37 Notes to the consolidated statement of cash flows

Net cash from operating activities

Net cash from operating activities increased by EUR 3.6 billion year-on-year to EUR 35.8 billion. The strong business performance both in the United States and outside of the United States provided the basis for the positive trend. Exchange rate effects also had an increasing effect on net cash from operating activities. By contrast, higher cash outflows in connection with the integration of Sprint in the United States and an increase of EUR 0.4 billion in net interest payments had a decreasing effect. Factoring agreements of EUR 0.1 billion had a positive impact on net cash from operating activities in the 2022 financial year. In the prior year, factoring agreements had had negative effects of EUR 0.1 billion.

Deutsche Telekom defines operating working capital as the total of trade receivables, inventories, and trade and other payables. The positive effect on the change in assets carried as operating working capital is mainly attributable to the smaller increase of receivables under the Equipment Installment Plan compared with the prior year, and the reduction of stock levels of terminal equipment in the United States operating segment. In the 2022 financial year, the reduction in the stock levels of mobile terminal equipment was primarily driven by the extensive market launch of new models and the warehouse closures at former Sprint sites. The positive effect on the change in liabilities carried as operating working capital mainly resulted from lower cash outflows to terminal equipment manufacturers and to other suppliers in the United States operating segment.

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 24.1 billion, cash outflows for investments in intangible assets and property, plant and equipment were EUR 2.3 billion lower than in the prior year. In the United States operating segment, FCC mobile licenses were acquired for a total of EUR 3.0 billion and in the Europe operating segment, mobile spectrum licenses were acquired for a total of EUR 0.1 billion in the reporting period. Another EUR 0.1 billion was paid in this connection in the United States operating segment in the 2021 financial year as an advance payment and included in prior-year cash outflows for investments in intangible assets and property, plant and equipment. In the prior year, this item had included cash outflows for the acquisition of mobile spectrum licenses of EUR 8.3 billion in the United States operating segment and of EUR 0.1 billion in the Europe operating segment. Excluding investments in mobile spectrum licenses, cash outflows for investments in intangible assets and property, plant and equipment were up EUR 3.0 billion year-on-year. This change was primarily attributable to an increase in the United States operating segment as a result of the accelerated build-out of the 5G network, the integration of Sprint, and exchange rate effects. In the Germany operating segment, cash outflows for investments in intangible assets and property, plant and equipment increased by EUR 0.3 billion as a result of the continued fiber-optic and 5G build-out. A decline in the Group Development operating segment had an offsetting effect of EUR 0.3 billion, mainly due to the sale of T‑Mobile Netherlands and lower build-out volumes by GD Towers.

The contractually promised government grants from publicly funded projects for the broadband build-out in Germany were recognized in full as receivables. 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 6.9 billion (2021: EUR 6.4 billion; 2020: EUR 7.6 billion) were made in the 2022 financial year. Capitalized interest of EUR 0.1 billion (2021: EUR 0.2 billion, 2020: 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 2022 financial year, Deutsche Telekom leased assets totaling EUR 11.1 billion, mainly network equipment, cell sites, and land and buildings. These assets will subsequently be recognized in the statement of financial position under right-of-use assets as well as non-current assets and disposal groups held for sale, and the related liabilities under lease liabilities and liabilities directly associated with non-current assets and disposal groups held for sale. Future repayments of the liabilities will be recognized in net cash used in/from financing activities. In the 2022 financial year, EUR 6.6 billion related to the modification of the arrangements with Crown Castle, 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, asset leases were down EUR 1.2 billion against the prior year. This decline was mainly due to the reduction in the number of cell sites in the United States operating segment due to the decommissioning of Sprint’s wireless network. The modification of the arrangements also increased property, plant and equipment and other financial liabilities by EUR 0.8 billion each for contractual components that, due to their financing character, do not fall under the scope of IFRS 16.

For further information on the modification of the arrangements between T‑Mobile US and Crown Castle, please refer to Note 8 “Right-of-use assets – lessee relationships.”

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 2022 financial year for future consideration for acquired broadcasting rights (2021: EUR 0.5 billion). The payment of the consideration will be recognized in net cash used in/from financing activities.

In the United States operating segment, EUR 0.3 billion was recognized for mobile terminal equipment under property, plant and equipment in the 2022 financial year (2021: EUR 1.0 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 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 ‑6.5 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 2022 financial year, Deutsche Telekom made total interest payments of EUR 6.9 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 2021: