Development of selected financial data
Net revenue, service revenuea
- Net revenue decreased by 2.1 % to EUR 112.0 billion; in organic terms, it increased slightly by 0.6 %. High-value service revenue increased by 1.0 % to EUR 92.9 billion; in organic terms, the increase was 3.6 %.
- Our Germany segment increased revenue by 2.8 % year-on-year, and by 2.1 % on an organic basis, on the back of the strong development of service revenues and partnership business.
- In the United States segment, revenue declined by 4.0 %, partly due to exchange rate effects. In organic terms, the decline of 0.8 % was due in part to the decrease in terminal equipment revenue.
- Revenue in our Europe segment grew by 5.7 %, and by 4.8 % on an organic basis, on account of higher mobile service revenues.
- Revenue in Systems Solutions was up 2.2 % year-on-year, and by 5.3 % in organic terms, on the back of growth in the Road Charging, Digital, Advisory, and Cloud portfolio areas.
- In Group Development, revenue declined significantly due to the sale of T‑Mobile Netherlands and GD Towers; in organic terms, revenue increased by 3.2 %.
billions of €
EBITDA AL (adjusted for special factors)a
- Adjusted EBITDA AL grew by 0.7 % to EUR 40.5 billion. In organic terms, it increased by 4.0 %.
- In our Germany segment, adjusted EBITDA AL was up 4.1 %, driven by high-value revenue growth and enhanced cost efficiency.
- In the United States, adjusted EBITDA AL increased by 3.1 %. In organic terms, the increase was largely due to a 5.2 % cut in costs. Adjusted core EBITDA AL grew by 7.6 % to EUR 26.1 billion.
- Adjusted EBITDA AL in the Europe segment grew by 3.8 % due to a positive net margin.
- In Systems Solutions, adjusted EBITDA AL grew by 13.0 %, mainly due to increased revenue in our Road Charging and Digital portfolio areas.
- In Group Development, adjusted EBITDA AL declined significantly due to the sale of T‑Mobile Netherlands and GD Towers.
- At 36.2 %, the Group’s adjusted EBITDA AL margin increased by 1.1 percentage points against the prior-year level. The adjusted EBITDA AL margin was 40.6 % in the Germany segment, 36.5 % in the United States segment, and 34.9 % in the Europe segment.
billions of €
Profit/loss from operations (EBIT)a
- EBIT increased by EUR 17.6 billion to EUR 33.8 billion.
- Special factors had a positive effect of EUR 10.7 billion on EBITDA AL (2022: EUR -4.2 billion). Deconsolidations, disposals, and acquisitions generated proceeds of EUR 12.2 billion, most of which was attributable to the sale of GD Towers. By contrast, the integration costs from the merger of T‑Mobile US and Sprint decreased compared with the prior year.
- At EUR 24.0 billion, depreciation, amortization and impairment losses were EUR 3.9 billion lower than in the prior-year, with the decrease being almost exclusively attributable to the United States and Group Development segments.
- The impairment losses amounted to EUR 0.2 billion and related primarily to the Systems Solutions and the Group Headquarters & Group Services segments. The impairment losses recorded in the prior year of EUR 1.2 billion were mainly attributable to the former Sprint’s fiber-optic-based wireline assets in the United States segment.
billions of €
Net profit
- Net profit increased by EUR 9.8 billion to EUR 17.8 billion.
- Our loss from financial activities increased from EUR 4.5 billion to EUR 8.8 billion, due mainly to interest rate-based impairment losses, reducing the share of profit/loss of associates and joint ventures accounted for using the equity method, primarily GD Towers. Other financial income/expense additionally decreased in connection with the measurement of provisions and liabilities, as well as gains/losses from financial instruments. Finance costs were negatively impacted partly as a result of the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of GD Towers.
- Tax expense came to EUR 3.0 billion compared with EUR 2.2 billion in the prior year.
- Profit attributable to non-controlling interests increased from EUR 1.5 billion to EUR 4.2 billion.
- Adjusted earnings per share amounted to EUR 1.60 compared with EUR 1.83 in the prior year.
billions of €
For a reconciliation for the organic development of key figures for the prior-year, please refer to the section “Additional information.”
ROCE
- ROCE (return on capital employed) increased by 4.5 percentage points to 9.0 %. This was due to significant growth in net operating profit after taxes (NOPAT), while the average amount of net operating assets (NOA) remained almost constant over the year.
- The positive development in NOPAT is largely due to a significant increase in special factors, particularly from the sale of GD Towers. In addition, the integration costs from the merger of T‑Mobile US and Sprint decreased compared with the prior year. NOPAT was reduced by impairment losses on our stake in GD Towers.
%
Net debtb
- Net debt decreased by EUR 10.1 billion to EUR 132.3 billion.
- The main factors reducing net debt were free cash flow (before dividend payments and spectrum investment) of EUR 20.9 billion and cash proceeds of EUR 10.7 billion from the sale of GD Towers. Exchange rate effects of EUR 3.6 billion also had a positive impact.
- Net debt increased in particular due to the share buy-back programs at T‑Mobile US (EUR 12.1 billion). Additions of lease liabilities and right-of-use assets (EUR 4.2 billion), the dividend payment – including to non-controlling interests – (EUR 4.0 billion), and the sale-and-leaseback transaction in connection with the sale of GD Towers (EUR 3.0 billion) also had an increasing effect.
billions of €
Cash capex (before spectrum investment)
- Cash capex (before spectrum investment) decreased by EUR 4.4 billion to EUR 16.6 billion.
- In the United States segment, cash capex decreased by EUR 4.3 billion as a result of higher cash outflows in the prior year for the accelerated build-out of the 5G network and the integration of Sprint. By contrast, in the Germany segment, our capital expenditures for the fiber-optic and 5G build-out were slightly higher than in the prior year.
- Cash capex (including spectrum investment), too, decreased by EUR 6.2 billion to EUR 17.9 billion. In the reporting year, the United States and Europe segments paid a total amount of EUR 1.3 billion to acquire spectrum licenses. In the prior year, EUR 3.1 billion had been paid for spectrum licenses, mainly in the United States and Europe segments.
billions of €
Free cash flow AL (before dividend payments and spectrum investment)
- Free cash flow AL (before dividend payments and spectrum investment) increased from EUR 11.5 billion to EUR 16.1 billion.
- The sound business performance in the operating segments had an increasing effect on net cash from operating activities. Lower cash outflows in connection with the integration of Sprint in the United States and lower cash capex (before spectrum investment) also had a positive impact.
- Free cash flow AL was reduced by an increase of EUR 1.0 billion in cash outflows for the repayment of lease liabilities, mainly in the United States and Germany segments, an increase of EUR 0.4 billion in tax payments, and an increase of EUR 0.1 billion in net interest payments.
billions of €
For further information, please refer to the sections “Development of business in the Group” and “Development of business in the operating segments” in the combined management report, and to the IR back-up on our Investor Relations website.
For further information on our performance indicators and alternative performance measures, please refer to the section “Management of the Group” in the combined management report and our Investor Relations website.
5G
Refers to the mobile communications standard launched in 2020, which offers data rates in the gigabit range, mainly over the 3.6 GHz and 2.1 GHz bands, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
a aThe GD Towers business entity, which operated the cell tower business in Germany and Austria and was assigned to the Group Development operating segment, was recognized as a discontinued operation in the consolidated financial statements from the third quarter of 2022 until its sale on February 1, 2023. By contrast, we use the management approach for the presentation in the combined management report, i.e., the results of operations include the value contributions from GD Towers up to and including January 2023. For information on the sale of GD Towers, please refer to the section “Group organization” in the combined management report and the section “Changes in the composition of the Group and other transactions” in the consolidated financial statements.
b bIncluding net debt reported under liabilities directly associated with non-current assets and disposal groups held for sale.