35 Notes to the consolidated statement of cash flows

Net cash from operating activities

Net cash from operating activities increased by EUR 8.4 billion year-on-year to EUR 32.2 billion. The strong performance both in the United States and outside of the United States had a positive effect here. In addition, the increase is attributable to the business combination of T‑Mobile US and Sprint effective April 1, 2020. Net cash from operating activities had been negatively affected in the prior year by interest payments totaling EUR 1.6 billion for zero-coupon bonds. Net cash from operating activities had also been negatively impacted in the amount of EUR 2.2 billion in the prior year as a result of the premature termination of forward-payer swaps for borrowings raised at T‑Mobile US as well as by a net increase of EUR 0.7 billion in interest payments, mainly as a result of the financial liabilities assumed and the restructuring carried out in connection with the acquisition of Sprint, and the related increase in financing. Income tax payments increased by EUR 0.2 billion compared with the prior year. Factoring agreements of EUR 0.1 billion had a negative impact on net cash from operating activities in the 2021 financial year. In the prior year, factoring agreements had had negative effects of EUR 0.8 billion, mainly as a result of the contractual termination of a revolving factoring agreement in the Germany operating segment.

Deutsche Telekom’s working capital measures are focused on improvements in the area of liabilities as well as in the management of receivables and inventories. However, they are not used for active liquidity management. The positive effect on the change in assets carried as working capital is mainly attributable to lower cash outflows for mobile terminal equipment in the United States operating segment, due in part to the planned withdrawal from the terminal equipment lease model. By contrast, factors including higher receivables under the Equipment Installment Plan in the United States operating segment and in Europe had a negative impact on the change in assets carried as working capital. The development of liabilities carried as working capital in the financial year was neutral. The prior year had been negatively impacted by high cash outflows to terminal equipment manufacturers and to other telecommunications companies in the United States operating segment due to seasonal effects.

For further information on individual assets carried as working capital, please refer to Note 2 “Trade receivables” and Note 4 “Inventories.”

For further information, please refer to Note 14 “Trade and other payables.”

At EUR 26.4 billion, cash capex was EUR 7.7 billion higher than in the prior year. In the United States operating segment, FCC mobile licenses were acquired mainly as part of the concluded C-band auction for a total of EUR 8.3 billion and, in the Europe operating segment, mobile spectrum licenses were acquired for a total of EUR 0.1 billion in the 2021 financial year. The figure for the prior year included EUR 1.7 billion for the acquisition of mobile spectrum licenses, EUR 1.1 billion of which related to the United States operating segment, EUR 0.4 to the Europe operating segment, and EUR 0.2 billion to the Group Development operating segment. Excluding investments in mobile spectrum licenses, cash capex was up EUR 1.0 billion year-on-year. This change was primarily attributable to an increase in the United States operating segment on account of the inclusion of Sprint and as a result of the further build-out of the 5G network.

The contractually promised government grants from publicly funded projects for the broadband build-out in Germany were recognized in full as receivables as of the start of the second half of 2019. They reduce the cost of the relevant property, plant and equipment. The grants received and payments made for the build-out continue to be recognized in net cash used in/from investing activities, however, they are not part of cash capex, because the payments made do not result in additions to property, plant and equipment. Since the payments are not made at the same point in time as the proceeds are received, the net amounts can be positive or negative in the individual periods.

Interest payments (including capitalized interest) of EUR 6.4 billion (2020: EUR 7.6 billion, 2019: EUR 4.3 billion) were made in the 2021 financial year. Capitalized interest of EUR 0.2 billion (2020: EUR 0.3 billion, 2019: EUR 0.3 billion) was reported within cash capex in net cash used in/from investing activities, together with the associated assets.

Non-cash transactions in the consolidated statement of cash flows

In the deal signed between Deutsche Telekom and SoftBank on September 6, 2021, Deutsche Telekom acquired a total of around 45.4 million T‑Mobile US shares from SoftBank on September 28, 2021. SoftBank received in return 225 million new shares in Deutsche Telekom AG by way of a capital increase against a non-cash contribution.

For further information on the increase of the stake in T‑Mobile US by way of the agreement concluded with SoftBank, please refer to the section “Other transactions that had no effect on the composition of the Group.”

In the 2021 financial year, Deutsche Telekom did not make use of financing options under which the payments for trade payables from operating and investing activities mainly become due at a later point in time by involving banks in the process (2020: EUR 0.2 billion). These are shown under financial liabilities in the statement of financial position. As soon as the payments have been made, they are disclosed under net cash used in/from financing activities.

In the 2021 financial year, Deutsche Telekom leased assets totaling EUR 5.7 billion, mainly network equipment, cell sites, and land and buildings. As a result, these assets are recognized in the statement of financial position under right-of-use assets and the related liabilities under lease liabilities. Future repayments of the liabilities will be recognized in net cash used in/from financing activities. In the prior year, this figure stood at EUR 14.3 billion, EUR 9.4 billion of which related to a modified agreement with American Tower for the lease of around 20,729 cell towers, resulting in an increase in the same amount in the carrying amount of the right-of-use assets and the lease liabilities. Excluding this effect, there was a year-on-year increase of EUR 0.8 billion, which was mainly attributable to the further build-out of the 5G network and the inclusion of Sprint in the United States operating segment, and to the sale-and-leaseback agreements in connection with the combination of the cell tower business in the Netherlands.

Consideration for the acquisition of broadcasting rights is paid by Deutsche Telekom in accordance with the terms of the contract on the date of its conclusion or spread over the term of the contract. Financial liabilities of EUR 0.5 billion were recognized in the 2021 financial year for future consideration for acquired broadcasting rights (2020: EUR 0.4 billion). The payment of the consideration will be recognized in net cash used in/from financing activities.

In the United States operating segment, EUR 1.0 billion was recognized for mobile terminal equipment under property, plant and equipment in the 2021 financial year (2020: EUR 2.5 billion). This relates to the terminal equipment lease model at T‑Mobile US, under which customers do not purchase the devices but lease them. The cash outflows are presented under net cash from operating activities. The decline was primarily due to the withdrawal from the terminal equipment lease model.

The combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund in the Group Development operating segment resulted in the following non-cash transactions: First, the stake in T‑Mobile Infra was contributed into Cellnex Netherlands in exchange for the granting of a stake of 37.65 % in the “new” company, Cellnex Netherlands. Second, in order to ensure T‑Mobile Netherlands’ continued access to the contributed passive mobile infrastructure, a long-term agreement, primarily on the lease of corresponding infrastructure components, was concluded in the form of a sale-and-leaseback transaction.

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 “Changes in the composition of the Group and other transactions” under “Summary of accounting policies.”

The carrying amounts of the financial liabilities associated with net cash used in/from financing activities, divided into carrying amount changes having and not having an effect on cash flows, developed as follows in the reporting year:

Total carrying amount changes having an effect on cash flows of EUR ‑7.4 billion reported in net cash used in/from financing activities deviate from net cash used in/from financing activities due in particular to the dividend entitlements of Deutsche Telekom AG’s shareholders having an effect on cash flows, the interest paid in connection with financial liabilities reported in cash generated from operations, and the changes in non-controlling interests having an effect on cash flows. The other carrying amount changes in lease liabilities not having an effect on cash flows are mainly attributable to additions in connection with the recognition of right-of-use assets. The other carrying amount changes in financial liabilities not having an effect on cash flows include additions of EUR 0.5 billion for the acquisition of broadcasting rights.

In the 2021 financial year, Deutsche Telekom made total interest payments of EUR 6.4 billion to service interest obligations. This figure includes interest payments for derivative and non-derivative financial liabilities, interest payments for lease liabilities, and interest payments recognized under intangible assets and property, plant and equipment. The above reconciliation only shows the carrying amounts of the financial liabilities, lease liabilities, and derivative financial assets allocated to net cash used in/from financing activities.

For further information, please refer to the previous section “Non-cash transactions in the consolidated statement of cash flows.”

The carrying amounts of the financial liabilities disclosed in net cash used in/from financing activities, divided into carrying amount changes having and not having an effect on cash flows, developed as follows in 2020: