Changes in the composition of the Group and other transactions In the 2019 financial year, Deutsche Telekom conducted the following transactions, which had or will have an impact on the composition of the Group. Other changes to the composition of the Group not shown here were of no material significance for Deutsche Telekom’s consolidated financial statements. Acquisition of Tele2 Netherlands Holding N.V. On December 15, 2017, Deutsche Telekom signed an agreement with the Tele2 Group on the acquisition of 100 percent of the shares in the telecommunications provider Tele2 Netherlands Holding N.V. (Tele2 Netherlands) by T‑Mobile Netherlands Holding B.V. (T‑Mobile Netherlands). After the European Commission issued its approval without conditions on November 27, 2018, the transaction was consummated on January 2, 2019. Tele2 Netherlands has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since the acquisition date. This transaction will establish a stronger, more sustainable provider of convergent fixed-network and mobile services in the Dutch market. Consideration totaling EUR 718 million was transferred from the Deutsche Telekom Group at the acquisition date. This consisted of a cash payment (taking purchase price adjustments into account) of EUR 199 million and the transfer of a 25 percent share in T‑Mobile Netherlands (prior to the business combination) that was measured at a fair value of EUR 519 million. As a consequence of this transaction, Deutsche Telekom now recognizes non-controlling interests of 25 percent in the combined company resulting from the aforementioned transfer of 25 percent of the shares in T‑Mobile Netherlands (prior to the business combination) and the non-controlling interests in Tele2 Netherlands. The purchase price allocation and the measurement of Tele2 Netherlands’ assets and liabilities at the acquisition date were finalized as of December 31, 2019. The fair values of Tele2 Netherlands’ acquired assets and liabilities recognized at the acquisition date are presented in the following table: (XLS:) Download millions of € Fair value at the acquisition date ASSETS CURRENT ASSETS 283 Cash and cash equivalents 4 Trade receivables 235 Contract assets 7 Other assets 20 Inventories 17 NON-CURRENT ASSETS 1,094 Goodwill 109 Other intangible assets 455 Of which: customer base 210 Of which: spectrum licenses 182 Of which: other 63 Property, plant and equipment 286 Right-of-use assets 171 Deferred tax assets 67 Other assets 6 ASSETS 1,377 LIABILITIES CURRENT LIABILITIES 264 Lease liabilities 79 Trade and other payables 97 Other provisions 58 Contract liabilities 10 Other liabilities 20 NON-CURRENT LIABILITIES 155 Lease liabilities 118 Other provisions 17 Deferred tax liabilities 15 Contract liabilities 5 LIABILITIES 419 Deutsche Telekom has measured the non-controlling interests in the acquiree at fair value. This means that the full-goodwill method has been used. The acquired goodwill of EUR 109 million to be recognized in Deutsche Telekom’s consolidated statement of financial position is calculated as follows: (XLS:) Download millions of € Fair value at the acquisition date Consideration transferred 718 + non-controlling interests 240 – fair value of the acquired assets (1,268) + fair value of the acquired liabilities 419 = GOODWILL 109 The goodwill reflects the value of expected synergies arising from the acquisition, expected new customer gains, and the value of the assembled workforce. Goodwill can be deducted from income tax in the amount of EUR 92 million. The spectrum licenses were measured using the guideline transaction method, with the fair value being derived on the basis of the price analyses used in spectrum auctions carried out in the European telecommunications industry. The spectrum licenses are amortized over the expected useful life of 10 to 11 years. The customer base was measured using the multi-period excess earnings method. Under this method, the fair value of the customer base is determined by calculating the present value of profit/loss after taxes that can be assigned to the existing customers. The customer base is amortized over the remaining useful life of 5 to 15 years. The carrying amounts of the acquired receivables are based on the fair values. The gross amounts of the receivables amount to EUR 279 million. No material contingent liabilities have been identified. The deferred tax assets relate to Tele2 Netherlands’ loss carryforwards. The deferred tax liabilities comprise the tax effect on the temporary differences between the fair value of the different assets and liabilities on the one hand, and the respective carrying amount for tax purposes on the other. No material transaction-based costs were incurred by December 31, 2019. Deutsche Telekom’s net revenue increased by EUR 598 million in the reporting period due to the acquisition of Tele2 Netherlands. Net profit for the current reporting period includes profit/loss before taxes of EUR -24 million from Tele2 Netherlands. Since the business combination took place before the beginning of the 2019 financial year, net revenue and net profit would not have been other than as reported. Sale of Telekom Albania On January 15, 2019, OTE concluded an agreement for the sale of its stake in Telekom Albania to Bulgarian company Albania Telecom Invest AD for a purchase price of EUR 50 million. The transaction was consummated on May 7, 2019. The net deconsolidation gain/loss resulting from the sale is immaterial from a Group perspective. Transfer of the stake in Ströer SE & Co. KGaA to plan assets On August 14, 2019, Deutsche Telekom transferred its 11.34 percent stake in Ströer SE & Co. KGaA to Deutsche Telekom Trust e.V., where it will be used as plan assets to cover existing pension obligations. This transaction resulted in income of EUR 142 million from the divestiture of the stake, which had previously been accounted for using the equity method. For further information, please refer to the section “Notes to the consolidated statement of financial position.” The composition of the Deutsche Telekom Group changed as follows in the 2019 financial year: (XLS:) Download Domestic International Total CONSOLIDATED SUBSIDIARIES January 1, 2019 61 213 274 Additions 3 17 20 Disposals (including mergers) 3 24 27 DECEMBER 31, 2019 61 206 267 ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD January 1, 2019 2 7 9 Additions 2 2 4 Disposals 1 2 3 DECEMBER 31, 2019 3 7 10 JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD January 1, 2019 2 4 6 Additions 0 2 2 Disposals 1 0 1 DECEMBER 31, 2019 1 6 7 TOTAL January 1, 2019 65 224 289 Additions 5 21 26 Disposals (including mergers) 5 26 31 DECEMBER 31, 2019 65 219 284 The following transaction will change the composition of the Deutsche Telekom Group in the future. Agreed business combination of T‑Mobile US and Sprint Together with their respective majority shareholders Deutsche Telekom AG and Softbank K.K., T‑Mobile US and Sprint Corp. concluded a binding agreement on April 29, 2018 to combine their companies. The agreement is subject to approvals by the regulatory and anti-trust authorities and certain other customary closing conditions. Under the agreement, T‑Mobile US will acquire all of the shares in Sprint. In return for every 9.75 Sprint shares, the company’s shareholders will receive one new T‑Mobile US share without any additional cash contribution. On completion of the transaction, Deutsche Telekom will hold around 42 percent of T‑Mobile US’ shares and Softbank around 27 percent, while the free float will account for around 31 percent. Due to the voting-rights agreement with Softbank, and to the fact that individuals nominated by Deutsche Telekom will hold the majority of the seats on the new company’s Board of Directors, T‑Mobile US will continue to be included as a fully consolidated subsidiary in the consolidated financial statements. For further information, please refer to the section “Group organization” in the combined management report.