Net assets of the Group

Total assets amounted to EUR 298.6 billion as of December 31, 2022, up by EUR 17.0 billion against December 31, 2021. Exchange rate effects in particular, primarily from the translation of U.S. dollars into euros, had an increasing effect. This increase is also due to the sustained high level of investing activities including, among other investments, spectrum acquisitions in the United States operating segment. The agreement signed between T‑Mobile US and Crown Castle on the modification of existing arrangements concerning the lease of cell sites also increased total assets. Total assets were reduced due to the sale of T‑Mobile Netherlands.

Cash and cash equivalents decreased from EUR 7.6 billion year-on-year to EUR 5.8 billion.

For further information, please refer to Note 37 “Notes to the consolidated statement of cash flows” in the notes to the consolidated financial statements.

On the assets side, trade receivables amounted to EUR 16.8 billion, up by EUR 1.5 billion against the 2021 year-end. In the United States operating segment, the increase in receivables was mainly due to exchange rate effects. The increase in receivables there was also attributable to the Equipment Installment Plan owing to customer additions. The carrying amount in the Germany operating segment also increased as a result of the termination of factoring agreements. The carrying amount was reduced by higher allowances of customer receivables, in particular in the United States operating segment. These resulted from higher receivables and potential future macroeconomic effects. Furthermore, wholesale receivables in the United States declined.

Intangible assets increased by EUR 8.0 billion to EUR 140.6 billion. Of this figure, EUR 8.8 billion was attributable to additions, EUR 3.1 billion of which resulted from the acquisition of mobile spectrum and related almost entirely to the licenses acquired at the FCC Auctions 110 and 108 in the United States. Exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 6.8 billion. Positive effects from changes in the composition of the Group contributed EUR 0.1 billion to the increase in the carrying amount, while amortization and impairment losses of EUR 6.9 billion reduced it. This includes impairment losses of EUR 0.2 billion. The reclassification of assets worth EUR 0.6 billion to non-current assets and disposal groups held for sale also reduced the carrying amount. These relate to the agreements on the sale of the Group’s cell tower business in Germany and Austria (GD Towers) and of the wireline business in the United States. Disposals decreased the carrying amount by EUR 0.1 billion.

Property, plant and equipment increased by EUR 4.0 billion compared to December 31, 2021 to EUR 65.7 billion. Additions for the upgrade and build-out of the network and in connection with the broadband/fiber-optic build-out and mobile infrastructure build-out increased the carrying amount by EUR 18.2 billion. The modification of the arrangements between T‑Mobile US and Crown Castle for existing cell sites increased the carrying amount by EUR 0.8 billion. Exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 1.5 billion. Reclassifications of lease assets upon expiry of the contractual lease term to property, plant and equipment, in the United States operating segment in particular, increased the carrying amount by EUR 0.6 billion, while depreciation and impairment losses of EUR 13.7 billion had an offsetting effect. This includes impairment losses of EUR 0.7 billion, mainly relating to the impairment test of the former Sprint’s fiber-optic-based wireline business, which was carried out in the second quarter of 2022, and the corresponding sale agreed in the third quarter of 2022. The reclassification of assets worth EUR 1.5 billion to non-current assets and disposal groups held for sale reduced the carrying amount. These relate to the agreements on the sale of GD Towers and of the wireline business in the United States. Disposals of EUR 1.1 billion also reduced the carrying amount.

Compared with December 31, 2021, right-of-use assets increased by EUR 3.0 billion to EUR 33.7 billion. This increase was driven by additions of EUR 10.5 billion, primarily as a result of the modification to existing leases agreed between T‑Mobile US and Crown Castle in January 2022, mainly concerning the lease of Crown Castle’s cell sites. The modification of the arrangements resulted in an increase of USD 7.3 billion (EUR 6.6 billion) each in the right-of-use assets and in lease liabilities. Exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 2.0 billion. Depreciation, amortization and impairment losses of EUR 7.2 billion reduced the carrying amount. This included a EUR 1.6 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. This also includes impairment losses of EUR 0.3 billion, mainly relating to the impairment test of the former Sprint’s fiber-optic-based wireline assets, which was carried out in the second quarter of 2022, and the corresponding sale agreed in the third quarter of 2022. The reclassification of assets worth EUR 1.5 billion to non-current assets and disposal groups held for sale reduced the carrying amount. These relate to the agreements on the sale of GD Towers and of the wireline business in the United States. Reclassifications of lease assets upon expiry of the contractual lease term to property, plant and equipment, in the United States operating segment in particular, also reduced the carrying amount by EUR 0.6 billion. Disposals of EUR 0.3 billion also reduced the carrying amount.

Current and non-current financial assets increased by EUR 1.0 billion to EUR 9.9 billion. Originated loans and receivables increased by EUR 0.9 billion, mainly in connection with cash collateral deposited for forward-payer swaps. In connection with receivables from grants still to be received from funding projects for the broadband build-out in Germany, the carrying amount of other receivables increased by EUR 0.2 billion. The carrying amount of debt instruments measured at fair value through profit or loss increased by EUR 0.4 billion in connection with the sale of a 50 % stake in GlasfaserPlus and the recognition of a contingent consideration receivable. The carrying amount of derivatives with a hedging relationship decreased by EUR 0.5 billion, due on the one hand to the decrease in positive fair values from interest rate swaps in fair value hedges, which is primarily the result of a significant increase in the interest rate level. On the other hand, the fair values of interest rate and currency derivatives in cash flow hedges increased, primarily as a result of the significant rise in the interest rate level. The carrying amount of derivatives without a hedging relationship remained stable overall. This is due to a EUR 0.2 billion increase in the carrying amount of interest and currency derivatives. In connection with the stock options received from SoftBank to purchase shares in T‑Mobile US, the carrying amount of the stock options recorded a net increase of EUR 0.1 billion against December 31, 2021. This was attributable to an increase of EUR 0.6 billion from positive measurement effects in connection with the development of the T‑Mobile US share price and the amortization in full from the initial measurement of the stock options at fair value. This was offset by the derecognition of the exercised options in April 2022, which had a fair value of EUR 0.5 billion at the time of exercising the stock options. The carrying amount of the derivatives without a hedging relationship decreased by EUR 0.3 billion in connection with negative measurement effects from derivatives embedded in bonds issued by T‑Mobile US.

Non-current assets and disposal groups held for sale decreased by a net EUR 0.2 billion compared with December 31, 2021 to EUR 4.7 billion. The sale of T‑Mobile Netherlands as of March 31, 2022 reduced the carrying amount by EUR 4.7 billion, and the sale of the 50 % stake in GlasfaserPlus on February 28, 2022 by EUR 0.1 billion. By contrast, the reclassification and continued recognition of the assets of GD Towers increased the carrying amount by EUR 4.2 billion, and those of the wireline business in the United States by EUR 0.3 billion. The assets were classified as held for sale as of December 31, 2022 on account of the sales agreements concluded.

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

Miscellaneous assets increased by EUR 1.2 billion to EUR 13.1 billion, EUR 0.6 billion of which was due to the increase in capitalized contract costs. This increase was attributable in particular to a higher level of capitalized costs of obtaining a contract in postpaid customer business in the United States and Germany operating segments. Contract assets increased by EUR 0.4 billion. This resulted in part from the increased marketing of the Equipment Installment Plan in the United States operating segment. Investments accounted for using the equity method also increased by EUR 0.4 billion, essentially as a result of the sale of the 50 % stake in GlasfaserPlus. Following the loss of control pursuant to the IFRSs as a result of the transaction, GlasfaserPlus was deconsolidated as of February 28, 2022. Since this date, the remaining 50 % of the shares in the joint venture have been included in the consolidated financial statements as an investment accounted for using the equity method. As of December 31, 2022, the carrying amount of the investment amounted to EUR 0.5 billion following recognition of an impairment loss of EUR 0.5 billion on the investment in the reporting year. The impairment loss was triggered by the current macroeconomic developments and the associated sharp rise in interest rates. In addition, DIV II was deconsolidated on August 2, 2022 as a result of the admission of new investors and the associated loss of control over the entity. Since then, the stake retained by the Group of 41.25 % has been included in the consolidated financial statements as an associate using the equity method. The carrying amount of the investment amounted to EUR 0.3 billion as of December 31, 2022. It was reduced by the disposal of 37.65 % of the shares in Cellnex Netherlands in the amount of EUR 0.4 billion as a result of the deconsolidation of DIV II. Inventories decreased by EUR 0.2 billion, due to the sale of terminal equipment in consequence of the impending market launch of new handset models, and warehouse closures at former Sprint sites in the United States operating segment. By contrast, inventories increased in the Germany and Europe operating segments, partly as a preventive measure in connection with the prevailing supply chain uncertainty. Exchange rate effects, in particular from the translation of U.S. dollars into euros, also contributed to the increase. Other assets increased by EUR 0.2 billion.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities increased by EUR 1.6 billion compared with the end of 2021 to a total of EUR 113.0 billion. The carrying amount of bonds and other securitized liabilities decreased by EUR 0.1 billion. Exchange rate effects, especially from the translation of U.S. dollars into euros, increased the carrying amount of bonds and other securitized liabilities by EUR 3.9 billion. Senior notes issued by T‑Mobile US in the reporting year with a total volume of USD 3.0 billion (EUR 3.0 billion) and asset-backed securities (ABS notes) with a volume of USD 0.8 billion (EUR 0.8 billion) increased the carrying amount. The net change of EUR 2.3 billion in commercial paper also increased the carrying amount. Repayments by T‑Mobile US of bonds with a total volume of USD 2.8 billion (EUR 2.7 billion) and outside of the United States of EUR bonds with a volume of EUR 2.6 billion and a GBP bond with a volume of GBP 0.7 billion (EUR 0.8 billion) reduced the carrying amount. In addition, the carrying amount decreased by EUR 3.5 billion in connection with measurement effects from derivatives with a hedging relationship, the offsetting entry for which is posted under bonds and other securitized liabilities. Liabilities with the right of creditors to priority repayment in the event of default decreased by EUR 0.3 billion, mainly due to repayments. The carrying amount of other interest-bearing liabilities decreased by EUR 0.3 billion compared with the prior-year level. In connection with cash collateral received for derivative financial instruments – primarily forward-payer swaps – the carrying amount of other interest-bearing liabilities decreased by EUR 1.5 billion. By contrast, the modification of the arrangements between T‑Mobile US and Crown Castle regarding cell sites increased the carrying amount by EUR 0.8 billion. In addition, liabilities recognized by T‑Mobile US for future payments for IP transit services in connection with the agreement on the sale of the wireline business increased the carrying amount by EUR 0.6 billion. The carrying amount of derivative financial liabilities increased by EUR 2.2 billion to EUR 2.9 billion. Negative measurement effects of derivatives with a hedging relationship increased the carrying amount, mainly due to the increase in negative fair values from interest rate swaps in fair value hedges, which is primarily the result of a significant increase in the interest rate level. The carrying amount of derivatives without a hedging relationship decreased due to positive measurement effects from a forward transaction to hedge the price of acquiring shares in T‑Mobile US in the future.

Current and non-current lease liabilities increased by EUR 5.7 billion to EUR 38.8 billion compared with December 31, 2021. This increase primarily relates to the modification of the arrangements between T‑Mobile US and Crown Castle, which resulted in an increase in the carrying amounts of lease liabilities of EUR 6.6 billion. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised lease liabilities by EUR 2.1 billion. The reclassification of lease liabilities to liabilities directly associated with non-current assets and disposal groups held for sale reduced the carrying amount by EUR 1.8 billion. These relate to the agreements on the sale of GD Towers and of the wireline business in the United States. The carrying amount was further reduced, in part in connection with the decommissioning of former Sprint cell sites and the closure of some former Sprint shops in the United States operating segment. The carrying amount was also reduced by declines in the Group Headquarters & Group Services segment and in the Systems Solutions operating segment.

Trade and other payables increased by EUR 1.6 billion to EUR 12.0 billion, due in particular to the sharp rise in procurement volumes in the United States, Germany, and Europe operating segments. In the United States operating segment, liabilities increased in connection with the acquisition of non-current assets and vis-à-vis terminal equipment vendors. The increase was also driven in part by exchange rates. The reclassification to liabilities directly associated with non-current assets and disposal groups held for sale reduced the carrying amount. These relate to the agreements on the sale of GD Towers and of the wireline business in the United States.

Provisions for pensions and other employee benefits decreased by EUR 2.0 billion compared with December 31, 2021 to EUR 4.2 billion, mainly due to the increase in the discount rate. The development of the fair values of plan assets had an offsetting effect. Overall, the remeasurement of defined benefit plans resulted in an actuarial gain of EUR 1.8 billion.

Current and non-current other provisions decreased by EUR 1.3 billion compared with the end of 2021 to EUR 8.2 billion. Other provisions for personnel costs decreased by EUR 0.7 billion, mainly in connection with a decline in the provision recognized for the Civil Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK). This is due to a significant increase in the interest rate level. The provisions for restoration obligations decreased by EUR 1.1 billion in connection with reclassifications to liabilities directly associated with non-current assets and disposal groups held for sale, in particular in connection with the agreed sale of GD Towers. By contrast, the provisions for litigation risks increased by a net amount of EUR 0.2 billion, mainly in connection with the proceedings pending in consequence of the cyberattack on T‑Mobile US in August 2021. The provisions recognized for sales and procurement support also increased by EUR 0.2 billion. Exchange rate effects, in particular from the translation of U.S. dollars into euros, also ultimately contributed to this increase.

Liabilities directly associated with non-current assets and disposal groups held for sale increased by EUR 2.0 billion against December 31, 2021 to EUR 3.3 billion. The sale of T‑Mobile Netherlands as of March 31, 2022 reduced the carrying amount by EUR 1.4 billion. By contrast, the reclassification and continued recognition of the liabilities of GD Towers increased the carrying amount by EUR 3.0 billion, and those of the wireline business in the United States by EUR 0.4 billion.

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

Miscellaneous liabilities increased by EUR 0.6 billion compared to December 31, 2021 to EUR 8.9 billion, due in particular to the increase in contract liabilities by EUR 0.3 billion and the increase in income tax liabilities, also by EUR 0.3 billion.

Shareholders’ equity increased from EUR 81.5 billion as of December 31, 2021 to EUR 87.3 billion. Profit of EUR 9.5 billion, other comprehensive income of EUR 5.6 billion, and capital increases from share-based payments of EUR 0.7 billion contributed to this increase. Shareholders’ equity was reduced in connection with dividend payments for the 2021 financial year to Deutsche Telekom AG shareholders in the amount of EUR 3.2 billion and to other shareholders of subsidiaries in the amount of EUR 0.2 billion. Transactions with owners also reduced the carrying amount by EUR 6.0 billion, mainly due to the acquisition of additional T‑Mobile US shares to increase the stake and due to the share buy-back program underway at T‑Mobile US. Changes in the composition of the Group resulting from the sale of T‑Mobile Netherlands reduced the carrying amount of shareholders’ equity by EUR 0.6 billion.