37 Notes to the consolidated statement of cash flows

Net cash from operating activities

Net cash from operating activities increased by EUR 1.5 billion year-on-year to EUR 37.3 billion. This positive trend is attributable to sound business development. Lower cash outflows in connection with the integration of Sprint in the United States also had a positive effect. However, net cash from operating activities was negatively impacted by the sale of T‑Mobile Netherlands and the GD tower companies, as well as by exchange rate effects. The increase in tax payments of EUR 0.4 billion and the increase in net interest payments of EUR 0.1 billion also had a reducing effect.

Deutsche Telekom defines operating working capital as the total of trade receivables, inventories, and trade and other payables. The positive effect on the change in assets carried as operating working capital is mainly attributable to the strategic withdrawal from the terminal equipment lease business in the United States operating segment and the associated decline in receivables from terminal equipment leasing. Furthermore, there is a positive year-on-year effect from the completed migration of former Sprint customers to the T‑Mobile US network, which meant there was a smaller increase in receivables under the Equipment Installment Plan in the reporting year than in the prior year. Moreover, the prior year included a negative effect from the increase in receivables as a result of the planned termination of factoring agreements in the Germany operating segment. By contrast, there was a positive effect in the prior year from the greater reduction of stock levels of terminal equipment in the United States operating segment, which was primarily driven by the impending market launch of new models and the warehouse closures at former Sprint sites. The negative effect on the change in liabilities carried as operating working capital mainly resulted from a lower procurement volume in the reporting year, especially in the United States operating segment.

For further information on individual assets carried as working capital, please refer to Note 2 “Trade receivables” and Note 4 “Inventories.”

For further information, please refer to Note 14 “Trade and other payables.”

At EUR 17.9 billion, cash outflows for investments in intangible assets and property, plant and equipment were EUR 6.2 billion lower than in the prior year. In the United States operating segment, mobile spectrum licenses were acquired for a total of EUR 1.0 billion (of which EUR 0.1 billion for FCC licenses) and in the Europe operating segment, mobile spectrum licenses were acquired for a total of EUR 0.3 billion in the reporting period. In the prior year, this item had included cash outflows for the acquisition of mobile spectrum licenses of EUR 3.0 billion in the United States operating segment and of EUR 0.1 billion in the Europe operating segment. Excluding investments in mobile spectrum licenses, cash outflows for investments in intangible assets and property, plant and equipment were down EUR 4.4 billion year-on-year. Cash outflows in the United States operating segment decreased by EUR 4.3 billion, in particular due to higher cash outflows for investments in the prior year as a result of the accelerated build-out of the 5G network and the integration of Sprint. Cash outflows also decreased year-on-year as a result of the sale of the business entities GD tower companies and T‑Mobile Netherlands. By contrast, cash outflows increased by EUR 0.2 billion in the Germany operating segment, mainly in connection with the fiber-optic build-out.

The contractually promised government grants from publicly funded projects for the broadband build-out in Germany were recognized in full as receivables. They reduce the cost of the relevant property, plant and equipment. The grants received and payments made for the build-out continue to be recognized in net cash used in/from investing activities; however, they are not part of cash capex, because the payments made do not result in additions to property, plant and equipment. Since the payments are not made at the same point in time as the proceeds are received, the net amounts can be positive or negative in the individual periods.

Interest payments (including capitalized interest) of EUR 7.9 billion (2022: EUR 6.9 billion, 2021: EUR 6.4 billion) were made in the 2023 financial year. Capitalized interest of EUR 0.2 billion (2022: EUR 0.1 billion, 2021: EUR 0.2 billion) was reported within cash capex in net cash used in/from investing activities, together with the associated assets.

Non-cash transactions in the consolidated statement of cash flows

In the reporting period, Deutsche Telekom leased assets totaling EUR 6.2 billion, mainly network equipment, cell sites, and land and buildings. As a result, these assets are recognized in the statement of financial position under right-of-use assets and the related liabilities under lease liabilities. Future repayments of the liabilities will be recognized in net cash used in/from financing activities. In the prior-year period, EUR 6.6 billion had related to the modification of the arrangements with Crown Castle, resulting in an increase in the same amount in the carrying amount of the right-of-use assets and the lease liabilities. Excluding this effect, asset leases were up EUR 1.7 billion against the prior-year period, mainly due to the leaseback of passive network infrastructure in Germany and Austria under the sale-and-leaseback agreement in connection with the sale of the GD tower companies. In the United States operating segment, asset leases were down slightly year-on-year, mainly due to synergies from the decommissioning of Sprint’s old mobile network and the associated lower lease liabilities for network technology.

Consideration for the acquisition of broadcasting rights is paid by Deutsche Telekom in accordance with the terms of the contract on the date of its conclusion or spread over the term of the contract. Financial liabilities of EUR 0.3 billion were recognized in the 2023 financial year for future consideration for acquired broadcasting rights (2022: EUR 0.5 billion). The payment of the consideration will be recognized in net cash used in/from financing activities.

In the United States operating segment, EUR 0.1 billion was recognized for mobile terminal equipment under property, plant and equipment in the reporting period (prior-year period: EUR 0.3 billion). This relates to the terminal equipment lease model at T‑Mobile US, under which customers do not purchase the devices but lease them. The cash outflows are presented under net cash from operating activities. The decline was primarily due to the strategic withdrawal from the terminal equipment lease model.

In accordance with a supplementary agreement closed between T‑Mobile US, SoftBank, and Deutsche Telekom in the course of the merger of T‑Mobile US and Sprint, T‑Mobile US issued 48,751,557 shares of common stock in T‑Mobile US to SoftBank in the reporting year.

For further information on the transfer of T‑Mobile US shares to SoftBank, please refer to the section “Summary of accounting policies” under “Changes in the composition of the Group and other transactions.”

The carrying amounts of the financial liabilities associated with net cash used in/from financing activities, divided into carrying amount changes having and not having an effect on cash flows, developed as follows in the reporting year:

Total carrying amount changes having an effect on cash flows of EUR ‑9.0 billion reported in net cash used in/from financing activities deviate from net cash used in/from financing activities due in particular to the dividend entitlements of Deutsche Telekom AG ’s shareholders having an effect on cash flows, the interest paid in connection with financial liabilities reported in cash generated from operations, and the changes in non-controlling interests having an effect on cash flows. The other carrying amount changes in lease liabilities not having an effect on cash flows are mainly attributable to additions in connection with the recognition of right-of-use assets. The other carrying amount changes in financial liabilities not having an effect on cash flows include additions of EUR 0.3 billion for the acquisition of broadcasting rights.

In the 2023 financial year, Deutsche Telekom made total interest payments of EUR 7.9 billion to service interest obligations. This figure includes interest payments for derivative and non-derivative financial liabilities, interest payments for lease liabilities, and interest payments recognized under intangible assets and property, plant and equipment. The above reconciliation only shows the carrying amounts of the financial liabilities, lease liabilities, and derivative financial assets allocated to net cash used in/from financing activities.

For further information, please refer to the previous section “Non-cash transactions in the consolidated statement of cash flows.”

The carrying amounts of the financial liabilities disclosed in net cash used in/from financing activities, divided into carrying amount changes having and not having an effect on cash flows, developed as follows in 2022: