Results of operations of Deutsche Telekom AG

The negative operating results worsened by approximately EUR 3.4 billion year-on-year, due mainly to a year-on-year decrease in other operating income of EUR 3.5 billion and a EUR 0.2 billion decline in net revenue. A decrease in other operating expenses of EUR 0.3 billion in particular had an offsetting effect.

Lower intragroup cost transfers from hiring out employees and from renting and leasing out property were the main factors contributing to the reduction in net revenue of EUR 0.2 billion.

Other operating income in the previous year had been positively impacted by several factors, including income of EUR 1.5 billion in connection with a capital repayment based on fair values, the write-up on an equity investment of EUR 0.9 billion, and the realization of hidden reserves in connection with a spin-off in the amount of EUR 0.8 billion. The decrease of EUR 3.5 billion in the reporting year was also attributable to a EUR 0.2 billion decline in income from derivatives, mainly in connection with U.S. dollar contracts, and to a EUR 0.1 billion decline in foreign currency translation gains on loans denominated in foreign currencies.

The decrease of EUR 0.3 billion in other operating expenses compared with the previous year was mainly attributable to a reduction of EUR 0.1 billion in foreign currency translation losses and a EUR 0.1 billion decline in expenses from derivatives, in particular in connection with U.S. dollar contracts. Another contributory factor was the EUR 0.1 billion decrease in other employee-related costs.

Net financial income increased by EUR 4.4 billion to EUR 5.6 billion, due primarily to an increase of EUR 2.5 billion in income related to subsidiaries, associated, and related companies and a EUR 0.5 billion decrease in net interest expense. Furthermore, net financial income in the previous year had been negatively impacted by a write-down in the amount of EUR 1.4 billion on CTA Holding GmbH, Bonn.

Income related to subsidiaries, associated, and related companies was positively affected in the reporting year in particular by profits transferred by Telekom Deutschland GmbH, Bonn, of EUR 4.3 billion (2020: EUR 3.6 billion), by T‑Mobile Global Zwischenholding GmbH, Bonn, of EUR 2.1 billion (2020: EUR 0.6 thousand), by GMG Generalmietgesellschaft mbH, Cologne, of EUR 0.3 billion (2020: EUR 0.2 billion), and by DFMG Holding GmbH, Bonn, of EUR 0.1 billion (2020: EUR 0.2 billion). The transfer of the losses from Deutsche Telekom IT GmbH, Bonn, of EUR 0.7 billion (2020: EUR 0.8 billion), from T‑Systems International GmbH, Frankfurt/Main, of EUR 0.2 billion (2020: EUR 0.7 billion), and from Telekom Innovation Pool GmbH, Bonn, of EUR 0.1 billion (2020: EUR 6 million) 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 the effect of a capital repayment based on fair values by T‑Mobile Global Holding GmbH, Bonn, to T‑Mobile Global Zwischenholding GmbH, Bonn, in the amount of EUR 2.1 billion.

The decrease in net interest expense of EUR 0.5 billion compared with the prior year was primarily the result of higher income from plan assets for pension obligations in the amount of EUR 0.2 billion and lower interest expense resulting from the decrease in long-term loans from Group companies, accounting for EUR 0.1 billion. In addition, a EUR 0.1 billion decline in expenses from interest added back to noncurrent other accruals had a positive effect on net interest expense.

Income after income taxes was particularly impacted by the aforementioned effects and increased by EUR 1.1 billion year-on-year in 2021.

Other tax expense of EUR 17 million combined with the aforementioned factors resulted in income after taxes of EUR 3,605 million in the 2021 financial year. Taking into account EUR 2,283 million in unappropriated net income carried forward, unappropriated net income totaled EUR 5,888 million.