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28 Finance costs

millions of €








Interest income




Interest expense








Of which: from leases




Of which: from financial instruments relating to measurement categories in accordance with IFRS 9




Debt instruments measured at amortized cost




Debt instruments measured at fair value through other comprehensive income




Debt instruments measured at fair value through profit or loss




Financial liabilities measured at amortized costa





Interest expense calculated according to the effective interest method and adjusted for accrued interest from derivatives recognized in the reporting year that were used as hedging instruments against interest rate-based changes in the fair values of financial liabilities measured at amortized cost in the reporting year for hedge accounting in accordance with IFRS 9 (2021: interest income of EUR 417 million and interest expense of EUR 284 million; 2020: interest income of EUR 377 million and interest expense of EUR 101 million; 2019: interest income of EUR 297 million and interest expense of EUR 54 million).

The increase in finance costs is mainly due to the financial liabilities assumed and the restructuring begun in connection with the acquisition of Sprint, and the related increase in financing. In this context, between April 2020 and the end of 2021, T‑Mobile US bonds with terms originally ending between 2023 and 2026 and bearing interest of between 4.5 and 6.5 % were repaid prematurely and new bonds were issued with terms ending between 2026 and 2060 and bearing interest of between 2.05 and 3.6 %. In connection with the premature termination of forward-payer swaps by T‑Mobile US at the start of April 2020 and the associated losses recorded directly in equity, reclassifications to profit or loss of EUR 0.2 billion were made in 2021 (2020: EUR 0.1 billion).

EUR 211 million (2020: EUR 334 million, 2019: EUR 343 million) was capitalized as part of acquisition costs in the reporting year. The amount was calculated on the basis of an interest rate in the average range between 3.6 % at the start of the year and 3.4 % at the end of the year (2020: between 3.2 and 3.6 %, 2019: between 3.5 and 3.2 %) applied across the Group.

Interest payments (including capitalized interest) of EUR 6.4 billion (2020: EUR 7.6 billion, 2019: EUR 4.3 billion) were made in the reporting year.

Accrued interest payments from derivatives (interest rate swaps) that were designated as hedging instruments in a fair value hedge in accordance with IFRS 9 are netted per swap contract and recognized as interest income or interest expense depending on the net amount. Finance costs are assigned to the measurement categories on the basis of the hedged item. Only financial liabilities were hedged in the reporting period.