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3 Contract assets

As of December 31, 2024, the carrying amount of contract assets amounted to EUR 2.7 billion, compared with EUR 2.4 billion in the prior year. Contract assets relate to receivables that have not yet legally come into existence, which arise from the earlier – as compared to billing – recognition of revenue, in particular from the sale of goods and merchandise under long-term multiple-element arrangements (e.g., mobile contract plus handset). Receivables from long-term construction contracts are also recognized under contract assets. Of the total contract assets, EUR 0.2 billion related to contract assets in connection with long-term construction contracts (December 31, 2023: EUR 0.2 billion).

The increase in the carrying amount resulted from higher contract assets in the United States and Germany operating segments. In the United States operating segment, the increase of EUR 104 million was mainly due to growth in business models in the consumer and business customer areas, in which discounts are granted on handset sales on the condition of a minimum service contract term.

For information on allowances of contract assets, please refer to Note 43 “Financial instruments and risk management.”