Legal structure of the Group
Deutsche Telekom AG, Bonn, is the parent of the Deutsche Telekom Group. Its shares are traded on the Frankfurt/Main Stock Exchange as well as on other stock exchanges.
For information on the composition of capital stock in accordance with § 289a (1) HGB and § 315a HGB of direct and indirect equity investments, please refer to Note 19 “Shareholders’ equity” in the notes to the consolidated financial statements and to the notes to the annual financial statements of Deutsche Telekom AG as of December 31, 2023.
Shareholders’ equity
Each share entitles the holder to one vote. These voting rights are restricted, however, in relation to treasury shares (at December 31, 2023: around 8 million in total).
Treasury shares. The amount of issued capital assigned to treasury shares was approximately EUR 20 million at December 31, 2023. This equates to 0.2 % of share capital. 7,843,113 treasury shares were held at December 31, 2023.
For information on the treasury shares in accordance with § 160 (1) No. 2 AktG, please refer to Note 8 in the annual financial statements of Deutsche Telekom AG as of December 31, 2023 and to Note 19 “Shareholders’ equity” in the notes to the consolidated financial statements.
The shareholders’ meeting resolved on April 1, 2021 to authorize the Board of Management to purchase shares in the Company by March 31, 2026, with the amount of share capital accounted for by these shares totaling up to EUR 1,218,933,400.57, provided the shares to be purchased on the basis of this authorization in conjunction with the other shares of the Company that the Company has already purchased and still possesses or are to be assigned to it under § 71d and § 71e AktG do not at any time account for more than 10 % of the Company’s share capital. Moreover, the requirements under § 71 (2) sentences 2 and 3 AktG must be complied with. Shares shall not be purchased for the purpose of trading in treasury shares. This authorization may be exercised in full or in part. The purchase can be carried out in partial tranches spread over various purchase dates within the authorization period until the maximum purchase volume is reached. Dependent Group companies of Deutsche Telekom AG within the meaning of § 17 AktG or third parties acting for the account of Deutsche Telekom AG or for the account of dependent Group companies of Deutsche Telekom AG within the meaning of § 17 AktG are also entitled to purchase the shares. The shares are purchased through the stock exchange in adherence to the principle of equal treatment (§ 53a AktG). Shares can instead also be purchased by means of a public purchase or share exchange offer addressed to all shareholders, which, subject to a subsequently approved exclusion of the right to offer shares, must also comply with the principle of equal treatment.
The shares may be used for one or several of the purposes permitted by the authorization granted by the shareholders’ meeting on April 1, 2021 under item 7 on the agenda. The shares may also be used for purposes involving an exclusion of subscription rights. In addition, they may be sold on the stock market or by way of an offer to all shareholders, or canceled. The shares may be used to fulfill the rights of Board of Management members to receive shares in Deutsche Telekom AG, which the Supervisory Board has granted to these members as part of the arrangements governing the remuneration of the Board of Management, on the basis of a decision by the Supervisory Board to this effect. Furthermore, under the authorization granted on April 1, 2021, the Board of Management is authorized to offer and/or grant shares to employees of Deutsche Telekom and of lower-tier affiliated companies as well as to Managing Board members of lower-tier affiliated companies; this also includes the authorization to offer or grant shares free of charge or on other special conditions.
Under the resolution of the shareholders’ meeting on April 1, 2021, the Board of Management is also authorized to acquire the shares through the use of equity derivatives.
No treasury shares were acquired in the reporting period and in the prior year. Currently, the treasury shares for participants of the Share Matching Plan and of the Shares2You share program for employees are issued from the pool of shares previously held in a trust deposit.
As part of the acquisition of VoiceStream Wireless Corp., Bellevue, and Powertel, Inc., Bellevue, in 2001, Deutsche Telekom AG issued new shares from authorized capital to a trustee, for the benefit of holders of warrants, options, and conversion rights, among others. These options or conversion rights expired in full in the 2013 financial year. As a result, the trustee no longer had any obligation to fulfill any claims in accordance with the purpose of the deposit. The trust relationship was terminated at the start of 2016 and the deposited shares were transferred free of charge to a custody account of Deutsche Telekom AG. The previously deposited shares are accounted for in the same way as treasury shares in accordance with § 272 (1a) HGB. On the basis of authorization by the shareholders’ meeting on April 1, 2021, the treasury shares acquired free of charge may be used for the same purposes as the treasury shares acquired for a consideration. In the reporting year, 5,927 thousand previously deposited shares were reallocated for issue to eligible participants of the Share Matching Plan (prior year: 708 thousand shares).
For matching shares from the Share Matching Plan and for free shares from the employee share program Shares2You, treasury shares are transferred free of charge to the custody accounts of employees of Deutsche Telekom AG. In cases where treasury shares are transferred to the custody accounts of employees of other Group companies, the costs have been transferred at fair value to the respective Group company since the 2016 financial year. For treasury shares bought by way of the personal investment as part of the Shares2You program and transferred to the custody accounts of employees, a conversion rate of EUR 20.96 per share or EUR 20.24 per share was used. The conversion is determined using the lowest price at which a trade actually took place on an official German exchange on the date of conversion.
In all months of the reporting year, except for December, treasury shares (5,914 thousand in total) were reallocated and transferred to the custody accounts of eligible participants (prior year: 760 thousand treasury shares). As of December 31, 2023, disposals of treasury shares resulting from the transfers in the reporting period accounted for 0.12 %, or EUR 15 million, of share capital. Gains on disposal arising from transfers of treasury shares amounted to EUR 118 million. The transfers of treasury shares increased the capital reserve by EUR 103 million. In the reporting year, 1,808 thousand treasury shares with a fair value of EUR 37 million were billed to other Group companies.
Authorized capital. The shareholders’ meeting on April 7, 2022 authorized the Board of Management to increase the share capital with the approval of the Supervisory Board by up to EUR 3,829,600,199.68 by issuing up to 1,495,937,578 no par value registered shares against cash and/or contribution in kind in the period ending April 6, 2027. The authorization may be exercised in full or on one or more occasions in partial amounts. The Board of Management is authorized, subject to the approval of the Supervisory Board, to exclude residual amounts from shareholders’ subscription rights. Furthermore, the Board of Management is authorized, subject to the approval of the Supervisory Board, to disapply shareholders’ subscription rights in the event of capital increases against contribution in kind when issuing new shares for business combinations or acquisitions of companies, parts thereof, or interests in companies, including increasing existing investment holdings, or other assets eligible for contribution for such acquisitions, including receivables from the Company. However, the value of the new shares for which shareholders’ subscription rights have been disapplied on the basis of this authorization – together with the value of the shares or conversion and/or option rights or obligations under bonds issued or sold since April 7, 2022 subject to the disapplication of subscription rights – must not exceed 10 % of the total share capital; the latter is defined as the amount existing as of April 7, 2022, upon entry of the authorization, or upon the issue of the new shares, whichever amount is lowest. If the issue or sale is carried out in analogous or mutatis mutandis application of § 186 (3) sentence 4 AktG, this shall also constitute the disapplication of subscription rights. The Board of Management is also authorized, subject to the approval of the Supervisory Board, to determine the rights accruing to the shares in the future and the conditions for issuing shares (2022 Authorized Capital).
As of December 31, 2023, the share capital was contingently increased by up to EUR 1,200,000,000, comprising up to 468,750,000 no par value shares (2018 Contingent Capital). A capital increase from the 2018 Contingent Capital, however, is no longer possible, because the authorization granted to the Board of Management by the shareholders’ meeting on May 17, 2018 to issue bonds with warrants or convertible bonds with option or conversion rights to shares of the Company expired on May 16, 2023 without these rights being exercised. The contingent capital increase could have been implemented subject to the aforementioned deadline being met to the extent that
- the holders or creditors of bonds with warrants, convertible bonds, profit participation rights, and/or participating bonds (or combinations of these instruments) with option or conversion rights, which are issued or guaranteed by Deutsche Telekom AG or its direct or indirect majority holdings by May 16, 2023, on the basis of the authorization resolution granted by the shareholders’ meeting on May 17, 2018, had made use of their option and/or conversion rights or
- those obligated as a result of bonds with warrants, convertible bonds, profit participation rights, and/or participating bonds (or combinations of these instruments), which are issued or guaranteed by Deutsche Telekom AG or its direct or indirect majority holdings by May 16, 2023, on the basis of the authorization resolution granted by the shareholders’ meeting on May 17, 2018, had fulfilled their option or conversion obligations (including in the event that, in exercising a repayment option when the final due date of the bond is reached, Deutsche Telekom AG grants shares in Deutsche Telekom AG completely or partially in lieu of cash payment of the amount due)
and other forms of fulfillment had not been used. The new shares would have participated in profits starting at the beginning of the financial year in which they would have been issued as the result of the exercise of any option or conversion rights or the fulfillment of any option or conversion obligations. The Supervisory Board is authorized to amend § 5 (3) of the Articles of Incorporation of Deutsche Telekom AG in accordance with the particular usage of the contingent capital and after the expiry of all the option or conversion periods.
Main agreements including a change of control clause
The main agreements entered into by Deutsche Telekom AG that include a clause in the event of a change of control principally relate to bilateral credit lines and several loan agreements. In the event of a change of control, the individual lenders have the right to terminate the credit line and, if necessary, serve notice or demand repayment of the loans. A change of control is assumed when a third party, which can also be a group acting jointly, acquires control over Deutsche Telekom AG.
On November 2, 2016, Deutsche Telekom AG signed a change agreement to the shareholder agreement with the Greek government from May 14, 2008 on Hellenic Telecommunications Organization S.A (OTE), Athens, Greece; the change agreement concerned the accession of the Hellenic Republic Asset Development Fund (HRADF) as a party to the contract. Under this agreement, the Greek government is, under certain circumstances, entitled to acquire all shares in OTE from Deutsche Telekom AG as soon as one (or more) person(s), with the exception of the Federal Republic of Germany, either directly or indirectly acquire(s) 35 % of the voting rights of Deutsche Telekom AG.
In the master agreement establishing the procurement joint venture BuyIn in Belgium, Deutsche Telekom AG and Orange S.A. (formerly France Télécom S.A.)/Atlas Services Belgium S.A. (a subsidiary of Orange S.A.) agreed that if Deutsche Telekom or Orange comes under the controlling influence of a third party or if a third party that is not wholly owned by the Orange group of companies acquires shares in Atlas Services Belgium, the respective other party (Orange and Atlas Services Belgium only jointly) may terminate the master agreement with immediate effect.
Changes in the composition of the Group
56 German and 238 foreign subsidiaries are fully consolidated in Deutsche Telekom’s consolidated financial statements (December 31, 2022: 63 and 290). 15 associates (December 31, 2022: 14) and 21 joint ventures (December 31, 2022: 15) are also included using the equity method.
The principal subsidiaries of Deutsche Telekom AG are listed in the section “Summary of accounting policies – Principal subsidiaries” in the notes to the consolidated financial statements.
Business combinations
Deutsche Telekom did not consummate any material business combinations in the reporting year.
For further information, please refer to the section “Summary of accounting policies – Changes in the composition of the Group and other transactions” in the notes to the consolidated financial statements.