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Results

Results of operations of the Group

Net revenue, service revenue

In 2021, we generated net revenue of EUR 108.8 billion, which was 7.7 % or EUR 7.8 billion up on the prior-year level. In organic terms, i.e., assuming a comparable composition of the Group in the prior year and excluding exchange rate effects, revenue developed positively, with growth of EUR 4.7 billion or 4.5 %. For a comparison on an organic basis, net revenue in the prior-year period was raised by EUR 5.5 billion to account for effects of changes in the composition of the Group – primarily from the acquisition of Sprint, the disposal of Sprint’s prepaid business to DISH and the acquisition of Shentel in the United States operating segment – and net exchange rate effects of EUR ‑2.3 billion were taken into account. Service revenue in the Group increased by EUR 5.2 billion or 6.5 % year-on-year to EUR 84.1 billion.

Contribution of the segments to net revenue

millions of €

 

 

 

 

 

 

2021

2020

Change

Change
%

2019

Net revenue

108,794

100,999

7,795

7.7

80,531

Of which: service revenuea

84,057

78,893

5,164

6.5

n.a.

Germany

24,164

23,790

374

1.6

23,750

United States

68,359

61,208

7,151

11.7

40,420

Europe

11,384

11,335

49

0.4

11,587

Systems Solutions

4,019

4,159

(140)

(3.4)

4,411

Group Development

3,165

2,883

282

9.8

2,797

Group Headquarters & Group Services

2,515

2,556

(41)

(1.6)

2,627

Intersegment revenue

(4,812)

(4,932)

120

2.4

(5,061)

a

The definition of “service revenue” was not applied consistently Group-wide for the years prior to 2020.

Our United States operating segment in particular contributed to the positive revenue trend with an increase of 11.7 %. In organic terms, i.e., in particular assuming the inclusion of Sprint for the full year in the prior year and constant exchange rates, revenue increased by 5.8 % year-on-year due to both higher service revenues and higher terminal equipment revenues. Revenue in our home market of Germany was up on the prior-year level, increasing by 1.6 %. This was mainly driven by an increase in revenue in the fixed-network core business, primarily due to broadband business, and in mobile service revenues. Our Europe operating segment recorded revenue growth of 0.4 %. In organic terms, i.e., in particular adjusted for the sale of the Romanian fixed-network business and assuming constant exchange rates, revenue increased by 2.4 %. Organic growth was mainly driven by the strong performance of the mobile business, especially the increase in mobile service revenues with higher margins, slight increases in roaming and visitor revenues, and higher revenues from terminal equipment sales. Fixed-network service revenues developed slightly better. Revenue in our Systems Solutions operating segment was down 3.4 % year-on-year. This decrease was mainly driven by the expected decline in traditional IT infrastructure business, due in part to deliberate business decisions such as the reduction in end-user services. By contrast, our growth areas grew significantly, especially public cloud, digital solutions, and road charging. Revenue in our Group Development operating segment increased by 9.8 %. In organic terms, i.e., adjusted for the sale of the Dutch cell tower business, the transfer of the Austrian cell tower business, as well as the acquisition of the Dutch MVNO and SIM provider Simpel, revenue increased by 4.6 %. This revenue increase resulted from the operational and structural growth of our two business units T‑Mobile Netherlands and GD Towers, which includes DFMG and the Austrian cell tower business.

For further information on revenue development in our segments, please refer to the section “Development of business in the operating segments.”

Contribution of the segments to net revenuea

%

Contribution of the segments to net revenue (pie chart)
a For further information, please refer to Note 36 “Segment reporting” in the notes to the consolidated financial statements.

Breakdown of revenue by region

%

Breakdown of revenue by region (pie chart)

Breakdown of revenue by region

%

Breakdown of revenue by region (pie chart)

At 62.8 %, our United States operating segment provided by far the largest contribution to net revenue of the Group and in particular thanks to the acquisition of Sprint was up 2.2 percentage points above the level in the prior year. In this connection, the proportion of net revenue generated internationally also increased significantly from 75.5 % to 77.0 %.

Adjusted EBITDA AL, EBITDA AL

Adjusted EBITDA AL increased year-on-year by EUR 2.3 billion or 6.6 % to EUR 37.3 billion in 2021. In organic terms, adjusted EBITDA AL increased by EUR 0.7 billion or 1.9 %. For a comparison on an organic basis, adjusted EBITDA AL in the prior-year period was raised by EUR 2.5 billion to account for effects of changes in the composition of the Group – primarily from the acquisition of Sprint and the disposal of Sprint’s prepaid business to DISH in the United States operating segment – and net exchange rate effects of EUR ‑0.9 billion were taken into account. Adjusted core EBITDA AL, which is distinguished by excluding revenue from terminal equipment leases in the United States from adjusted EBITDA AL, thereby presenting operational development undistorted by the withdrawal from the terminal equipment lease business, increased by EUR 3.2 billion or 10.1 % to EUR 34.5 billion.

Contribution of the segments to adjusted Group EBITDA AL

millions of €

 

 

 

 

 

 

 

 

2021

Proportion of adjusted Group EBITDA AL
%

2020

Proportion of adjusted Group EBITDA AL
%

Change

Change
%

2019

EBITDA AL (adjusted for special factors) in the Group

37,330

100.0

35,017

100.0

2,313

6.6

24,731

Germany

9,520

25.5

9,188

26.2

332

3.6

9,026

United States

22,697

60.8

20,997

60.0

1,700

8.1

11,134

Europe

4,007

10.7

3,910

11.2

97

2.5

3,910

Systems Solutions

286

0.8

279

0.8

7

2.5

307

Group Development

1,307

3.5

1,101

3.1

206

18.7

1,033

Group Headquarters & Group Services

(440)

(1.2)

(429)

(1.2)

(11)

(2.6)

(650)

Reconciliation

(47)

(0.1)

(28)

(0.1)

(19)

(67.9)

(29)

All operating segments made a positive contribution to this development. Adjusted EBITDA AL of our United States operating segment increased significantly as a result of the business combination of T‑Mobile US and Sprint, among other factors. In organic terms, i.e., adjusted for the effect of the acquisition of Sprint and assuming constant exchange rates, adjusted EBITDA AL stood at the prior-year level. The aforementioned higher service and equipment revenues had a positive effect. This was offset by negative effects of the planned withdrawal from the terminal equipment lease model in the United States and higher operational expenses – primarily in connection with the acquisition of Sprint. Adjusted core EBITDA AL, i.e., the earnings measure undistorted by the withdrawal from the terminal equipment lease business, increased by EUR 2.5 billion or 14.7 % to EUR 19.9 billion. Our Germany operating segment contributed to the increase thanks to high-value revenue growth and improved cost efficiency with 3.6 % higher adjusted EBITDA AL. Adjusted EBITDA AL in our Europe operating segment increased by 2.5 %. In organic terms, i.e., adjusted for the sale of the Romanian fixed-network business and the transfer of the Austrian cell tower business, and assuming constant exchange rates, adjusted EBITDA AL increased by 5.4 %. In addition to the positive revenue effects, savings in indirect costs also contributed to this development. Adjusted EBITDA AL in our Systems Solutions operating segment also increased by 2.7 %. Efficiency effects from our transformation program and effects from increased revenue in our growth areas exceeded the decline in earnings in the traditional IT infrastructure business. Adjusted EBITDA AL in our Group Development operating segment increased by 18.7 % year-on-year; in organic terms, it grew by 13.5 %. This growth was attributable to the positive revenue trend at T‑Mobile Netherlands, the acquisition of Simpel, and efficient cost management at T‑Mobile Netherlands. The GD Towers business posted consistent growth on the back of rising volumes and was further strengthened by the transfer of the Austrian cell tower business.

EBITDA AL increased by EUR 0.7 billion or 2.2 % year-on-year to EUR 33.9 billion, with special factors changing from EUR ‑1.8 billion to EUR ‑3.4 billion. Expenses incurred in connection with staff-related measures decreased from EUR 1.3 billion in the prior-year period by EUR 0.6 billion to EUR 0.7 billion. Part of this decrease was attributable to the reversal of other provisions for personnel costs, which had been recognized by OTE in 2010 and 2011 in connection with an additional payment to the Greek social insurance fund, as a result of proceedings concluded in September 2021. Net expenses of EUR 2.5 billion were recorded as special factors under effects of deconsolidations, disposals, and acquisitions. EUR 2.6 billion of the expenses mainly related to acquisition and integration costs as well as restructuring costs to realize cost efficiencies from the business combination of T‑Mobile US and Sprint. In this context, EUR 0.8 billion related to a reduction in the useful life of leased network technology for cell sites in the United States. In the prior year, net expenses of EUR 1.7 billion had been recorded as special factors under effects of deconsolidations, disposals, and acquisitions. EUR 1.5 billion of these also mainly related to the business combination with Sprint. In addition, in the Group Development operating segment, EBITDA AL was influenced by net positive special factors of EUR 0.2 billion, which related to the gain on deconsolidation due to the sale of the Dutch cell tower business. Reversals of impairment losses of EUR 1.7 billion had been recognized in the prior year and mainly related to the partial reversal of impairment losses on spectrum licenses at T‑Mobile US, which increased the carrying amount. Other special factors affecting EBITDA AL in the prior year amounted to EUR 0.5 billion and mainly related to expenses incurred in the United States operating segment in connection with the coronavirus pandemic.

For further information on the development of (adjusted) EBITDA AL in the segments, please refer to the section “Development of business in the operating segments.”

A reconciliation of the definition of EBITDA with the “after leases” indicator (EBITDA AL) can be found in the following table:

millions of €

 

 

 

 

 

 

2021

2020

Change

Change
%

2019

EBITDA

40,539

38,633

1,906

4.9

27,120

Depreciation of right-of-use assetsa

(5,547)

(4,530)

(1,017)

(22.5)

(3,181)

Interest expenses on recognized lease liabilitiesa

(1,099)

(925)

(174)

(18.8)

(796)

EBITDA AL

33,893

33,178

715

2.2

23,143

Special factors affecting EBITDA AL

(3,437)

(1,839)

(1,598)

(86.9)

(1,589)

EBITDA AL (adjusted for special factors)

37,330

35,017

2,313

6.6

24,731

a

Excluding finance leases at T-Mobile US.

EBIT

Group EBIT increased from EUR 12.8 billion to EUR 13.1 billion, up EUR 0.3 billion or 2.0 % against the prior year. This increase is partly due to the effects described under adjusted EBITDA AL and EBITDA AL. At EUR 27.5 billion, depreciation, amortization and impairment losses were EUR 1.7 billion higher than in the prior year. This increase is attributable, among other factors, to the first-time inclusion of Sprint for the full year. Furthermore, in the United States operating segment, a reduction in the useful life of leased network technology for cell sites following the business combination of T‑Mobile US and Sprint increased depreciation of the corresponding right-of-use assets by EUR 0.8 billion. Impairment losses decreased from EUR 0.8 billion to EUR 0.3 billion. Of the prior-year figure, a total of EUR 0.5 billion had related to the Systems Solutions operating segment and the Group Headquarters & Group Services segment, and EUR 0.2 billion to the Europe operating segment. Of the impairment losses recognized in the reporting year, EUR 0.2 billion related to the Systems Solutions operating segment and the Group Headquarters & Group Services segment. This was a consequence of several factors, including the ad hoc impairment testing carried out in the Systems Solutions cash-generating unit in the prior year. In addition, despite the marginal improvement in the business outlook, the increase in the cost of capital in the reporting year prompted further impairment losses to be recognized on non-current assets in the Systems Solutions cash-generating unit at the end of 2021.

For further information on depreciation, amortization and impairment losses, please refer to Note 27 “Depreciation, amortization and impairment losses” in the notes to the consolidated financial statements.

Profit before income taxes

Profit before income taxes decreased by EUR 0.8 billion or 8.7 % to EUR 7.9 billion. Loss from financial activities increased from EUR 4.1 billion to EUR 5.1 billion, with finance costs increasing by EUR 0.4 billion to EUR 4.6 billion, mainly due to the financial liabilities assumed in connection with the acquisition of Sprint and the related restructuring and increase in financing. In this connection, between April 2020 and the end of 2021, existing T‑Mobile US bonds were repaid prematurely and new bonds were issued in their place at more favorable terms and conditions. Other financial income/expense decreased by EUR 0.5 billion year-on-year, resulting in other financial expense of EUR 0.4 billion. On the one hand, gains/losses from financial instruments decreased by EUR 1.2 billion to a loss of EUR 0.6 billion, due in part to negative measurement effects resulting, among other factors, from embedded derivatives at T‑Mobile US and from a forward transaction to hedge the price of acquiring T‑Mobile US shares in the future. By contrast, net positive measurement effects resulted from the amortization and subsequent measurement of the stock options received from SoftBank in June 2020 to purchase shares in T‑Mobile US. On the other hand, the interest component from the measurement of provisions and liabilities increased, in particular in the Group Headquarters & Group Services segment, by EUR 0.7 billion.

Net profit, adjusted net profit

At EUR 4.2 billion, net profit remained at the prior-year level. Tax expense decreased by EUR 0.1 billion to EUR 1.8 billion. Profit attributable to non-controlling interests decreased from EUR 2.6 billion to EUR 1.9 billion. This mainly relates to our United States operating segment. Excluding special factors, which had a negative overall effect of EUR 1.7 billion on net profit, adjusted net profit amounted to EUR 5.9 billion, up 2.6 % against the prior year.

The following table presents the reconciliation of net profit to the figures adjusted for special factors:

millions of €

 

 

 

 

 

 

2021

2020

Change

Change
%

2019

Net profit (loss)

4,176

4,158

18

0.4

3,867

Special factors affecting EBITDA AL

(3,437)

(1,839)

(1,598)

(86.9)

(1,589)

Staff-related measures

(717)

(1,268)

551

43.5

(913)

Non-staff-related restructuring

(22)

(32)

10

31.2

(81)

Effects of deconsolidations, disposals and acquisitions

(2,542)

(1,655)

(887)

(53.6)

(462)

Reversals of impairment losses

0

1,655

(1,655)

(100.0)

0

Other

(156)

(539)

383

71.1

(132)

Special factors affecting net profit

1,751

283

1,468

n.a.

510

Impairment losses

(258)

(656)

398

60.7

(368)

Profit (loss) from financial activities

(139)

(25)

(114)

n.a.

(4)

Income taxes

1,064

730

334

45.8

461

Non-controlling interests

1,084

234

850

n.a.

421

Special factors

(1,686)

(1,557)

(129)

(8.3)

(1,081)

Net profit (loss) (adjusted for special factors)

5,862

5,715

147

2.6

4,948

Earnings per share, adjusted earnings per share

Earnings per share is calculated as net profit divided by the adjusted weighted average number of ordinary shares outstanding, which totaled 4,813 million as of December 31, 2021. This resulted in earnings per share of EUR 0.87, compared with EUR 0.88 in the prior year. Adjusted earnings per share, adjusted for special factors affecting net profit, amounted to EUR 1.22 compared with EUR 1.20 in the prior year.

Special factors

The following table presents a reconciliation of EBITDA AL, EBIT, and net profit to the respective figures adjusted for special factors:

millions of €

 

 

 

 

 

 

 

EBITDA AL
2021

EBIT
2021

EBITDA AL
2020

EBIT
2020

EBITDA AL
2019

EBIT
2019

EBITDA AL/EBIT

33,893

13,057

33,178

12,804

23,143

9,457

Germany

(588)

(588)

(752)

(805)

(458)

(458)

Staff-related measures

(471)

(471)

(676)

(676)

(423)

(423)

Non-staff-related restructuring

(12)

(12)

(18)

(18)

(38)

(38)

Effects of deconsolidations, disposals and acquisitions

(3)

(3)

(18)

(18)

0

0

Impairment losses

0

0

0

(52)

0

0

Other

(102)

(102)

(40)

(40)

3

3

United States

(2,637)

(2,692)

(370)

(370)

(544)

(544)

Staff-related measures

(16)

(16)

(32)

(32)

(17)

(17)

Non-staff-related restructuring

0

0

0

0

0

0

Effects of deconsolidations, disposals and acquisitions

(2,621)

(2,618)

(1,522)

(1,522)

(527)

(527)

Impairment losses

0

(58)

0

0

0

0

Reversals of impairment losses

0

0

1,604

1,604

0

0

Other

0

0

(420)

(420)

0

0

Europe

11

11

(188)

(374)

(141)

(461)

Staff-related measures

83

83

(181)

(181)

(111)

(111)

Non-staff-related restructuring

(1)

(1)

0

0

0

0

Effects of deconsolidations, disposals and acquisitions

(39)

(39)

(6)

(6)

(23)

(23)

Impairment losses

0

0

0

(186)

0

(320)

Reversals of impairment losses

0

0

50

50

0

0

Other

(32)

(32)

(51)

(51)

(8)

(8)

Systems Solutions

(213)

(393)

(209)

(582)

(304)

(332)

Staff-related measures

(148)

(148)

(167)

(167)

(149)

(149)

Non-staff-related restructuring

(3)

(3)

(3)

(3)

(4)

(4)

Effects of deconsolidations, disposals and acquisitions

(39)

(39)

0

0

(11)

(11)

Impairment losses

0

(180)

0

(373)

0

(27)

Other

(24)

(24)

(39)

(39)

(141)

(141)

Group Development

173

173

(43)

(43)

97

97

Staff-related measures

(8)

(8)

(11)

(11)

(19)

(19)

Non-staff-related restructuring

0

0

0

0

(1)

(1)

Effects of deconsolidations, disposals and acquisitions

184

184

(30)

(30)

111

111

Impairment losses

0

0

0

0

0

0

Other

(3)

(3)

(2)

(2)

4

4

Group Headquarters & Group Services

(182)

(203)

(277)

(322)

(237)

(237)

Staff-related measures

(157)

(157)

(201)

(201)

(195)

(195)

Non-staff-related restructuring

(7)

(7)

(11)

(11)

(38)

(38)

Effects of deconsolidations, disposals and acquisitions

(23)

(23)

(78)

(78)

(13)

(13)

Impairment losses

0

(21)

0

(44)

0

0

Other

5

5

14

14

9

9

Group

(3,437)

(3,692)

(1,839)

(2,496)

(1,589)

(1,959)

Staff-related measures

(717)

(717)

(1,268)

(1,268)

(913)

(913)

Non-staff-related restructuring

(22)

(22)

(32)

(32)

(81)

(81)

Effects of deconsolidations, disposals and acquisitions

(2,542)

(2,538)

(1,655)

(1,655)

(462)

(462)

Impairment losses

0

(258)

0

(656)

0

(370)

Reversals of impairment losses

0

0

1,655

1,655

0

0

Other

(156)

(156)

(539)

(539)

(132)

(132)

EBITDA AL/EBIT (adjusted for special factors)

37,330

16,749

35,017

15,300

24,731

11,416

Profit (loss) from financial activities (adjusted for special factors)

 

(4,998)

 

(4,103)

 

(2,192)

Profit (loss) before income taxes (adjusted for special factors)

 

11,752

 

11,197

 

9,223

Income taxes (adjusted for special factors)

 

(2,879)

 

(2,659)

 

(2,454)

Profit (loss) (adjusted for special factors)

 

8,873

 

8,538

 

6,770

Profit (loss) (adjusted for special factors) attributable to

 

 

 

 

 

 

Owners of the parent (net profit (loss)) (adjusted for special factors)

 

5,862

 

5,715

 

4,948

Non-controlling interests (adjusted for special factors)

 

3,011

 

2,823

 

1,822

AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
MVNO – Mobile Virtual Network Operator
Company that offers mobile minutes at relatively low prices without subsidized handsets. A mobile virtual network operator does not have its own wireless network, but uses the infrastructure of another mobile operator to provide its services.
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary
Roaming
Refers to the use of a communication device or just a subscriber identity in a visited network rather than one’s home network. This requires the operators of both networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play, for example, when cell phones and smartphones are used across national boundaries.
Glossary
SIM card – Subscriber Identification Module card
Chip card that is inserted into a cell phone to identify it in the mobile network. Deutsche Telekom counts its customers by the number of SIM cards activated and not churned. Customer totals also include the SIM cards with which machines can communicate automatically with one another (M2M cards). The churn rate is determined and reported based on the local markets of the respective countries.
Glossary