Development of the economic environment and the associated impact
The macroeconomic challenges currently facing society, politics, and business are multi-faceted and often interdependent, such as the rise in energy prices, the general energy supply shortage, the coronavirus pandemic, the ongoing high rate of inflation, rising interest rate levels, the devaluation of the euro, geopolitical tensions, and the war in Ukraine. This gives rise to substantial uncertainty in terms of global economic development. Deutsche Telekom is aware that, in view of the current developments, it is only possible to extrapolate past experience to the future to a limited extent. Deutsche Telekom is constantly reassessing the challenges and takes them into account in its consolidated financial statements and financial reporting, e.g., when determining the impairment of goodwill, the recognition of deferred taxes, and the measurement of provisions and financial instruments.
Deutsche Telekom’s business activities and hence its results of operations and financial position are not significantly impacted yet by the consequences of the war in Ukraine. Deutsche Telekom does not operate any mobile or voice networks in Russia or Ukraine. Neither does a stop on gas deliveries from Russia directly impact on the Group’s network operations. Deutsche Telekom is discontinuing its developer activities in Russia. Possible future effects on the measurement of individual assets and liabilities are being analyzed on an ongoing basis. Indirect effects on Deutsche Telekom arise primarily from increased energy prices in the Europe operating segment. The Group’s main energy costs are secured by long-term hedging transactions, especially in the United States and Germany operating segments. It has also secured the main financing requirements there with long-term fixed interest rates. The medium- and long-term effects on global economic development cannot be assessed with certainty.
The coronavirus pandemic continues to have implications for the global economy in the reporting year. Business activities and thus the results of operations and financial position of Deutsche Telekom were impacted by the coronavirus pandemic in various business areas, affecting revenue and earnings, although not to any significant extent. Although the pandemic has only had a limited negative impact on the telecommunications sector so far, if the pandemic were to re-escalate, it could lead to further supply-side shortages. Possible future effects on the measurement of individual assets and liabilities are being analyzed on an ongoing basis. Based on experience so far, the coronavirus pandemic is expected to continue to have only a limited impact on Deutsche Telekom’s business going forward.