13 Financial liabilities and lease liabilities

The following table shows the composition and maturity structure of financial liabilities as of December 31, 2021:

The carrying amount of current and non-current financial liabilities increased by EUR 4.4 billion compared with year-end 2020 to EUR 111.5 billion, primarily due to the factors described below. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 5.0 billion.

The carrying amount of bonds and other securitized liabilities increased by EUR 6.2 billion. The main factors in this increase were senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 14.8 billion (EUR 12.5 billion) with terms ending between 2026 and 2060 and bearing interest of between 2.25 and 3.6 %. The carrying amount was also increased by AUD bonds with a volume of AUD 0.1 billion (EUR 0.1 billion) issued by Deutsche Telekom AG and euro bonds with a volume of EUR 0.1 billion. The early repayment by T‑Mobile US in the reporting period of bonds with a volume of USD 5.8 billion (EUR 4.8 billion) with terms originally ending between 2023 and 2026 and bearing interest of between 4.5 and 6.5 %, and scheduled repayments by T‑Mobile US of bonds with a volume of USD 3.3 billion (EUR 2.8 billion) and repayments in the Group of euro bonds with a volume of EUR 2.3 billion and U.S. dollar bonds with a volume of USD 0.6 billion (EUR 0.5 billion) had a contrasting effect. The carrying amount of bonds and other securitized liabilities increased by EUR 4.4 billion due to exchange rate effects, especially from the translation of U.S. dollars into euros.

The carrying amount of liabilities to banks decreased by EUR 1.3 billion compared with December 31, 2020 to EUR 4.0 billion, mainly due to scheduled repayments of EUR 1.2 billion made in the reporting period and a decline of EUR 0.2 billion in connection with factoring in the United States operating segment. Exchange rate effects, mainly from the translation of U.S. dollars into euros, raised the carrying amount by EUR 0.1 billion.

The liabilities with the right of creditors to priority repayment in the event of default of EUR 3.2 billion (December 31, 2020: EUR 3.9 billion) relate primarily to bonds issued by Sprint. Collateral was provided for these bonds, hence they constitute a separate class of financial instruments. Repayments in the reporting period in the amount of EUR 0.9 billion when translated into euros reduced the carrying amount. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 0.3 billion. At the reporting date, cash and cash equivalents with a carrying amount of EUR 76 million (December 31, 2020: EUR 63 million) when translated into euros were pledged as collateral for these bonds.

The carrying amount of other interest-bearing liabilities increased by EUR 0.1 billion compared with December 31, 2020 to EUR 7.3 billion. The carrying amount of other interest-bearing liabilities increased by a total of EUR 0.1 billion in connection with collateral received for derivative financial instruments.

For further information on cash collateral, please refer to Note 40 “Financial instruments and risk management.”

The carrying amount of derivative financial liabilities decreased by EUR 0.2 billion to EUR 0.7 billion, mainly in connection with positive measurement effects in the reporting period.

For further information on derivative financial liabilities, please refer to Note 40 “Financial instruments and risk management.”

Deutsche Telekom has established ongoing liquidity management. To ensure the Group’s and Deutsche Telekom AG’s solvency and financial flexibility at all times, Deutsche Telekom maintains a liquidity reserve in the form of credit lines and cash. This liquidity reserve is to cover the capital market maturities of the next 24 months at any time. Since the successful business combination between T‑Mobile US and Sprint, T‑Mobile US has pursued its own separate financing and liquidity strategy.

At December 31, 2021, Deutsche Telekom (excluding T‑Mobile US) had standardized bilateral credit agreements with 21 banks for a total of EUR 12.6 billion. As of December 31, 2021, EUR 0.1 billion of these credit lines had been utilized. Pursuant to the credit agreements, the terms and conditions depend on Deutsche Telekom’s rating. The bilateral credit agreements have an original maturity of 36 months and can, after each period of 12 months, be extended by a further 12 months to renew the maturity of 36 months. From today’s perspective, access to the international debt capital markets is not jeopardized.

Furthermore, bilateral credit lines with an aggregate total volume of USD 5.5 billion (EUR 4.9 billion) plus a cash balance of USD 6.6 billion (EUR 5.9 billion) were available to T‑Mobile US as of December 31, 2021. None of these credit lines had been utilized as of December 31, 2021.

The carrying amount of current and non-current lease liabilities increased by EUR 0.4 billion to EUR 33.1 billion compared with December 31, 2020. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 2.2 billion. Effects of changes in the composition of the Group, mainly from the first-time inclusion of Shentel, acquired by T‑Mobile US, also increased the carrying amount by EUR 0.3 billion. This was offset in particular by an advance payment for the lease of cell sites of EUR 0.9 billion made by T‑Mobile US to a U.S. cell tower company in September 2021 in connection with a change to the existing lease agreed in the reporting period. The carrying amount was further reduced by EUR 0.6 billion, in part in connection with the decommissioning of former Sprint cell sites and the closure of some former Sprint shops in the United States operating segment. The reclassification of T‑Mobile Netherlands’s liabilities to liabilities directly associated with non-current assets and disposal groups held for sale, decreases of EUR 0.2 billion in the Group Headquarters & Group Services segment and of EUR 0.1 billion in the Europe operating segment also reduced the carrying amount.

For further information on lessee relationships, please refer to Note 8 “Right of use assets – lessee relationships.”

For further information on the agreed sale of T‑Mobile Netherlands, please refer to the section “Changes in the composition of the Group and other transactions” under “Summary of accounting policies.”

In the reporting year and in the 2020 financial year, there were no significant expenses for variable lease payments that were not included in the measurement of lease liabilities.

As of December 31, 2021, future payment obligations for leases that have not yet begun and which are not taken into account in the measurement of lease liabilities amounted to EUR 0.1 billion (December 31, 2020: EUR 0.2 billion).

The following tables show the contractually agreed (undiscounted) interest payments and repayments of the non-derivative financial liabilities, the lease liabilities, and the derivatives with positive and negative fair values:

All instruments held at December 31, 2021 and for which payments were already contractually agreed were included. Planning data for future, new liabilities were not included. Amounts in foreign currency were each translated at the closing rate at the reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December 31, 2021. Financial liabilities that can be repaid at any time are always assigned to the earliest possible time period. In accordance with § 2 (4) of the German Act on the Transformation of the Deutsche Bundespost Enterprises into the Legal Structure of Stock Corporation (Stock Corporation Transformation Act – Postumwandlungsgesetz), the Federal Republic is guarantor of all Deutsche Telekom AG’s liabilities that were already outstanding as at January 1, 1995. At December 31, 2021, this figure was a nominal EUR 0.1 billion (December 31, 2020: EUR 0.1 billion).