Net assets of the Group

Total assets amounted to EUR 281.6 billion as of December 31, 2021, up by EUR 16.7 billion against December 31, 2020. This increase is mainly attributable to investments in intangible assets for spectrum acquisition in the United States operating segment. Positive exchange rate effects and 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. This effect was offset in part by a decline in cash and cash equivalents.

Cash and cash equivalents decreased by EUR 5.3 billion year-on-year to EUR 7.6 billion.

For further information, please refer to Note 35 “Notes to the consolidated statement of cash flows” in the notes to the consolidated financial statements.

Trade receivables increased by EUR 1.8 billion to EUR 15.3 billion. The increase was primarily driven by higher receivables under the Equipment Installment Plan and growth in customer numbers in the United States operating segment. The carrying amount also increased in the Germany and Europe operating segments due to the reporting date. Exchange rate effects, primarily from the translation from U.S. dollars into euros, also increased receivables. Lower receivables in the Group Development operating segment, primarily as a result of the reclassification of T‑Mobile Netherlands’ assets to non-current assets and disposal groups held for sale in connection with the agreed sale, had an offsetting effect.

Intangible assets and property, plant and equipment increased by EUR 15.4 billion to EUR 194.4 billion in total, EUR 8.4 billion of which resulted from the acquisition of mobile spectrum in the United States operating segment, primarily in connection with the conclusion of the FCC C-band auction in the United States. T‑Mobile US purchased 142 licenses for around EUR 7.8 billion (USD 9.3 billion) in the auction and made initial “relocation payments” of EUR 0.2 billion to relocate incumbent licensees. Furthermore, in the Europe operating segment, licenses were acquired for a total of EUR 0.3 billion, including in the Czech Republic and Hungary. Capital expenditure to upgrade and build out the network and acquire mobile terminal equipment in our United States operating segment and in connection with the broadband/fiber-optic build-out and mobile infrastructure in the Germany and Europe operating segments also increased the carrying amount. Exchange rate effects of EUR 10.4 billion and effects of changes in the composition of the Group of EUR 1.6 billion, mainly from the first-time inclusion of Shentel, acquired by T‑Mobile US, also increased the carrying amount. Depreciation, amortization and impairment losses reduced the net carrying amounts by EUR 21.3 billion in total. The reclassification of assets to non-current assets and disposal groups held for sale reduced the carrying amounts by EUR 3.1 billion. These reclassifications mainly resulted from the agreed sale of T‑Mobile Netherlands and the agreed sale of the 50 % stake in GlasfaserPlus GmbH. In addition, disposals decreased the carrying amounts by EUR 1.7 billion.

For further information on the acquisition of Shentel and the agreed sale of T‑Mobile Netherlands, please refer to the section “Changes in the composition of the Group and other transactions” in the consolidated financial statements.

Compared with December 31, 2020, right-of-use assets increased by EUR 0.5 billion to EUR 30.8 billion. The carrying amount was increased by additions of EUR 5.5 billion, including as a result of a sale and leaseback transaction concluded after the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund. The carrying amount was also increased by exchange rate effects of EUR 2.1 billion, primarily from the translation of U.S. dollars into euros, and effects from changes in the composition of the Group of EUR 0.3 billion, mainly in connection with the acquisition of Shentel. The carrying amount was decreased by depreciation, amortization and impairment losses of EUR 6.2 billion. This included a EUR 0.8 billion increase in depreciation and amortization due to a reduction in the useful life of leased network technology for cell sites in the United States operating segment following the business combination of T‑Mobile US and Sprint. The reclassification of T‑Mobile Netherlands’s assets to non-current assets and disposal groups held for sale in the amount of EUR 0.5 billion and disposals of EUR 0.4 billion also reduced the carrying amount. In addition, reclassifications of lease assets at the end of the contractual lease term to property, plant and equipment, in the United States operating segment in particular, reduced the carrying amount by EUR 0.2 billion.

Current and non-current financial assets decreased by EUR 0.8 billion to EUR 8.9 billion. The carrying amount of derivatives with a hedging relationship decreased by EUR 0.5 billion to EUR 1.6 billion, mainly due to the decrease in positive fair values from interest rate swaps in fair value hedges, which is primarily the result of a rise in the interest rate level. The carrying amount of derivatives without a hedging relationship decreased by a net effect of EUR 0.8 billion to EUR 1.2 billion. Taking into account the partial exercising of the stock options received from SoftBank in June 2020 to purchase shares in T‑Mobile US, as well as measurement effects, the carrying amount of these stock options decreased by EUR 0.6 billion compared with December 31, 2020. In addition, the carrying amount of the derivatives without a hedging relationship decreased by EUR 0.4 billion in connection with embedded derivatives of T‑Mobile US. This related in part to the premature repayment of bonds. By contrast, the carrying amount was increased by positive measurement effects of EUR 0.1 billion from energy forward agreements embedded in contracts. Receivables from grants still to be received from funding projects for the broadband build-out in Germany increased by EUR 0.1 billion year-on-year.

Non-current assets and disposal groups held for sale increased by EUR 3.7 billion compared with December 31, 2020 to EUR 4.9 billion. EUR 4.7 billion of the increase resulted from the reclassification of T‑Mobile Netherlands’ assets in connection with the sale agreed as of September 6, 2021 and EUR 0.1 billion from the agreement concluded on November 5, 2021 on the sale of 50 % of the shares in GlasfaserPlus. By contrast, the sale of the Dutch company T‑Mobile Infra as of June 1, 2021 and of Telekom Romania Communications as of September 30, 2021 had decreasing effects on the carrying amount of EUR 0.4 billion and EUR 0.6 billion respectively.

For further information on the corporate transactions, please refer to the section “Group organization.”

The increase in other assets of EUR 1.5 billion to EUR 11.9 billion was due in part to the increase in the carrying amount of investments accounted for using the equity method, mainly as a result of the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund. As a result of the transaction, 37.65 % of the shares in Cellnex NL with a carrying amount of EUR 0.4 billion were included in the Group Development operating segment in the consolidated financial statements using the equity method. Other assets increased by EUR 0.5 billion, in part in connection with an increase in advance payments for hardware and support services in the United States operating segment. Capitalized contract costs increased by EUR 0.4 billion due to higher levels of capitalized costs of obtaining contracts in postpaid customer business in the United States operating segment. These mainly related to sales commissions paid to employees and third-party retailers. Inventories increased by EUR 0.2 billion compared with December 31, 2020, primarily due to increased stockpiling of high-priced devices for planned marketing campaigns in the United States operating segment. Exchange rate effects also increased the carrying amount.

For further information on the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund, please refer to the section “Group organization.”

On the liabilities and shareholders’ equity side, current and non-current financial liabilities increased by EUR 4.4 billion compared with the end of 2020 to a total of EUR 111.5 billion. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 5.0 billion. T‑Mobile US issued senior notes in the 2021 financial year with a total volume of USD 14.8 billion (EUR 12.5 billion) and made early repayments on bonds with a total volume of USD 5.8 billion (EUR 4.8 billion). In addition, T‑Mobile US repaid bonds with a volume of USD 3.3 billion (EUR 2.8 billion) on schedule. Furthermore, AUD bonds with a volume of AUD 0.1 billion (EUR 0.1 billion) and euro bonds with a volume of EUR 0.1 billion were issued within the Group, and 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) were repaid. The carrying amount of liabilities to banks decreased by EUR 1.3 billion compared with December 31, 2020. Financial liabilities decreased by EUR 0.1 billion in connection with collateral received for derivative financial instruments.

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 accounting for EUR 0.3 billion, also increased the carrying amount. 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 and a decline of EUR 0.6 billion, due in part to the decommissioning of former Sprint cell sites and the closure of some former Sprint shops in the United States operating segment. The reclassification of the liabilities of T‑Mobile Netherlands to liabilities directly associated with non-current assets and disposal groups held for sale also decreased the carrying amount.

For further information on the development of financial liabilities, please refer to Note 13 “Financial liabilities and lease liabilities” in the notes to the consolidated financial statements.

Trade and other payables increased by EUR 0.7 billion to EUR 10.5 billion, mainly due to higher liabilities to suppliers of mobile terminal equipment in the United States operating segment and exchange rate effects, in particular from the translation of U.S. dollars into euros. By contrast, liabilities in the Group Development operating segment decreased as a result of the reclassification of T‑Mobile Netherlands’ liabilities to liabilities directly associated with non-current assets and disposal groups held for sale.

Provisions for pensions and other employee benefits decreased by EUR 1.6 billion compared with December 31, 2020 to EUR 6.1 billion, mainly due to an increase in the share prices of plan assets and interest rate adjustments. All this resulted in an actuarial gain of EUR 1.4 billion from the remeasurement of defined benefit plans to be recognized directly in equity.

Current and non-current other provisions increased by EUR 0.4 billion compared with December 31, 2020 to EUR 9.5 billion, with other personnel provisions increasing by EUR 0.3 billion, which was attributable, in part, to short-term variable remuneration, phased retirement, and vacation. By contrast, the provisions recognized for the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK) decreased by EUR 0.1 billion, which is mainly attributable to the subsequent measurement of the present value determined using actuarial principles (interest effect). The provisions for restoration obligations increased by EUR 0.2 billion. Within provisions for termination benefits, provisions were reduced by, among other factors, the reversal of other provisions for personnel costs of EUR 0.1 billion, which had been recognized by OTE in 2010 and 2011 for an additional payment to the Greek social insurance fund, as a result of proceedings concluded in September 2021.

Liabilities directly associated with non-current assets and disposal groups held for sale increased by EUR 0.9 billion against December 31, 2020 to EUR 1.4 billion. Of this increase, EUR 1.4 billion resulted from the reclassification of T‑Mobile Netherlands’ liabilities in connection with the agreed sale. By contrast, the sale of the Dutch company T‑Mobile Infra as of June 1, 2021 and of Telekom Romania Communications as of September 30, 2021 in particular had decreasing effects on the carrying amount of EUR 0.2 billion and EUR 0.3 billion respectively.

For further information on the corporate transactions, please refer to the section “Group organization.”

Other liabilities remained at the level of December 31, 2020 of EUR 8.3 billion. Other liabilities were reduced by EUR 0.1 billion, mainly in connection with lower liabilities from early retirement arrangements for civil servants. By contrast, existing build-out obligations in connection with grants still to be received from funding projects for the broadband build-out in Germany increased other liabilities by EUR 0.1 billion. Income tax liabilities decreased by EUR 0.1 billion year-on-year, whereas contract liabilities increased by EUR 0.2 billion year-on-year.

Shareholders’ equity increased from EUR 72.6 billion as of December 31, 2020 to EUR 81.5 billion. Profit of EUR 6.1 billion and other comprehensive income of EUR 6.7 billion increased shareholders’ equity, as did the capital increase from share-based payment of EUR 0.5 billion. By contrast, shareholders’ equity was reduced in connection with dividend payments for the 2020 financial year to Deutsche Telekom AG shareholders in the amount of EUR 2.8 billion and to other shareholders of subsidiaries in the amount of EUR 0.3 billion. The carrying amount of shareholders’ equity also decreased by a net EUR 0.8 billion due to the acquisition of T‑Mobile US shares by way of a capital increase against contribution in kind. As a result, Deutsche Telekom AG’s stake in T‑Mobile US increased by 3.6 percentage points to 46.8 %. Taking into account a fair value of EUR 0.8 billion for the exercised stock options, which were recognized directly in equity as part of the consideration paid to SoftBank, the issued capital and reserves attributable to owners of the parent increased by a total of EUR 1.5 billion, while those attributable to non-controlling interests decreased by EUR 2.4 billion. As a result, the share of profit attributable to the owners of the parent increased, as did consequently earnings per share. Effects of changes in the composition of the Group – mainly due to the sale of Telekom Romania Communications in the Europe operating segment – of EUR 0.2 billion and transactions with owners of EUR 0.2 billion decreased the carrying amount.

For more information on the increase in the stake in T‑Mobile US, please refer to the section “Group organization” and Note 19 “Shareholders’ equity” in the notes to the consolidated financial statements.