Profitability and financial position of the Group

Profitability

ROCE decreased by 1.0 percentage points in the reporting year to 7.5 %, due to a EUR 2.4 billion reduction in net operating profit after taxes (NOPAT) to EUR 19.0 billion, while the average amount of net operating assets (NOA) remained almost constant at EUR 255.1 billion.

The reduction in NOPAT is primarily attributable to the development of special factors in profit from operations (EBIT). Special factors totaling EUR 1.9 billion had a negative effect on EBIT in the reporting year. They included expenses for staff-related measures of EUR 1.1 billion, including in connection with the 2025 Workforce Transformation in the fourth quarter of 2025, as well as expenses of EUR 0.4 billion for acquisition and integration costs, primarily from the UScellular Acquisition in the United States operating segment. In the prior year, EBIT was impacted by net positive special factors of EUR 0.4 billion, mainly due to the reversal in 2024 of impairment losses recognized in prior years on FCC licenses of T‑Mobile US of EUR 2.6 billion.

The development of NOPAT was also negatively impacted by the share of profit of associates and joint ventures included in the consolidated financial statements using the equity method, which fell from EUR 2.5 billion in the prior year to EUR 0.8 billion in the reporting year. While in the prior year, reversals of impairment losses of EUR 2.1 billion and EUR 0.3 billion, respectively, were recognized on the carrying amounts of the investments in GD Towers and GlasfaserPlus, in the reporting year, equivalent reversals of EUR 0.5 billion and EUR 0.2 billion were made.

For further information on the definition of ROCE and the methods used to calculate this key performance indicator, please refer to the section “Management of the Group.”

Finance management

Our finance management ensures our Group’s ongoing solvency and hence its financial equilibrium. The fundamentals of Deutsche Telekom’s finance policy are established each year by the Board of Management and overseen by the Supervisory Board. Group Treasury is responsible for implementing the finance policy and for ongoing risk management. In order to ensure we have scope for financing, we continuously monitor the development of net debt, Deutsche Telekom AG’s rating, financial flexibility, and free cash flow AL. There have been no material changes resulting from our finance management in the reporting year. We set out the course for the financial years through 2027 at our 2024 Capital Markets Day.

Changes in net debt

millions of €

In addition to the purchase price payments and inflows of cash in connection with the acquisitions of UScellular, Vistar Media, and Blis, and the purchase price payments for the equity interests acquired in the joint ventures Metronet and Lumos, corporate transactions in the United States operating segment included the acquisition of customer bases as well as the senior notes and lease liabilities assumed in connection with the first-time consolidation of UScellular. The acquisition of spectrum relates to the United States, Germany, and Europe operating segments.

For further information on the business combinations, please refer to the section “Group organization” and the section “Summary of accounting policies – Changes in the composition of the Group and other transactions” in the notes to the consolidated financial statements.

Other financing options

Off-balance-sheet financing instruments mainly relate to the sale of receivables by means of factoring. Total receivables sold as of December 31, 2025 amounted to EUR 1.8 billion (December 31, 2024: EUR 2.0 billion). At the end of 2025, this solely related to factoring agreements in the United States operating segment. The agreements are used in particular for active receivables management.

Deutsche Telekom’s credit rating with Standard & Poorʼs was upgraded on May 28, 2025, standing at BBB+ with a positive outlook as of December 31, 2025. On September 26, 2025, the rating agency Moody’s raised our rating, which stood at A3 with a stable outlook as of December 31, 2025. As a solid investment-grade company, we have access to the international capital markets.

To ensure financial flexibility, we primarily use the KPI “relative debt” (ratio of net debt to adjusted EBITDA). This is a core component of our finance strategy and an important performance indicator for investors, analysts, and rating agencies. At 2.62x, we met the target value for relative debt of ≤ 2.75x. At 31.8 %, the equity ratio was also within the target corridor of between 25 and 35 %.

Free cash flow AL (before dividend payments and spectrum investment) increased from EUR 19.2 billion in the prior year to EUR 19.5 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 0.8 billion to EUR 40.6 billion as a result of the strong development of the operating business. Lower cash outflows in connection with the integration of Sprint in the United States also had an increasing effect. By contrast, exchange rate effects and slight increases in net interest payments and tax payments had a reducing effect.

Excluding cash outflows for investments made by T‑Mobile US to acquire customer bases, cash capex (before spectrum investment) increased by EUR 0.9 billion to EUR 16.9 billion. Cash capex in the United States operating segment increased by EUR 0.6 billion to EUR 8.9 billion, in particular due to higher investments in the continued network build-out and additional capex as a result of the UScellular Acquisition. In the Europe operating segment, cash capex stood at EUR 2.0 billion, which was up EUR 0.2 billion year on year, due to the increase in the volume of the underlying investments in optical fiber, mobile communications, and fixed-network capacity. In the Germany operating segment, capital expenditure totaled EUR 4.9 billion in the reporting year, EUR 0.1 billion more than in the prior year, with much of this figure going towards the fiber-optic build-out. In the Systems Solutions operating segment, cash capex declined slightly year-on-year to EUR 0.2 billion.

The sale of spectrum licenses by T‑Mobile US to N77 generated cash proceeds of EUR 1.8 billion. Excluding this transaction, proceeds from the disposal of intangible assets (excluding goodwill and spectrum) and property, plant and equipment rose by EUR 0.1 billion.

A decrease of EUR 0.4 billion in cash outflows – in particular in the United States operating segment – for the repayment of lease liabilities had an increasing effect on free cash flow AL.

For further information on the statement of cash flows, please refer to Note 37 “Notes to the consolidated statement of cash flows” in the notes to the consolidated financial statements.