16 Other provisions
The carrying amount of current and non-current other provisions decreased by EUR 0.1 billion compared with December 31, 2022 to EUR 8.1 billion, primarily due to the factors described below.
Provisions for termination benefits and other provisions for personnel costs include, among other components, provisions for staff restructuring. These have developed as follows in the 2023 financial year:
Provisions for termination benefits increased by EUR 0.2 billion, primarily due to the program implemented by T‑Mobile US in the third quarter of 2023 to reduce its workforce by almost 5,000 positions, which equates to just under 7 % of employees at T‑Mobile US. Essentially all expenses arising in connection with this program were recognized in the 2023 financial year. The associated cash outflows will continue essentially until mid-2024.
Other provisions for personnel costs increased by EUR 0.3 billion, mainly due to an increase in the carrying amount of the provision recognized for the Civil Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK). This is primarily due to a decline in the discount rate. By contrast, the provisions for performance-related remuneration components and leave not taken decreased. Other provisions for personnel costs also include provisions for deferred compensation and allowances, as well as for anniversary gifts.
The provisions for restoration obligations decreased by EUR 0.2 billion. These include the estimated costs for dismantling and removing assets, and restoring the sites on which they are located. The estimated costs are included in the costs of the relevant assets. The decline is primarily due to the decommissioning of the former Sprint’s wireless network and the closure of shops in the United States operating segment in 2022.
Provisions for litigation risks increased by EUR 0.1 billion compared with the prior year, mainly in connection with the proceedings pending in consequence of the cyberattack on T‑Mobile US in August 2021. The provisions for litigation risks primarily relate to possible settlements attributable to pending lawsuits.
Provisions for sales and procurement support decreased by EUR 0.2 billion. These provisions are recognized for dealer commissions and market development funds (advertising subsidies, and refunds). Provisions for sales and procurement support decreased mainly in connection with the bonuses paid out to sales partners in the United States operating segment.
Miscellaneous other provisions decreased by EUR 0.3 billion. They include a large number of low-value individual items, such as provisions related to executory contracts, the disposal of businesses and site closures, in particular in prior financial years, as well as warranty and environmental damage provisions.
For further information on litigation risks from pending lawsuits, please refer to Note 39 “Contingencies.”
In the measurement of the other provisions, Deutsche Telekom is exposed to interest rate fluctuations, which is why the effect of a possible change in the interest rate on the principal non-current provisions was simulated. The other, non-staff-related provisions are discounted using maturity-related discount rates specific to the respective currency area. To this end, Deutsche Telekom determines discount rates with maturities of up to 30 years. In 2023, the discount rates ranged from 2.95 to 4.10 % (2022: from 2.69 to 3.93 %) in the euro currency area and from 5.18 to 6.17 % (2022: from 5.20 to 6.78 %) in the U.S. dollar currency area. If the discount rate were increased by 50 basis points with no other change in the assumptions, the present value of the principal other non-current provisions would decrease by EUR 62 million (December 31, 2022: EUR 49 million). If the discount rate were decreased by 50 basis points with no other change in the assumptions, the present value of the principal other non-current provisions would increase by EUR 65 million (December 31, 2022: EUR 50 million).