.

When the netting of the positive and negative fair values of all derivatives was negative from Deutsche Telekom’s perspective, Deutsche Telekom provided cash collateral to counterparties pursuant to collateral agreements. The net amounts are normally recalculated every bank working day and offset against each other. The cash collateral paid is offset by corresponding negative net derivative positions of EUR 554 million at the reporting date, which is why it was not exposed to any credit risks in this amount at the reporting date.

For further information, please refer to Note 11 “Other financial assets.”

The collateral paid is reported under originated loans and other receivables within other financial assets. On account of its close connection to the corresponding derivatives, the collateral paid constitutes a separate class of financial assets. Likewise, the collateral received, which is reported as other interest-bearing liabilities under financial liabilities, constitutes a separate class of financial liabilities on account of its close connection to the corresponding derivatives.

According to agreement, no cash collateral was provided for interest rate swaps concluded by T‑Mobile US with a nominal value of EUR 4.0 billion (when translated into euros).

The fair values of the unhedged interest rate swaps at the reporting date were negative in each case from the perspective of T‑Mobile US (total value of EUR -490 million (when translated into euros)).

In accordance with the terms of bonds issued by T‑Mobile US, T‑Mobile US has the right to terminate the bonds prematurely under specific conditions. The rights of early termination constitute embedded derivatives and are presented separately as derivative financial assets in the consolidated statement of financial position. Since they are not exposed to any credit risk, they constitute a separate class of financial instruments.

There were no other significant agreements reducing the maximum exposure to the credit risks of financial assets. The maximum exposure to credit risk of the other financial assets thus corresponds to their carrying amounts.

Liquidity risk. For further information, please refer to Note 13 “Financial liabilities and lease liabilities.”

Hedge accounting

Fair value hedges. To hedge the fair value risk of fixed-interest liabilities, Deutsche Telekom primarily uses interest rate swaps and forward interest rate swaps (pay variable, receive fixed) denominated in EUR, GBP, and USD. Fixed-income bonds denominated in EUR, GBP, and USD were designated as hedged items. The changes in the fair values of the hedged items resulting from changes in the EURIBOR, GBP LIBOR, or USD LIBOR swap rate are offset against the changes in the value of these interest rate swaps.In addition, cross-currency swaps mainly in the EUR/USD and EUR/GBP currency pairs are designated as fair value hedges, which convert fixed-income foreign currency bonds into variable-interest EUR bonds to hedge the interest rate and currency risk. The changes in the fair value of the hedged items resulting from changes in the USD LIBOR and the GBP LIBOR swap rate as well as the USD and GBP exchange rate are offset against the changes in the fair value of these cross-currency swaps. The aim of the fair value hedges is thus to transform the fixed-income bonds into variable-interest debt, thus hedging the fair value (interest rate risk and currency risk) of these financial liabilities. Credit risks are not part of the hedging.

Cash flow hedges – interest rate risks. Deutsche Telekom mainly uses payer interest rate swaps and forward payer interest rate swaps (pay fixed, receive variable) to hedge the cash flow risk of existing and future debt. The interest payments to be made in the hedging period are the hedged items and are recognized in profit or loss in the same period. Hedged items may be individual liabilities, portfolios of liabilities, or combinations of liabilities and derivatives (aggregate risk exposure). The changes in the cash flows of the hedged items resulting from changes in the USD LIBOR rate and the EURIBOR rate are offset against the changes in the cash flows of the interest rate swaps. The aim of this hedging is to transform the variable-interest bonds into fixed-income debt, thus hedging the cash flows of the financial liabilities. Credit risks are not part of the hedging.

Cash flow hedges – currency risks. Deutsche Telekom entered into currency derivative and cross-currency swaps (pay fixed, receive variable) to hedge cash flows not denominated in a functional currency. The payments in foreign currency to be made in the hedging period are the hedged items and are recognized in profit or loss in the same period. The terms of the hedging relationships will end in the years 2020 through 2033. In the case of rolling cash flow hedges for currency risks, short-term currency forwards are entered into, which are then extended by means of follow-up transactions.

At each reporting date, the effectiveness of the fair value and cash flow hedges is reviewed prospectively based on the main contractual features and determined retrospectively in the form of a statistical regression analysis; rolling foreign currency hedges are reviewed using the dollar offset test. All hedging relationships were sufficiently effective as of the reporting date.

Hedging of a net investment. The hedges of the net investment in T‑Mobile US against fluctuations in the U.S. dollar spot rate de-designated in prior periods did not generate any effects in 2019. The amounts recognized in total other comprehensive income would be reclassified in the event of the disposal of T‑Mobile US.

Conditions of derivative financial instruments in hedging relationships

millions of €

 

 

 

 

 

 

2020

 

Nominal amount

Average hedge rate

Average swap rate received

Average swap rate paid

Average margin paid

FAIR VALUE HEDGES

 

 

 

 

 

Interest rate risk

 

 

 

 

 

EURIBOR

4,615

 

0.3649%

6M EURIBOR

0.0000%

USD LIBOR

 

 

 

 

 

GBP LIBOR

 

 

 

 

 

Cross-currency risk

 

 

 

 

 

USD/EUR

 

 

 

 

 

GBP/EUR

 

 

 

 

 

Other

 

 

 

 

 

CASH FLOW HEDGES

 

 

 

 

 

Currency risk

 

 

 

 

 

Buy

 

 

 

 

 

USD/EUR

247

1.1102

 

 

 

GBP/EUR

83

0.8362

 

 

 

Other

29

 

 

 

 

Sell

 

 

 

 

 

USD/EUR

173

1.0632

 

 

 

Interest rate risk

 

 

 

 

 

EURIBOR

 

 

 

 

 

USD LIBOR

 

 

 

 

 

millions of €

 

 

 

 

 

 

2021–2024

 

Nominal amount

Average hedge rate

Average swap rate received

Average swap rate paid

Average margin paid

FAIR VALUE HEDGES

 

 

 

 

 

Interest rate risk

 

 

 

 

 

EURIBOR

6,453

 

0.6228%

6M EURIBOR

0.3186%

USD LIBOR

2,449

 

2.4249%

3M USD LIBOR

0.8962%

GBP LIBOR

352

 

1.2500%

3M GBP LIBOR

0.7870%

Cross-currency risk

 

 

 

 

 

USD/EUR

 

 

 

 

 

GBP/EUR

 

 

 

 

 

Other

79

 

 

 

 

CASH FLOW HEDGES

 

 

 

 

 

Currency risk

 

 

 

 

 

Buy

 

 

 

 

 

USD/EUR

3

1.1373

 

 

 

GBP/EUR

770

0.9072

6.5000%

6.5718%

 

Other

24

 

 

 

 

Sell

 

 

 

 

 

USD/EUR

197

1.0990

 

 

 

Interest rate risk

 

 

 

 

 

EURIBOR

7,178

 

6M EURIBOR

-0.2099%

0.3263%

USD LIBOR

3,562

 

3M USD LIBOR

4.9986%

3.0242%

millions of €

 

 

 

 

 

 

2025 and thereafter

 

Nominal amount

Average hedge rate

Average swap rate received

Average swap rate paid

Average margin paid

FAIR VALUE HEDGES

 

 

 

 

 

Interest rate risk

 

 

 

 

 

EURIBOR

9,200

 

1.4384%

6M EURIBOR

0.7661%

USD LIBOR

3,665

 

4.3042%

3M USD LIBOR

1.5948%

GBP LIBOR

470

 

2.5590%

6M GBP LIBOR

0.6477%

Cross-currency risk

 

 

 

 

 

USD/EUR

1,557

1.1221

8.7500%

3M EURIBOR

5.8751%

GBP/EUR

796

0.8799

2.8571%

3M EURIBOR

1.0062%

Other

481

 

 

 

 

CASH FLOW HEDGES

 

 

 

 

 

Currency risk

 

 

 

 

 

Buy

 

 

 

 

 

USD/EUR

1,758

1.3620

8.7863%

7.7873%

 

GBP/EUR

441

0.9122

7.9388%

7.5811%

 

Other

 

 

 

 

 

Sell

 

 

 

 

 

USD/EUR

 

 

 

 

 

Interest rate risk

 

 

 

 

 

EURIBOR

1,000

 

6M EURIBOR

0.1120%

0.5966%

USD LIBOR

10,998

 

3M USD LIBOR

3.6857%

0.5350%

Nominal and carrying amounts of derivative financial instruments in hedging relationships

millions of €

 

 

 

 

 

 

 

 

 

 

 

 

2019

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nominal amount of the hedging instruments

Carrying amount of the hedging instruments

Change in value of the hedging instru­ments in the re­porting period for deter­mining ineffec­tiveness

Nominal amount of the hedging instruments

Carrying amount of the hedging instruments

Change in value of the hedging instru­ments in the re­porting period for deter­mining ineffec­tiveness

 

 

in foreign currencies

in euros

Finan­cial assets

Finan­cial lia­bilities

in foreign currencies

in euros

Finan­cial assets

Finan­cial lia­bilities

Disclosure of the hedging instruments in the statement of financial position

In this and the following tables on hedging relationships, losses are shown as negative amounts unless explicitly stated otherwise.

FAIR VALUE HEDGES

 

 

 

 

 

 

 

 

 

 

Other financial assets/financial liabilities

Interest rate risk

 

27,204

1,029

(39)

783

 

23,705

264

(129)

85

Of which: EUR

 

20,268

 

 

 

 

16,374

 

 

 

 

Of which: USD

6,865

6,114

 

 

 

7,500

6,549

 

 

 

 

Of which: GPB

700

822

 

 

 

700

782

 

 

 

 

Cross-currency risk

 

2,912

124

(26)

257

 

2,373

4

(221)

43

Other financial assets/financial liabilities

Of which: USD

1,747

1,557

 

 

 

1,747

1,557

 

 

 

 

Of which: GPB

700

796

 

 

 

300

339

 

 

 

 

Of which: other

 

560

 

 

 

 

478

 

 

 

 

CASH FLOW HEDGES

 

 

 

 

 

 

 

 

 

 

Other financial assets/financial liabilities

Currency risk

 

3,725

166

(18)

251

 

4,121

5

(95)

(107)

Buy

 

 

 

 

 

 

 

 

 

 

 

USD/EUR

2,580

2,008

 

 

 

2,584

2,004

 

 

 

 

GBP/EUR

1,171

1,294

 

 

 

1,429

1,574

 

 

 

 

Other

 

52

 

 

 

 

70

 

 

 

 

Sell

 

 

 

 

 

 

 

 

 

 

 

USD/EUR

416

371

 

 

 

540

473

 

 

 

 

Interest rate risk

 

22,739

120

(1,235)

(747)

 

8,383

 

(391)

(391)

Other financial assets/financial liabilities

USD LIBOR

16,350

14,561

 

 

 

9,600

8,383

 

 

 

 

EURIBOR

 

8,178

 

 

 

 

 

 

 

 

 

Disclosures on hedged items in hedging relationships

millions of €

 

 

 

 

 

 

 

 

 

 

Carrying amount of the hedged items (including cumulative fair value hedge adjustment)

Cumulative adjustments to the carrying amount of the designated fair value hedges

Change in the fair value of the hedged items for determining ineffectiveness in the reporting period

Remaining balance of cumulative adjustments to the carrying amount of the de-designated fair value hedges

Balance of amounts recognized in other compre­hensive income relating to hedged risk (existing hedging relationships)a

Balance of amounts recognized in other compre­hensive income relating to hedged risk (terminated hedging relationships)

Presentation of the hedged items in the statement of financial position

a

Figures include non-controlling interests.

FAIR VALUE HEDGES

 

 

 

 

 

 

 

Financial liabilities

Interest rate risk

2019

28,019

857

(774)

304

n.a.

n.a.

2018

23,749

62

(67)

319

n.a.

n.a.

Cross-currency risk

2019

2,981

24

(299)

0

n.a.

n.a.

2018

2,102

(254)

(13)

0

n.a.

n.a.

CASH FLOW HEDGES

 

 

 

 

 

 

 

n.a.

Currency risk

2019

n.a.

n.a.

(244)

n.a.

83

8

 

2018

n.a.

n.a.

103

n.a.

(19)

8

 

Interest rate risk

2019

n.a.

n.a.

727

n.a.

(1,140)

0

 

2018

n.a.

n.a.

393

n.a.

(393)

(16)

 

HEDGE OF NET INVESTMENT

 

 

 

 

 

 

 

n.a.

Currency risk

2019

n.a.

n.a.

0

n.a.

794

n.a.

2018

n.a.

n.a.

0

n.a.

0

794

The recorded ineffectiveness in the income statement mainly results from the different discount rates of the hedged items (fixed-income) and designated hedging instruments (fixed-income and variable-interest). Furthermore, cross-currency interest rate hedges are impacted by effects from cross currency basis spreads, which are included in the hedging instruments, but not in the hedged items. For some hedges, the characteristics of hedging instruments and hedged items differ, resulting in ineffectiveness. In the case of interest rate hedges on highly probable future borrowings, ineffectiveness could arise if time shifts occur. The relative amounts of the ineffectiveness are not expected to increase significantly in the future. Furthermore, there are no other potential sources of ineffectiveness.

Reconciliation of total other comprehensive income from hedging relationshipsa

millions of €

 

 

 

 

 

 

 

Designated risk components (effective portion)

 

 

 

 

Cash flow hedges

Hedges of net investment

Total designated risk components

 

Total other compre­hensive income

 

Currency risk

Interest rate risk

Currency risk

Hedging costsb

a

Figures include non-controlling interests.

b

In the 2018 and 2019 financial years, hedging costs relate entirely to cross currency basis spreads.

Balance at January 1, 2019

(10)

(409)

794

375

58

433

Changes recognized directly in equity

244

(727)

0

(483)

(9)

(492)

Reclassification to profit or loss due to occurrence of the hedged item

(143)

(5)

0

(148)

2

(146)

BALANCE AT DECEMBER 31, 2019

91

(1,141)

794

(256)

51

(205)

Derivatives. The following table shows the fair values of the various derivatives. A distinction is made depending on whether these are part of an effective hedging relationship as set out in IFRS 9 (fair value hedge, cash flow hedge, net investment hedge) or not. Other derivatives can also be embedded, i.e., a component of a composite instrument that contains a non-derivative host contract.

millions of €

 

 

 

Net carrying
amounts
Dec. 31, 2019

Net carrying
amounts
Dec. 31, 2018

ASSETS

 

 

Interest rate swaps

 

 

Without a hedging relationship

6

121

In connection with fair value hedges

1,029

264

In connection with cash flow hedges

120

0

Currency forwards/currency swaps

 

 

Without a hedging relationship

49

24

In connection with cash flow hedges

5

2

Cross-currency swaps

 

 

Without a hedging relationship

206

339

In connection with fair value hedges

124

4

In connection with cash flow hedges

161

3

Other derivatives in connection with cash flow hedges

0

0

Other derivatives without a hedging relationship

3

2

Embedded derivatives

630

112

LIABILITIES

 

 

Interest rate swaps

 

 

Without a hedging relationship

34

31

In connection with fair value hedges

39

128

In connection with cash flow hedges

1,235

391

Currency forwards/currency swaps

 

 

Without a hedging relationship

59

36

In connection with cash flow hedges

4

3

In connection with net investment hedges

0

0

Cross-currency swaps

 

 

Without a hedging relationship

78

112

In connection with fair value hedges

26

221

In connection with cash flow hedges

14

91

Other derivatives in connection with cash flow hedges

0

0

Other derivatives without a hedging relationship

7

12

Embedded derivatives

146

52

Transfer of financial assets

Factoring transactions with substantially all risks and rewards being transferred

Deutsche Telekom is party to several factoring agreements under which it sells current trade receivables on a revolving basis; under these agreements, Deutsche Telekom has the right to decide on a case-by-case basis whether and to what extent the revolving nominal volume will be used. Sales exceeding this amount must be agreed on a case-by-case basis. The risks relevant for the risk assessment with respect to the receivables sold are the credit risk and the late-payment risk, which are transferred to the buyer of the receivables in full in return for payment of a fixed purchase price discount. Losses relating to certain receivables are reimbursed up to a maximum amount under a credit insurance policy, which reduces the credit risk. The receivables sold until the reporting date were derecognized in full. At the derecognition date, the fixed purchase price discount is expensed. Deutsche Telekom continues to perform receivables management against payment for the receivables sold. For the disclosures on the receivables sold, please refer to the table below. Expenses of EUR 24 million (EUR 230 million on a cumulative basis since commencement of the agreement) were recognized for a factoring agreement that expired in the 2019 financial year.

Factoring transactions involving the splitting of significant risks and rewards as well as the transfer of control

There is also a revolving factoring transaction in place under which a bank is required to purchase trade receivables from charges from sales of handsets payable over a period of up to two years. Deutsche Telekom has the right to decide on a case-by-case basis whether the revolving nominal volume will be used and to what extent. The risks relevant for the risk assessment with respect to the receivables sold are the credit risk and the late-payment risk. Deutsche Telekom bears credit risk-related losses from the various tranches up to a certain amount in each case; the other credit risk-related losses are borne by the bank. The late-payment risk is borne in full by Deutsche Telekom. Due to the allocation of the material risks between Deutsche Telekom and the bank, substantially all the risks and rewards of ownership of the receivables were neither transferred nor retained. Control of the receivables sold was transferred to the bank because it has the practical ability to resell the receivables. The bank has the right to sell all receivables overdue back to Deutsche Telekom. The purchase price corresponds to the nominal amount and is payable in the month following the buy-back. This does not affect the allocation of the credit risk-related losses, as such losses would be passed back to the bank in line with the agreed risk allocation. All receivables sold have been derecognized. At the derecognition date, the fair value of the expected losses is expensed as financial liabilities. Please refer to the table below for the disclosures on the continuing involvement resulting from the receivables sold. Expenses of EUR 4 million (EUR 68 million on a cumulative basis since commencement of the agreement) were recognized for factoring agreements terminated in the financial year.

Factoring transactions involving the splitting of significant risks and rewards with control remaining at Deutsche Telekom

In addition, there are several factoring agreements in place under which Deutsche Telekom sells – on a revolving basis – trade receivables from consumers and business customers relating to both charges already due and charges from sales of handsets payable over a period of up to two years.

In two transactions, subsidiaries of Deutsche Telekom sell receivables to structured entities that are also subsidiaries of Deutsche Telekom and were established for the sole purpose of these factoring agreements. The required funding is provided to these structured entities in the context of Deutsche Telekom’s general Group financing. These structured entities have no assets and liabilities other than those resulting from the purchase and sale of the receivables under factoring agreements. They resell the receivables to a second structured entity in each case. Deutsche Telekom does not consolidate the two second structured entities because it has no control over these entities’ relevant activities. In one of the transactions, the second structured entity resells the ownership interests in the receivables to two banks and a third structured entity on a pro-rata basis. Deutsche Telekom does not consolidate this third structured entity either because it likewise does not control this entity’s relevant activities. The structured entities not consolidated by Deutsche Telekom are financed by the external buyers of the receivables. In the other transaction, the second structured entity transfers the legal role of creditor for the receivables to a bank that performs this role on behalf of the investors who have beneficial ownership of the receivables (administrative agent). These investors are a bank and two other structured entities. Deutsche Telekom does not consolidate these other structured entities either because it likewise has no control over these entities’ relevant activities. The two other structured entities are financed through the issue of commercial paper to third parties outside the Group or, alternatively, through a credit facility provided by a bank.

In a third transaction, receivables are sold directly to a structured entity. This structured entity holds the receivables and allocates the risks and rewards resulting from these to Deutsche Telekom and a bank on the basis of contractual arrangements. It is financed through the issue of commercial paper to third parties outside the Group or, alternatively, through a credit facility provided by a bank. Deutsche Telekom does not consolidate the structured entity because it does not control the relevant activities.

The receivables being sold are selected from the relevant portfolios, either in an automated process in compliance with the eligibility criteria set out in the receivables purchase agreement or based on the decision of the relevant structured entity taking an obligatory minimum volume into account. The increase in the contractual maximum volume compared with the previous year results from the possibility to sell additional credit classes in a transaction at otherwise unchanged conditions. Receivables are sold on a daily basis and billed on a monthly basis. The purchase price up to a specific amount will be paid out immediately upon sale; remaining portions of the purchase price will only be paid to the extent that the volume of receivables sold in the relevant portfolio decreases further accordingly or the characteristics of the receivables change. In all transactions, Deutsche Telekom is obligated to buy back aged receivables and receivables for which a write-off is imminent at nominal value. Such buy-backs would not affect the allocation of the credit risk-related losses in any way, as the latter would be passed back to the buyers in line with the agreed risk allocation. The cash flows resulting from the buy-backs normally occur in the month following the buy-back. None of the structured entities has business activities other than the purchase or sale of trade receivables or other investments. In none of the transactions is Deutsche Telekom exposed to risks other than the credit risk and late-payment risk resulting from the sold receivables agreed in the respective agreement.

In other transactions, receivables are sold directly to buyers outside the Group without the involvement of structured entities. If more receivables are purchased in individual portfolios, the purchase price payment is deferred until the maximum program volume decreases further accordingly. In all those transactions, Deutsche Telekom has the right to decide whether receivables are sold and in which volume. In individual portfolios, receivables for which a write-off is imminent are sold back to Deutsche Telekom. Here the purchase price corresponds to the actual proceeds from collection or disposal and is payable after Deutsche Telekom receives these proceeds from collection or disposal. These buy-backs would affect neither the allocation of the credit risk-related losses nor Deutsche Telekom’s liquidity situation. In a portfolio, the existing credit insurance reimburses losses relating to certain receivables to a specific maximum amount and thus reduces the exposure to loss.

The risks relevant for the risk assessment with respect to the sold receivables are based on the credit risk and the late-payment risk. Deutsche Telekom bears certain portions of the credit risk in the individual transactions. The other credit risk-related losses are borne by the respective buyers. The late-payment risk in all transactions continues to be borne in full by Deutsche Telekom. Substantially all the risks and rewards of ownership of the receivables were neither transferred nor retained (allocation of the material risks and rewards between Deutsche Telekom and the buyers). Deutsche Telekom continues to perform servicing for the receivables sold. Under the factoring agreements in which structured entities are engaged, buyers have the unilateral right to transfer the servicing to third parties for no specific reason. Although Deutsche Telekom is not authorized to use the receivables sold other than in its capacity as servicer, it retains control over the receivables sold because the buyers and the structured entities do not have the practical ability to resell the purchased receivables. At the time the receivables are sold, the fair value of the expected losses is expensed. Expected future payments are presented as a component of the associated liability. In transactions with structured entities, certain portions of the purchase price are initially held back and, depending on the amount of the actual defaults, are only paid to Deutsche Telekom at a later date. To the extent that such portions of the purchase price are expected to be received in the future, they are recognized at fair value. Deutsche Telekom continues to recognize the trade receivables sold to the extent of its continuing involvement, i.e., in the maximum amount with which it is still liable for the credit risk and late-payment risk inherent in the receivables sold, and recognizes a corresponding associated liability presented in liabilities to banks. The receivables and the associated liability are then derecognized in the extent to which Deutsche Telekom’s continuing involvement is reduced (particularly when payment is made by the customer). The carrying amount of the receivables is subsequently reduced by the extent to which the actual losses to be borne by Deutsche Telekom resulting from the credit risk and the late-payment risk exceed the losses initially expected. This amount is recognized as an expense. Please refer to the table below for the disclosures on the continuing involvement resulting from the receivables sold.

On January 16, 2020, a factoring agreement existing at the reporting date for the revolving sale of trade receivables from consumers and business customers relating to charges already due ended when the contract expired. The receivables with an aggregate nominal volume of EUR 840 million that had been sold directly to buyers outside the Group and had not yet been paid by the customers were bought back when the agreement ended. Receivables that had arisen, been sold, and been derecognized up to and including the reporting date December 31, 2019 were bought back at fair value and are recognized in this amount. Receivables that had arisen and been sold from January 1, 2020 were bought back at their nominal amount, no longer derecognized, and are recognized at the transaction price. Since there is no longer an intention to sell the portfolio of bought-back receivables in the future, the receivables are measured at amortized cost.

Transfer of financial assets

millions of €

 

 

 

 

 

 

2019

 

Transfer of substantially all risks and rewards

Allocation of substantially all risks and rewards

 

 

 

Transfer of control

Retention of control

 

 

Full transfer of the credit and late-payment risk

Partial transfer of the credit risk and retention of most of the late-payment risk

Partial transfer of the credit risk and full retention of the late-payment risk

 

 

With the involvement of structured entities

Without the involvement of structured entities

Total

End of contract terms

2021–2022

2021

2020–2023

2020–2022

 

Contractual maximum volume

184

90

4,959

1,040

6,273

Purchase prices to be paid immediately

184

80

2,154

1,040

3,458

Volume of receivables sold as of the reporting date

91

42

3,007

1,101

4,241

Scope of volume of receivables sold in the reporting year

71–127

24–30

1,889–2,337

992–1,133

 

Provision for receivables management

0

0

0

4

4

CONTINUING INVOLVEMENT

 

 

 

 

 

Maximum credit risk (before credit insurance)

 

14

600

80

694

Credit insurance

27

 

 

23

50

Maximum late-payment risk

 

0

82

4

86

Carrying amount of the continuing involvement (asset side)

 

0

682

84

766

Carrying amount of the associated liability

 

0

733

118

851

Fair value of the associated liability

 

0

51

34

85

BUY-BACK AGREEMENTS

 

 

 

 

 

Nominal value of receivables that can be bought back at the nominal amount

 

42

2,887

 

2,929

Nominal value of receivables that can be bought back at the collected amount

 

 

120

840

960

PURCHASE PRICE DISCOUNTS RECOGNIZED IN PROFIT OR LOSS, PROGRAM FEES, AND PRO-RATA LOSS ALLOCATIONS

 

 

 

 

 

Current reporting year

1

1

240

62

304

Cumulative since commencement of the agreement

4

5

1,064

350

1,423

millions of €

 

 

 

 

 

 

 

2018

 

Transfer of substantially all risks and rewards

Allocation of substantially all risks and rewards

 

 

Full transfer of the credit risk and full retention of the late-payment risk

Transfer of control

Retention of control

 

 

 

Partial transfer of the credit risk and retention of most of the late-payment risk

Partial transfer of the credit risk and full retention of the late-payment risk

 

 

Full transfer of the credit and late-payment risk

With the involvement of structured entities

Without the involvement of structured entities

Total

End of contract terms

2020–2022

2022

2019

2019–2023

2019–2022

 

Contractual maximum volume

197

250

620

4,734

925

6,726

Purchase prices to be paid immediately

197

250

390

2,115

925

3,877

Volume of receivables sold as of the reporting date

133

285

393

2,949

904

4,664

Scope of volume of receivables sold in the reporting year

62–147

144–285

92–420

1,708–2,161

881–1,120

 

Provision for receivables management

0

2

0

0

4

6

CONTINUING INVOLVEMENT

 

 

 

 

 

 

Maximum credit risk (before credit insurance)

 

 

87

584

46

717

Credit insurance

33

 

150

 

17

200

Maximum late-payment risk

 

1

5

75

3

84

Carrying amount of the continuing involvement (asset side)

 

 

0

659

49

708

Carrying amount of the associated liability

 

 

1

681

80

762

Fair value of the associated liability

 

 

1

22

31

54

BUY-BACK AGREEMENTS

 

 

 

 

 

 

Nominal value of receivables that can be bought back at the nominal amount

 

 

379

2,822

3,201

Nominal value of receivables that can be bought back at the collected amount

 

 

15

127

814

956

PURCHASE PRICE DISCOUNTS RECOGNIZED IN PROFIT OR LOSS, PROGRAM FEES, AND PRO-RATA LOSS ALLOCATIONS

 

 

 

 

 

 

Prior reporting year

1

37

8

187

53

286

Cumulative since commencement of the agreement

3

206

68

824

290

1,391

Roaming
Refers to the use of a communication device or just a subscriber identity in a visited network rather than one’s home network. This requires the operators of both networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play when cell phones and smartphones are used across national boundaries.