The economic environment This section provides additional information on, and explains recent changes to, the economic situation as described in the combined management report for the 2018 financial year, focusing on macroeconomic developments in the first three months of 2019, the outlook, the currently prevailing economic risks, and the regulatory environment. The overall economic outlook presupposes there are no major unexpected occurrences in the forecast period. Macroeconomic development In the first three months of 2019, leading institutions and banks revised their growth outlooks downwards. The International Monetary Fund (IMF) lowered its growth forecast for global GDP in 2019 from 3.5 percent to 3.3 percent. Global growth is expected to return to 3.6 percent in 2020 on the back of the pickup anticipated for the second half of 2019. For the German economy, the IMF projects growth in the current year of 0.8 percent. Despite the sharp decline in industrial activity in Germany, domestic consumption and the service sector remain robust. The national economies in our core markets in Europe (excluding Germany) and North America continue to expand. Outlook Under the current conditions, we expect to see weaker but still stable economic trends in the economies of our core markets. However, the outlook is negatively affected by the economic slowdown in Europe and China and decelerated growth in global trade, with expansion in 2019 and 2020 now expected to be weaker than previously projected. Overall economic risks The economic risks have increased. Trade conflicts, political uncertainty – including with respect to Brexit – and further declines in industrial activity could curb a sustained expansion. Furthermore, geopolitical crises could also have a negative impact on the economies of the countries in which we operate. Regulation Increase of rates for unbundled local loop lines (ULL). According to a draft consultation published by the Federal Network Agency on April 10, 2019, the Agency is planning to increase the regulated rates received by Telekom Deutschland for leasing the “last mile” of its network with effect from July 1, 2019. Specifically, the rate for leasing the line from the customer to the cable distribution box is to increase from EUR 6.77/month to EUR 7.05/month and the charge for the longer section from the customer to the main distribution frame is to increase from EUR 10.02/month to EUR 11.19/month. Although these rates remain below the level we sought in our application, the Agency has at least recognized that the costs of building out the last mile of the network have risen in the three years since the rates were last set. The draft ruling will be subject to consultation at national and European level. Provided the European Commission expresses no serious doubts, the new rates may take effect as of July 1, 2019. Spectrum auction in Germany. The Federal Network Agency commenced the auction of nationwide frequencies for Germany in the 2.1 GHz and 3.4 to 3.7 GHz bands on March 19, 2019. Telekom Deutschland GmbH was admitted to the auction proceedings along with three other companies: Drillisch Netz AG, Telefónica Germany GmbH & Co. OHG, and Vodafone GmbH. The three existing network operators and six service providers have brought legal action in connection with the auction terms and conditions; however, this has no effect on the auction timing. As such, the auction began as planned on March 19, 2019. Additionally, the Federal Network Agency published basic terms and conditions for the award of spectrum in the 3.7 to 3.8 GHz band, which is reserved for local assignments. The award of this spectrum is to be prepared and implemented after the auction ends and the award rules have been finalized. Latest information on the spectrum auction is being published on the Federal Network Agency’s homepage. Spectrum auction in Austria. The auction in Austria of key spectrum in the 3.6 GHz range (3.4 to 3.8 GHz) required for the rollout of 5G was held between February 12 and March 8, 2019. The nationwide network operators A1, T-Mobile Austria, and Hutchison, as well as other regional operators, were admitted to the proceedings as participants. Deutsche Telekom’s subsidiary T-Mobile Austria secured continuous nationwide spectrum of 110 MHz (in the 3,690 to 3,800 MHz band), while Hutchison obtained only 100 MHz and A1 received varying regional spectrum packages due to the success of four regional providers. Spectrum auctions in the United States. The Federal Communications Commission (FCC) held a 28 GHz auction from November 2018 through January 2019. This was the first time that 5G spectrum in such a highfrequency band (known as millimeter wave (mmWave) had been auctioned in the United States. On March 14, 2019, a second mmWave auction began in which a total of 1.55 GHz of spectrum in the 24 GHz band was being made available. T-Mobile US is participating in this auction and the out-come will be announced after proceedings come to an end. A third auction is due to start on December 10, 2019 for spectrum in the 37 GHz, 39 GHz, and 47 GHz bands. The FCC will announce the details in due course. Awarding of spectrum The following table provides an overview of the main spectrum awards such as auctions as well as license extensions in Germany and at our international subsidiaries. It also indicates spectrum to be awarded in the near future in various countries. (XLS:) Download Main spectrum awards Expected start of award procedure Expected end of award procedure Frequency ranges (MHz) Award process Spectrum acquired (MHz) Spectrum investment a Simultaneous electronic multi-round auction with ascending, parallel bids for all available frequency ranges. b Combinatorial clock auction, three-stage, multi-round auction for spectrum from all available frequency ranges. c Auction completed. Outcome to be announced once the subsequent 24 GHz auction is concluded. Germany Started Q2 2019 2,100 / 3,400 – 3,700 Auction (SMRAa), since Mar. 19, 2019 tbd tbd Greece Q3 2019 Q4 2019 700 / 1,500 / 3,400 – 3,800 Auction (SMRAa), expected tbd tbd Greece Q1 2020 Q2 2020 700 / 1,500 Auction (SMRAa), expected tbd tbd Croatia Completed 2,100 / 2,600 Assignment on application 2x 20 MHz in the 2,600 MHz band Annual fees, no one-time charge Croatia Q2 2019 Q3 2019 3,400 – 3,800 tbd tbd tbd Netherlands Q1 2020 Q2 2020 700 / 1,500 / 2,100 Auction, details tbd tbd tbd North Macedonia Q2 2019 Q3 2019 2,100 tbd 2x 15 MHz tbd North Macedonia Completed 1,800 Extension of licenses 2x 10 MHz No extension fees North Macedonia Q2 2019 Q3 2019 700 / 3,400 – 3,800 Auction, details tbd tbd tbd Austria Completed 3,400 – 3,800 Regional auction (CCAb) 1x 110 MHz € 57 million Austria Q1 2020 Q2 2020 700 / 1,500 / 2,100 Auction (CCAb), expected tbd tbd Poland Q4 2019 Q1 2020 3,600 – 3,800 tbd tbd tbd Poland Q3 2021 Q4 2022 700 / 3,600 – 3,800 tbd tbd tbd Romania Q4 2019 Q4 2019 700 / 800 / 1,500 / 2,600 / 3,400 – 3,600 Auction, details tbd tbd tbd Slovakia Q3 2019 Q4 2019 700 / 1,800 Auction (SMRAa), expected tbd tbd Czech Republic Q3 2019 Q4 2019 700 / 3,400 – 3,600 Auction, details tbd tbd tbd Hungary Q3 2019 Q3 2019 700 / 2,100 / 2,600 / 3,400 – 3,800 Auction, details tbd tbd tbd United States Completed 28,000 Auction (SMRAa) Still openc Still openc United States Started Q2 2019 24,000 Auction (CCAb), since Mar. 14, 2019 tbd tbd United States Q4 2019 Q1 2020 37,000 / 39,000 / 47,000 Auction (CCAb) tbd tbd 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.