Development of the economic environment and the associated impact

The macroeconomic challenges currently facing society, politics, and business are multi-faceted. The global economy continues to be beset by the challenges of relatively high interest rates and dampened growth prospects. Tougher financing conditions, weak trade growth, and diminished business and consumer confidence are negatively impacting the economic outlook. Growing geopolitical tensions are further contributing to increased uncertainty about the economic outlook.

Deutsche Telekom is aware that, in view of the current developments, it is only possible to extrapolate past experience to the future to a limited extent. Deutsche Telekom continues to address these challenges and considers them in its business decisions in the course of developing measures to mitigate the risks. For instance, interest rate risks are countered by reducing the variable-interest debt portfolio. With respect to energy supply, Deutsche Telekom’s national companies pursue different procurement strategies, e.g., by concluding power purchase agreements, to balance long-term supply reliability and appropriate prices.

For further information on risk mitigation measures, please refer to the section “Risk and opportunity management” in the combined management report.

Deutsche Telekom also considers the development of the economic environment in its consolidated financial statements and financial reporting, e.g., when determining the impairment of goodwill, the recognition of deferred taxes, and the measurement of provisions and financial instruments. In the reporting year, for example, the current macroeconomic developments and the associated rise in discount rates resulted in impairment losses on the carrying amounts of the investments in the GD tower companies and GlasfaserPlus, which are accounted for using the equity method.