37 Notes to the consolidated statement of cash flows

Net cash from operating activities

At EUR 39.9 billion, net cash from operating activities was EUR 2.6 billion higher than in the prior year. 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. By contrast, net cash from operating activities was reduced by a EUR 0.2 billion increase in tax payments and a EUR 0.1 billion increase in net interest payments.

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 a lower number of new contracts with equipment installment plans compared with the prior year. In addition, lower receivables from the termination of government assistance programs and from wholesale partners, among other things, contributed to a decline in receivables. The negative effect on the change in liabilities carried as operating working capital mainly resulted from lower liabilities in the United States, Germany, and Europe operating segments.

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 19.2 billion, cash outflows for investments in intangible assets and property, plant and equipment were EUR 1.3 billion higher than in the prior-year period. In the reporting period, cash outflows of EUR 3.2 billion in total were recorded for the acquisition of mobile spectrum licenses in the United States operating segment. EUR 2.7 billion of this related to the acquisition of Channel 51 spectrum licenses in the 600 MHz band and EUR 0.5 billion to the acquisition of other FCC licenses. In the prior year, this item had included cash outflows for the acquisition of mobile spectrum licenses of EUR 1.0 billion in the United States operating segment and of EUR 0.3 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 0.6 billion year-on-year. Cash outflows in the United States operating segment decreased by EUR 0.8 billion, in particular due to higher cash outflows for investments in prior years for the accelerated build-out of the 5G network. By contrast, cash outflows in the Germany and Europe operating segments increased by EUR 0.2 billion and EUR 0.1 billion, respectively.

The contractually promised government grants from publicly funded projects for the broadband build-out in Germany 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 8.1 billion (2023: EUR 7.9 billion, 2022: EUR 6.9 billion) were made in the 2024 financial year. Capitalized interest of EUR 0.1 billion (2023: EUR 0.2 billion, 2022: EUR 0.1 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 with a carrying amount of EUR 3.8 billion, mainly network equipment, cell sites, and land and buildings. 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. The corresponding additions of right-of-use assets were down EUR 2.4 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 first quarter of 2023 and due to the accelerated build-out of the 5G network in the prior years in the United States operating segment.

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 0.4 billion were recognized in the reporting year for future consideration for acquired broadcasting rights (2023: EUR 0.3 billion). The payment of the consideration will be recognized in net cash used in/from financing activities.

In connection with the acquisition of Ka’ena in the United States, which was consummated on May 1, 2024, T‑Mobile US settled part of the upfront payment in the form of around 3 million ordinary shares in T‑Mobile US with a total value of around USD 0.5 billion (EUR 0.5 billion), determined on the basis of the closing share price on April 30, 2024. In addition, an other non-current financial liability of USD 0.2 billion (EUR 0.2 billion) was recognized as of the acquisition date for the fair value of the contingent and other consideration payable on August 1, 2026.

For further information on the acquisition of Ka’ena, please refer to the section “Changes in the composition of the Group and other transactions” under “Summary of accounting policies.”

Financial liabilities associated with net cash used in/from financing activities

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 ‑5.0 billion reported in net cash used in/from financing activities deviate from net cash used in/from financing activities, in particular due to the cash payments made for satisfying dividend entitlements of Deutsche Telekom AG’s shareholders, 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 as well as the share buy-back program of Deutsche Telekom AG. 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 0.4 billion for the acquisition of broadcasting rights.

In the 2024 financial year, Deutsche Telekom made interest payments of EUR 8.1 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 2023:

Supplier finance arrangements

Deutsche Telekom has concluded supplier finance arrangements with financial institutions to facilitate suppliers’ access to credit and to enable early billing of the goods and services they provide to Group companies in order to improve their liquidity. The supplier finance arrangements are offered on a voluntary basis and suppliers can participate at any time at their own discretion. Deutsche Telekom repays the banks the full invoice amount on the originally agreed payment date.

The terms of the arrangement do not provide for any additional extension of the credit, and local obligations customary in the industry, e.g., warranty obligations, apply. Extensions of payment terms are only granted in keeping with the usual limits in the respective local procurement markets and correspond to those of trade payables that are not part of the arrangements. The payment terms vary in the indicated ranges due to the various procurement agreements being concluded at different times in the respective local procurement markets. Since the arrangements do not change the terms of the original liabilities, the amounts to be paid to the banks continue to be recognized under trade payables and other liabilities.

The carrying amounts and payment terms of the supplier finance arrangements existing as of the reporting date are set out in the following table.

As of January 1, 2024, liabilities arising from supplier finance arrangements in Germany amounted to EUR 572 million and in the rest of Europe to EUR 223 million.