13 Financial liabilities and lease liabilities

The following table shows the composition and maturity structure of financial liabilities as of December 31, 2023:

The carrying amount of current and non-current financial liabilities decreased by EUR 8.5 billion compared with year-end 2022 to EUR 104.5 billion, primarily due to the factors described below. Exchange rate effects, in particular from the translation of U.S. dollars into euros, reduced the carrying amount by EUR 2.7 billion.

The carrying amount of bonds and other securitized liabilities decreased by EUR 6.0 billion to EUR 87.8 billion. Early repayments of bonds with terms ending between 2023 and 2028, made in the reporting year, including EUR bonds of EUR 2.4 billion, GBP bonds of GBP 0.2 billion (EUR 0.3 billion), and USD bonds of USD 1.4 billion (EUR 1.3 billion), reduced the carrying amount. The carrying amount was further reduced by scheduled repayments of bonds, including EUR bonds of EUR 1.3 billion, USD bonds of USD 4.3 billion (EUR 4.0 billion), GBP bonds of GBP 0.2 billion (EUR 0.2 billion), and NOK bonds of NOK 0.7 billion (EUR 0.1 billion). Net repayments of commercial paper also decreased the carrying amount by EUR 2.3 billion. The carrying amount was increased by senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 8.5 billion (EUR 7.9 billion) with terms ending between 2028 and 2054 and bearing interest of between 4.80 % and 6.00 %. In addition, the carrying amount increased by EUR 0.6 billion in connection with measurement effects from derivatives with a hedging relationship, the offsetting entry for which is posted under bonds and other securitized liabilities. Exchange rate effects decreased the carrying amount of bonds and other securitized liabilities by EUR 2.5 billion.

The carrying amount of liabilities to banks decreased by EUR 0.6 billion compared with December 31, 2022 to EUR 3.6 billion, mainly due to scheduled repayments of EUR 0.4 billion and by the net increase of EUR 0.2 billion in the balance of short-term borrowings.

The liabilities with the right of creditors to priority repayment in the event of default of EUR 2.1 billion (December 31, 2022: EUR 2.9 billion) relate primarily to bonds issued by Sprint. Collateral was provided for these bonds, hence they constitute a separate class of financial instruments. Repayments in the reporting period in the amount of EUR 0.7 billion when translated into euros reduced the carrying amount. Exchange rate effects also decreased the carrying amount by EUR 0.1 billion. At the reporting date, cash and cash equivalents with a carrying amount of EUR 64 million (December 31, 2022: EUR 63 million) when translated into euros were pledged as collateral for these bonds.

The carrying amount of other interest-bearing liabilities decreased by EUR 0.9 billion compared with December 31, 2022 to EUR 6.6 billion. Repayments by T‑Mobile US reduced the carrying amount by EUR 0.5 billion, of which EUR 0.2 billion, when translated into euros, related to payments made in connection with the existing agreement on IP transit services, concluded with Cogent as part of the sale of the Wireline Business. In connection with cash collateral received for derivative financial instruments – primarily forward-payer swaps – the carrying amount of other interest-bearing liabilities decreased by EUR 0.1 billion, with exchange rate effects reducing it by a further EUR 0.1 billion.

For further information on cash collateral, please refer to Note 43 “Financial instruments and risk management.”

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

The carrying amount of derivative financial liabilities decreased by EUR 0.3 billion to EUR 2.6 billion. It was reduced by measurement effects from interest rate swaps in fair value hedges of EUR 0.6 billion, due to lower medium- and long-term interest rate expectations. By contrast, gains on interest rate swaps in cash flow hedges increased the carrying amount by EUR 0.3 billion.

For further information on derivative financial liabilities, please refer to Note 43 “Financial instruments and risk management.”

Deutsche Telekom has established ongoing liquidity management. To ensure the Group’s and Deutsche Telekom AG’s solvency and financial flexibility at all times, Deutsche Telekom maintains a liquidity reserve in the form of credit lines and cash. This liquidity reserve is to cover the capital market maturities of the next 24 months at any time. Since the business combination between T‑Mobile US and Sprint, T‑Mobile US has pursued its own separate financing and liquidity strategy.

At December 31, 2023, Deutsche Telekom (excluding T‑Mobile US) had standardized bilateral credit agreements with 20 banks for a total of EUR 12.0 billion. None of these lines of credit had been utilized as of December 31, 2023. Pursuant to the credit agreements, the terms and conditions depend on Deutsche Telekom’s rating. The bilateral credit agreements have an original maturity of 36 months and can, after each period of 12 months, be extended by a further 12 months to renew the maturity of 36 months. From today’s perspective, access to the international debt capital markets is not jeopardized.

Furthermore, bilateral credit lines with an aggregate total volume of USD 7.5 billion (EUR 6.8 billion) plus a cash balance of USD 5.2 billion (EUR 4.7 billion) were available to T‑Mobile US as of December 31, 2023. None of these credit lines had been utilized as of December 31, 2023.

The carrying amount of current and non-current lease liabilities increased by EUR 2.0 billion to EUR 40.8 billion compared with December 31, 2022, mainly resulting from the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of the GD tower companies. As a result of this transaction, lease liabilities increased by EUR 5.0 billion. By contrast, lease liabilities in the United States operating segment decreased by EUR 1.6 billion due to the decommissioning of the former Sprint’s wireless network and the closure of former Sprint shops in the prior year, as well as a decline in network and build-out investments, primarily on account of higher capital efficiency resulting from the accelerated build-out of the nationwide 5G network in the prior year. Exchange rate effects, in particular from the translation of U.S. dollars into euros, reduced the carrying amount by EUR 1.1 billion.

For further information on lessee relationships, please refer to Note 8 “Right of use assets – lessee relationships.”

In the reporting year and in the previous year, there were no significant expenses for variable lease payments that were not included in the measurement of lease liabilities.

As of December 31, 2023, future payment obligations for leases that have not yet begun and which are not taken into account in the measurement of lease liabilities amounted to EUR 0.1 billion (December 31, 2022: EUR 0.2 billion).

The following tables show the contractually agreed (undiscounted) cumulative interest payments and repayments of the non-derivative financial liabilities, the lease liabilities, and the derivatives with positive and negative fair values:

For information on the guarantees to Glasfaser NordWest, please refer to Note 45 “Related party disclosures.”

All instruments held at December 31, 2023 and for which payments were already contractually agreed were included. Planning data for future, new liabilities were not included. Amounts in foreign currency were each translated at the closing rate at the reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December 31, 2023. Financial liabilities that can be repaid at any time are always assigned to the earliest possible time period. In accordance with § 2 (4) of the German Act on the Transformation of the Deutsche Bundespost Enterprises into the Legal Structure of Stock Corporation (Stock Corporation Transformation Act – Postumwandlungsgesetz), the Federal Republic is guarantor of all Deutsche Telekom AG’s liabilities that were already outstanding as at January 1, 1995. At December 31, 2023, this figure was a nominal EUR 0.1 billion (December 31, 2022: EUR 0.1 billion).