38 Segment reporting
Deutsche Telekom reports on five operating segments, as well as on the Group Headquarters & Group Services segment. Three operating segments are distinguished by region (Germany, United States, Europe), one by customers and products (Systems Solutions), and another by tasks (Group Development). For three operating segments, business activities are assigned by customer and product (Germany, Systems Solutions, United States), while one operating segment allocates its activities on a regional basis (Europe) and another allocates them by equity investment (Group Development).
The Germany operating segment comprises all fixed-network and mobile business activities for consumers and business customers, including separate sales entities in Germany to allow a customer-centric sales approach. The Wholesale business delivers wholesale telecommunication services for third-party telecommunications companies. Build-out of the mobile and fixed networks in Germany is managed by the Technology business unit.
The United States operating segment combines all mobile activities in the U.S. market. T‑Mobile US offers services, terminal equipment, and accessories for consumers. In addition, the company sells devices to dealers and other third-party distributors for resale. It provides wireless communications services through a variety of service plan options to U.S. domestic customers including plans marketed to businesses, as well as wireless devices. In addition to its wireless communications services, T‑Mobile US offers High Speed Internet utilizing its nationwide 5G network. T‑Mobile US also provides products that are complementary to its wireless communications services, including device protection.
The Europe operating segment comprises all fixed-network and mobile operations of the national companies in Greece, Hungary, Poland, the Czech Republic, Croatia, Slovakia, Austria, North Macedonia, and Montenegro. In these countries, Deutsche Telekom is an integrated provider of telecommunications services. In Romania, the focus is on mobile operations. Besides the traditional fixed-network and mobile business with residential customers, most of the national companies also offer ICT solutions for business customers.
The Systems Solutions operating segment offers ICT services to business customers in the core DACH market (Germany, Austria, and Switzerland) under the T‑Systems brand. T‑Systems primarily addresses the ICT growth areas of advisory, cloud services, and digitalization with a corresponding portfolio of products. Security solutions and networking are integral components of its service offering, supported by strategic partnerships. The services penetrate deep into the value chains of selected industries (automotive, healthcare, public sector).
The goal of the Group Development operating segment is to actively manage entities and equity investments to grow their value. In this context, 51.0 % of the shares in the cell tower business companies in Germany and Austria (GD tower companies) were sold on February 1, 2023. The investment management group Deutsche Telekom Capital Partners; Comfort Charge, which is a provider of e-mobility charging infrastructure; and the Group functions of Mergers & Acquisitions and strategic Portfolio Management are also assigned to Group Development.
The Group Headquarters & Group Services segment comprises all Group units that cannot be allocated directly to one of the operating segments, as well as the Board of Management department for Technology and Innovation. Group Headquarters defines strategic aims for the Group, ensures they are met, and becomes directly involved in selected Group projects. Group Services provides services to the entire Group; in addition to typical services provided by Deutsche Telekom Services Europe, such as financial accounting, human resources services, and operational procurement, Group Services also includes the placement services of personnel services provider Vivento. Further units are Group Supply Services (GSUS) for real estate management and strategic procurement, and MobilitySolutions, which is a full-service provider for fleet management and mobility services.
Changes to the segment and organizational structure in 2024
Acquisition of Ka’ena in the United States. On March 9, 2023, T‑Mobile US entered into a Merger and Unit Purchase Agreement for the acquisition of 100 % of the outstanding equity of the U.S. prepaid provider Ka’ena and its subsidiaries including, among others, Mint Mobile. The transaction was consummated on May 1, 2024.
For further information on the corporate transactions consummated and agreed in the reporting year, please refer to the section “Changes in the composition of the Group and other transactions” under “Summary of accounting policies.”
The business segments presented are reviewed at regular intervals by the Deutsche Telekom Board of Management in terms of the allocation of resources and their earnings performance.
The measurement principles for Deutsche Telekom’s segment reporting structure are based primarily on the IFRSs adopted in the consolidated financial statements. Deutsche Telekom evaluates the segments’ performance based on revenue and profit/loss from operations (EBIT), among other factors. Revenue generated and goods and services exchanged between segments are calculated on the basis of market prices. Services provided by Deutsche Telekom IT are generally charged at cost. Development services are not charged, but capitalized at segment level in accordance with the internal control logic. In accordance with the segments’ control logic, intragroup leases are not capitalized by the lessee, but instead recognized as periodic expenses. In accordance with the Company’s principles of segment management, when loans with embedded derivatives are granted internally to Group entities, the derivative component is recognized separately also in the creditor company’s financial statements and measured at fair value through profit or loss. Segment assets and liabilities include all assets and liabilities that are carried in the financial statements prepared by the segments and included in the consolidated financial statements. Segment investments include additions to intangible assets, property, plant and equipment, and right-of-use assets. Where entities accounted for using the equity method are directly allocable to a segment, their shares of profit or loss after income taxes and their carrying amounts are reported in that segment’s accounts. All of the performance indicators shown in the following tables are presented exclusively from the segments’ perspective: The effects of intersegment transactions are eliminated and presented in aggregate form in the reconciliation line.
The following table shows the performance indicators used by Deutsche Telekom to evaluate the operating segments’ performance as well as additional segment-related indicators: