Selected notes to the consolidated income statement

Sprint has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since April 1, 2020. As a result of the change in the composition of the Group during the year, the remeasured assets and liabilities were recognized as of this date, and all income and expenses generated from the date of first-time consolidation are included in Deutsche Telekom’s consolidated income statement. This affects the comparability of the figures for the current period with the prior-year figures.

For further information on the business combination of T‑Mobile US and Sprint, please refer to the section “Changes in the composition of the Group and other transactions.”

Net revenue

Net revenue breaks down into the following revenue categories:

For further information on changes in net revenue, please refer to the section “Development of business in the Group” in the interim Group management report.

Other operating income

In the prior-year period, income from the disposal of non-current assets primarily comprised income from the disposal of real estate previously recognized as non-current assets and disposal groups held for sale. Miscellaneous other operating income includes a large number of individual items accounting for marginal amounts.

Other operating expenses

Miscellaneous other operating expenses include a large number of individual items accounting for marginal amounts.

Depreciation, amortization and impairment losses

At EUR 6.8 billion, depreciation, amortization and impairment losses on intangible assets, property, plant and equipment, and right-of-use assets were EUR 2.4 billion higher overall in the first quarter of 2021 than in the prior-year period. Depreciation of property, plant and equipment increased by EUR 1.5 billion and amortization of intangible assets by EUR 0.4 billion. Depreciation of right-of-use assets increased by EUR 0.5 billion. These increases are all largely due to Sprint, which has been included in the consolidated group since April 1, 2020. At EUR 0.1 billion, impairment losses were EUR 0.1 billion higher than in the prior-year period. This increase was attributable, among other factors, to impairment losses resulting from ad hoc impairment testing conducted in 2020 of assets assigned to the Systems Solutions cash-generating unit.

For further information on the impairment losses recognized following ad hoc testing, please refer to the section “Selected notes to the consolidated statement of financial position.”

Profit/loss from financial activities

The loss from financial activities increased by EUR 0.7 billion compared with the first quarter of 2020 to EUR 1.7 billion. This increase was primarily due to a EUR 0.6 billion increase in finance costs to EUR 1.2 billion, mainly due to the financial liabilities acquired in connection with the acquisition of Sprint and the related restructuring and increase of financing. Other financial expense increased by EUR 0.1 billion year-on-year to EUR 0.5 billion, due in part to the lower gains from financial instruments compared with the prior-year period in connection with effects from the measurement – in part from the premature repayment of bonds and the resulting derecognition of the embedded derivative – of embedded derivatives at T‑Mobile US and with the subsequent measurement of the stock options to buy shares in T‑Mobile US received from SoftBank in June 2020. Higher interest income from the measurement of provisions and liabilities, especially in the Group Headquarters & Group Services segment, had an offsetting effect. Overall, the share of profit/loss of associates and joint ventures accounted for using the equity method was on a par with the prior-year period.

For further information on embedded derivatives at T‑Mobile US, please refer to the section “Disclosures on financial instruments.”

Income taxes

A tax expense of EUR 0.5 billion was recognized in the first quarter of 2021. The effective tax rate of 29 % essentially reflects the shares of the different countries in profit before income taxes and their respective national tax rates. A tax expense of EUR 0.5 billion was also recorded in the prior-year period, with a comparable tax rate.