Major regulatory decisions

Our business activities are largely subject to national, European, and U.S. regulation, which is associated with extensive powers to intervene in our product design and pricing, particularly in Europe. We were still subject to extensive regulation in our fixed-network and mobile businesses in 2023.

Regulation

Ongoing court case on the approval under merger control law for the joint venture Glasfaser NordWest. On September 12, 2023, the Federal Court of Justice admitted the appeal filed by the Bundeskartellamt and Telekom Deutschland against the Düsseldorf Higher Regional Court’s decision dated September 22, 2021. The Düsseldorf Higher Regional Court had decided to reverse the Bundeskartellamt’s approval under merger control law of the joint venture Glasfaser NordWest. Telekom Deutschland and EWE had established the joint venture Glasfaser NordWest in 2020 to bring fast internet to up to 1.5 million households and business locations. The September 12, 2023 decision now paves the way for the Federal Court of Justice to open a legal review into the reversal of the approval. The joint venture can continue building out FTTH until the Bundeskartellamt decides otherwise.

Bundesnetzagentur’s regulatory procedures based on the decision on access regulation including FTTB/H network access. On the basis of the Bundesnetzagentur’s decision of July 21, 2022 on the regulation of access to Deutsche Telekom’s copper and fiber-optic network, the following procedures on the reference offer for active access to FTTB/H networks, civil engineering infrastructure, as well as on charges for access to civil engineering infrastructure, were opened in 2023: In July 2023, Telekom Deutschland proposed a draft reference offer for civil engineering infrastructure and, in October 2023, submitted a rate application for the corresponding services. The procedure on the reference offer for active FTTB/H services is also under way. The commitment agreements for VDSL and FTTB/H agreed until the end of 2031 had already passed the extended review conducted by the Bundesnetzagentur in 2022.

Awarding of spectrum

At the multi-band auction in Croatia, which began with a bidding phase on January 17, 2023, Hrvatski Telekom secured an above-average package of spectrum, comprising the largest share of spectrum (2x 105 MHz), for around EUR 135 million. In Poland, the bidding phase for the 3,400 to 3,800 MHz band award ended on October 18, 2023. T‑Mobile Polska purchased 100 MHz of this spectrum for around EUR 111 million, securing one of the two spectrum blocks with the fewest technical constraints.

The Austrian regulatory authority RTR has begun the procedure to award 26 GHz millimeter wave spectrum. It also plans to award residual frequencies in the 3,400 to 3,800 MHz band from the 2019 auction in the same procedure. A public consultation on the tender conditions is under way. RTR expects the bidding process to start in the first quarter of 2024. In Poland, the award procedure for the 700 MHz band and, if applicable, for spectrum in the 26 GHz band could also potentially begin in 2024. In the Czech Republic, the procedure to extend the 900/1,800 MHz GSM license, which expires in 2024, is expected to begin at the start of 2024. In Slovakia meanwhile, the procedure (auction) to re-award spectrum in the 900 MHz and 2,100 MHz bands announced for the end of 2023 is at stake following calls by several parties to re-examine the auction conditions.

In Germany, the regulatory authority Bundesnetzagentur launched a public consultation on September 13, 2023, following which it intends to extend the usage rights – which expire at the end of 2025 – for the 800 MHz, 1,800 MHz (partial), and 2,600 MHz mobile frequencies and therefore not award them by way of an auction for the time being. The extension periods under discussion are for five or eight years.

In the United States, the U.S. regulator for the telecommunications sector, the Federal Communications Commission (FCC), did not hold any spectrum auctions in 2023. The FCC’s spectrum auction authority expired on March 9, 2023 and has yet to be reauthorized by the U.S. Congress. The U.S. Congress passed a narrow bill – the “5G Sale Act” – that gives the FCC the temporary authority to assign licenses purchased in the 2022 2.5 GHz spectrum auction. The law took effect on December 19, 2023 and provides the FCC with 90 days to process the license assignments. At Auction 108 in September 2022, T‑Mobile U.S. acquired spectrum for around USD 0.3 billion (EUR 0.3 billion). The allocation of the licenses was delayed on account of the expiry of the FCC’s authority, but is now expected in the first quarter of 2024.

The following table provides an overview of the main ongoing and planned spectrum awards and auctions as well as license extensions. It also indicates spectrum to be awarded in the near future in various countries.

Agreements on spectrum licenses

On August 8, 2022, T‑Mobile US entered into agreements with Channel 51 License and LB License for the acquisition of spectrum in the 600 MHz band in exchange for total cash consideration of USD 3.5 billion (EUR 3.2 billion). On March 30, 2023, the contractual parties further agreed that the transaction be divided into two separate tranches. The transfer of the licenses in accordance with the agreements is subject to regulatory approvals and certain other customary closing conditions. The Federal Communications Commission (FCC) approved the first tranche of the license transfer on December 29, 2023. T‑Mobile US expects the first tranche to be concluded in the second quarter of 2024, and the second tranche in late 2024/early 2025.

On July 1, 2020, T‑Mobile US and DISH Network Corporation (DISH) reached an agreement on the sale of spectrum licenses, under which DISH agreed to purchase certain 800 MHz spectrum licenses from T‑Mobile US for USD 3.6 billion (EUR 3.3 billion). The transaction is subject to approval by the FCC. On October 15, 2023, T‑Mobile US and DISH modified the agreement to include, among other changes, a non-refundable extension fee of USD 0.1 billion (EUR 0.1 billion) which DISH paid to T‑Mobile US on October 25, 2023, as well as the requirement that the purchase of the spectrum licenses must be finalized by April 1, 2024. The extension fee is fully creditable against the purchase price provided DISH exercises its option to purchase the spectrum by this date. If DISH does not purchase the spectrum licenses, T‑Mobile US is obligated to put the licenses up for sale at auction. Should bidding not reach the defined minimum purchase price of USD 3.6 billion, T‑Mobile US would be released from its obligation to sell the licenses.

On September 12, 2023, T‑Mobile US agreed with U.S. cable network operator Comcast to acquire spectrum in the 600 MHz band in exchange for total cash consideration of between USD 1.2 billion and USD 3.3 billion (EUR 1.1 billion and EUR 3.0 billion). The final purchase price will be determined at the time the parties make the required transfer filings with the FCC once it is decided which spectrum Comcast intends to sell. The transaction is expected to close in the first half of 2028, pending approval from the FCC. At the same time, T‑Mobile US and Comcast have agreed exclusive leasing arrangements. The leasing rights for T‑Mobile US will apply for at least two years, even if Comcast elects to remove some of its licenses from the purchase agreement.