Deutsche Telekom at a glance Net revenue Net revenue increased by 8.7 percent to EUR 19.5 billion. On a like-for-like basis, i.e., excluding exchange rate effects and effects of changes in the composition of the Group, net revenue increased by EUR 0.7 billion or 3.5 percent. Our United States operating segment posted an increase in revenue of 15.9 percent; also in U.S. dollars, the continuing success of our U.S. operations was evident in revenue growth of 7.0 percent. Our Europe operating segment recorded an increase in revenue of 2.8 percent and revenue in our Germany operating segment also edged up by 0.6 percent. The inclusion of Tele2 Netherlands made a substantial contribution to the increase in revenue in our Group Development operating segment. Net revenue billions of € Adjusted EBITDA ALa Adjusted EBITDA AL rose by 8.3 percent to EUR 5.9 billion, with contributions from all operating segments. Adjusted for exchange rate effects and the slightly positive effects of changes in the composition of the Group, adjusted EBITDA AL rose by EUR 0.2 billion or 3.9 percent. Adjusted EBITDA AL for our United States operating segment increased by 14.9 percent. In U.S. dollars, this constituted growth of 6.2 percent in our U.S. operations. Our Europe operating segment recorded an increase in adjusted EBITDA AL of 5.2 percent and our Germany operating segment an increase of 2.4 percent. However, substantial increases in adjusted EBITDA AL were likewise recorded by the System Solutions and Group Development operating segments – the latter also due to earnings contributions from the acquiree Tele2 Netherlands. At 30.5 percent, the Group’s adjusted EBITDA AL margin was almost on the prior-year level of 30.6 percent. The adjusted EBITDA AL margin was 39.4 percent in Germany, 32.7 percent in Europe, and 27.3 percent in the United States. Adjusted EBITDA ALa billions of € EBIT EBIT increased by EUR 0.1 billion to EUR 2.3 billion. Special factors of EUR 0.4 billion, incurred mainly in connection with staff-related measures, reduced EBIT, in contrast to EUR 0.3 billion in the previous year. At EUR 4.2 billion, depreciation, amortization and impairment losses were EUR 1.1 billion higher than in the prior-year period. This significant increase was primarily the result of the depreciation charges recognized for right-of-use assets as a result of the first-time application of the accounting standard IFRS 16 “Leases.” Previously, by contrast, expenses had been recognized in connection with operating leases. Depreciation of property, plant and equipment and amortization of intangible assets were slightly higher than in the prior year. EBIT billions of € Net profit Net profit decreased by EUR 0.1 billion to EUR 0.9 billion. As in the prior-year period, our loss from financial activities came to EUR 0.4 billion. Finance costs that were EUR 0.2 billion higher due to the application of IFRS 16 were compensated by positive measurement effects from embedded derivatives at T-Mobile US. Tax expense was flat on the prior-year period at EUR 0.5 billion. At EUR 0.4 billion, profit attributable to non-controlling interests was marginally higher than the prior-year figure of EUR 0.3 billion. Adjusted earnings per share amounted to EUR 0.25, on a level with the figure for the first quarter of 2018. Net profit billions of € Equity ratio The decrease in the equity ratio from 29.9 percent at year-end 2018 to 25.8 percent mainly results from the increase of 13.8 percent in total assets/total liabilities and shareholders’ equity. A key driver of this increase was the first-time application of the IFRS 16 accounting standard and the resulting capitalization of right-of-use assets and recognition of lease liabilities. Shareholders’ equity decreased from EUR 43.4 billion as of December 31, 2018 to EUR 42.8 billion. In particular, the resolved dividend distributed to shareholders of Deutsche Telekom AG in the amount of EUR 3.3 billion had a reducing effect. The profit of EUR 1.3 billion, the acquisition of Tele2 Netherlands totaling EUR 0.7 billion, and an effect of EUR 0.3 billion recognized directly in equity related to the transition to IFRS 16 had an increasing effect. Currency translation effects recognized directly in equity increased shareholders’ equity by EUR 0.5 billion. Equity ratio % Cash capex Cash capex (including spectrum investment) increased from EUR 3.1 billion to EUR 3.8 billion. Capital expenditures were focused primarily on the United States, Germany, and Europe operating segments and went toward the build-out and upgrade of our networks. The increase is attributable to the United States operating segment in the amount of EUR 0.6 billion, mainly due to the accelerated infrastructure build-out for the 600 MHz spectrum, laying the groundwork for 5G. As in the comparative period, payments were made for mobile spectrum licenses in the amount of EUR 0.1 billion, especially in the United States operating segment. Cash capex billions of € Free cash flow ALa(Before dividend payments and spectrum investment) Free cash flow AL was up from EUR 1.3 billion to EUR 1.6 billion. The increase was attributable to the positive development of net cash from operating activities, which benefited in particular from the strong performance of our operating segments, especially in the United States. The year-on-year increase of EUR 0.6 billion in cash capex (excluding spectrum investment) had a negative impact on free cash flow. Free cash flow ALa(Before dividend payments and spectrum investment) billions of € Net debt Net debt increased from EUR 55.4 billion at the end of 2018 to EUR 71.9 billion. The recognition of lease liabilities in connection with the first-time application of the IFRS 16 accounting standard raised net debt by EUR 15.6 billion. Additions to lease liabilities (EUR 1.1 billion), exchange rate effects (EUR 0.7 billion), and the acquisition of Tele2 Netherlands (EUR 0.4 billion) also increased this item. The main factor reducing net debt was free cash flow of EUR 2.4 billion. Net debt billions of € For a more detailed explanation, please refer to the section “Development of business in the Group.” a The new IFRS 16 “Leases” accounting standard has been applied since January 1, 2019. This led to a change in the definition of some of our financial performance indicators. Prior-year figures have not been adjusted; however, for the redefined key performance indicators we show prior-year comparatives calculated on a pro-forma basis. schließen 5G New communications standard, which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things – rollout starting 2020.
