Results of operations of Deutsche Telekom AG

The positive operating results improved by approximately EUR 2.5 billion year-on-year. This increase was mainly due to an increase in other operating income of EUR 2.3 billion, a decline in goods and services purchased of EUR 0.6 billion, and a decrease in other operating expenses of EUR 0.2 billion compared with the prior year. A decrease of EUR 0.7 billion in revenue had an offsetting effect.

The year-on-year decrease in revenue of EUR 0.7 billion is largely attributable to the spin-off of the DTGC business area and mainly relates to fixed-network revenue.

The increase of EUR 2.3 billion in other operating income was mainly attributable to income of EUR 1.5 billion from a capital repayment based on fair values by T‑Mobile Global Zwischenholding GmbH, Bonn, income of EUR 0.8 billion from the realization of hidden reserves in connection with the spin-off of the DTGC business area, and an increase of EUR 0.3 billion in income from derivatives primarily in connection with U.S. dollar contracts. A decrease of EUR 0.1 billion in income from cost transfers and reimbursements as well as a decline of EUR 0.1 billion in foreign currency translation gains, in particular, had a negative effect in the reporting year.

The write-ups on Hellenic Telecommunications Organization S.A. (OTE), Athens, in the amount of EUR 0.9 billion and on Deutsche Telekom Asset Management GmbH & Co. KG, Monheim, in the amount of EUR 0.1 billion, which were required under German GAAP due to improved earnings prospects, also had a positive effect in the reporting year. In the prior year, other operating income had included write-ups on Hellenic Telecommunications Organization S.A. (OTE), Athens, in the amount of EUR 0.9 billion, and on Ströer SE & Co. KGaA, Cologne, in the amount of EUR 0.1 billion.

The year-on-year decrease of EUR 0.6 billion in goods and services purchased is due primarily to the transfer of International Carrier Services in connection with the spin-off of the DTGC business area and relates to network access charges.

The decrease of EUR 0.2 billion in other operating expenses compared with the previous year was mainly attributable to a decrease of EUR 0.2 billion in expenses from derivatives in connection with U.S. dollar contracts.

Net financial income decreased by EUR 1.9 billion to EUR 1.2 billion. This was primarily due to a write-down in the amount of EUR 1.4 billion on CTA Holding GmbH, Bonn, as a result of the impairment of this company’s indirectly held investment in the British BT Group plc, London, United Kingdom. Furthermore, net financial income was impacted by an increase of EUR 0.3 billion in net interest expense and a decline of EUR 0.2 billion in income related to subsidiaries, associated, and related companies.

Income related to subsidiaries, associated, and related companies, which declined by EUR 0.2 billion compared with the prior year, was positively affected in the reporting year in particular by profits transferred by Telekom Deutschland GmbH, Bonn, of EUR 3.6 billion (2019: EUR 3.7 billion), T‑Mobile Global Zwischenholding GmbH, Bonn, of EUR 0.6 billion (2019: transfer of losses of EUR 17 thousand), DFMG Holding GmbH, Bonn, of EUR 0.2 billion (2019: EUR 0.3 billion), and GMG Generalmietgesellschaft mbH, Cologne, of EUR 0.2 billion (2019: EUR 0.2 billion). The transfer of the losses from Deutsche Telekom IT GmbH, Bonn, of EUR 0.8 billion (2019: EUR 0.7 billion), and from T‑Systems International GmbH, Frankfurt/Main, of EUR 0.7 billion (2019: EUR 0.2 billion), had an offsetting effect.

Income related to subsidiaries, associated and related companies was impacted in particular by the operating business of the consolidated subsidiaries. The figure for the reporting year also included effects from a capital repayment based on fair values by T‑Mobile Global Holding GmbH, Bonn, to T‑Mobile Global Zwischenholding GmbH, Bonn, as well as from the write-downs by Telekom Deutschland GmbH, Bonn, and T‑Systems International GmbH, Frankfurt/Main, on their shares in CTA Holding GmbH, Bonn.

The increase in the net interest expense of EUR 0.3 billion compared with the prior year was primarily the result of lower income from plan assets for pension obligations in the amount of EUR 0.2 billion and lower income from long-term loans to Group companies in the amount of EUR 0.1 billion.

Income after income taxes was particularly impacted by the aforementioned effects and increased by EUR 0.8 billion year-on-year in 2020.

Other tax expense of EUR 17 million combined with the aforementioned factors resulted in income after taxes of EUR 2,515 million in the 2020 financial year. Taking into account EUR 2,614 million in unappropriated net income carried forward, unappropriated net income totaled EUR 5,129 million.