8 Right-of-use assets – lessee relationships

The carrying amount of the right-of-use assets increased by EUR 3.0 billion compared to December 31, 2021 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. This agreement includes a modification of the monthly lease payments for existing cell sites and an extension of the non-cancelable lease term until December 31, 2033 (with additional extension options). 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, and an increase of USD 0.9 billion (EUR 0.8 billion) each in property, plant and equipment and in other financial liabilities for contract components that, due to their financing character, do not fall under the scope of IFRS 16. 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 the GD tower companies 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.

For further information on the aforementioned business transactions, please refer to the section “Changes in the composition of the Group and other transactions” under “Summary of accounting policies.”

For further information on depreciation, amortization and impairment losses, please refer to Notes 6 “Intangible assets” and 27 “Depreciation, amortization and impairment losses.”

For information on corresponding lease liabilities, please refer to Note 13 “Financial liabilities and lease liabilities.”

The right-of-use assets recognized in the statement of financial position relate in particular to leases for cell sites, network infrastructure, and real estate in the United States operating segment.

Leases can include extension and termination options that can have a substantial impact on the period of depreciation of the right-of-use assets if it is deemed to be reasonably certain that extension options will be exercised or termination options will not be exercised.

For further information, please refer to the section “Accounting policies” under “Summary of accounting policies.”

The right-of-use assets for land and equivalent rights, and buildings including buildings on land owned by third parties include right-of-use assets related to data centers with a carrying amount of EUR 117 million (December 31, 2021: EUR 147 million). The corresponding additions amounted to EUR 7 million (2021: EUR 62 million) and the depreciation to EUR 38 million (2021: EUR 34 million). In addition, the right-of-use assets for technical equipment and machinery also include right-of-use assets related to data centers with a carrying amount of EUR 18 million (December 31, 2021: EUR 23 million). The corresponding depreciation amounted to EUR 5 million in the reporting year (2021: EUR 7 million).

No significant gains or losses from sale and leaseback transactions were recorded in the reporting year. In the prior year, the gain from the sale-and-leaseback transaction in connection with the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund totaled EUR 0.1 billion, EUR 12 million of which was recognized directly in profit or loss. The remainder was to be released to profit or loss over the residual useful lives of the right-of-use assets recognized at T‑Mobile Netherlands. In the reporting year, the remainder was recognized directly in profit or loss as part of the deconsolidation as a result of the sale of T‑Mobile Netherlands on March 31, 2022.

For further information, please refer to the section “Accounting policies” under “Summary of accounting policies.”