Financial position of the Group

Total assets/total liabilities and shareholders’ equity amounted to EUR 273.9 billion as of March 31, 2021, up by EUR 9.0 billion against December 31, 2020. This increase is mainly attributable to investments in intangible assets for spectrum acquisition in the United States and Europe operating segments. This effect was offset in part by a decline in cash and cash equivalents.

On the assets side, trade receivables amounted to EUR 13.3 billion, down by EUR 0.3 billion against the 2020 year-end. This was attributable to the fact that the level of receivables in the United States, Germany, and Europe operating segments was lower on account of the reporting date. Exchange rate effects, mainly from the translation from U.S. dollars into euros, had an offsetting effect.

Intangible assets and property, plant and equipment increased by EUR 12.6 billion to total EUR 191.7 billion. This is mainly due to the conclusion of the C-band auction in the United States, where T‑Mobile US purchased 142 licenses for around EUR 7.8 billion (USD 9.3 billion) at auction. Furthermore, in the Europe operating segment, T‑Mobile Czech Republic purchased 5G licenses for EUR 0.1 billion at auction in November 2020. In Hungary, proceedings to re-award 900 and 1,800 MHz spectrum licenses that are due to expire in 2022 were held on January 28, 2021 and concluded the same day. Magyar Telekom acquired spectrum licenses for EUR 0.1 billion. Capital expenditure to upgrade and build out the network and acquire mobile terminal equipment in our United States operating segment and in connection with the broadband/fiber-optic build-out and mobile infrastructure in the Germany and Europe operating segments increased the carrying amount. Positive exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 5.6 billion. Depreciation, amortization and impairment losses reduced the net carrying amounts by EUR 5.4 billion in total, as did disposals of EUR 0.5 billion.

Right-of-use assets increased by EUR 0.7 billion compared to December 31, 2020 to EUR 31.0 billion, mainly due to the following effects: Positive exchange rate effects of EUR 1.1 billion, primarily from the translation of U.S. dollars into euros, and additions, also of EUR 1.1 billion, increased the carrying amount. Depreciation, amortization and impairment losses totaling EUR 1.4 billion and disposals of EUR 0.1 billion had a reducing effect.

Current and non-current financial assets decreased by EUR 1.6 billion to EUR 8.1 billion. Under derivative financial assets, the carrying amount of derivatives without a hedging relationship decreased by EUR 0.5 billion to EUR 1.5 billion, mainly in connection with effects from the measurement of embedded derivatives at T‑Mobile US – due in part to the premature repayment of bonds – and with the subsequent measurement of the stock options to buy shares in T‑Mobile US received from SoftBank in June 2020. The carrying amount of derivatives with a hedging relationship decreased by EUR 0.7 billion to EUR 1.3 billion, mainly due to the decrease in positive fair values from interest rate swaps in fair value hedges, which is primarily the result of a rise in interest rate levels. In connection with cash collateral, in particular in connection with the conclusion of the C-band auction in the United States operating segment, the carrying amount of other financial assets decreased by EUR 0.4 billion. By contrast, other financial assets increased by EUR 0.2 billion in connection with grants receivable from funding projects for the broadband build-out in Germany.

The increase of EUR 0.5 billion in other assets to EUR 10.9 billion was mainly due to the increase in other current assets caused by exchange rate effects, primarily from the translation of U.S. dollars into euros.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities increased by EUR 4.2 billion compared with the end of 2020 to a total of EUR 111.3 billion. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 2.8 billion. T‑Mobile US issued senior secured notes in the first quarter of 2021 with a total volume of USD 6.8 billion (EUR 5.7 billion) and made early repayments on bonds with a total volume of USD 2.0 billion (EUR 1.7 billion). In addition, euro bonds with a volume of EUR 1.0 billion were repaid on schedule in the Group. Financial liabilities decreased by EUR 0.5 billion in connection with collateral received for derivative financial instruments.

Current and non-current lease liabilities increased by EUR 0.5 billion to EUR 33.2 billion compared with December 31, 2020. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 1.2 billion. In particular, the decommissioning of former Sprint cell sites and the closure of some former Sprint shops in the United States operating segment had an offsetting effect.

Trade and other payables decreased by EUR 0.8 billion to EUR 8.9 billion, due in particular to lower liabilities to terminal equipment vendors and declines in liabilities for purchased services in the United States operating segment. Liabilities also decreased in the Germany and Europe operating segments. By contrast, changes in exchange rates, primarily from the translation of U.S. dollars into euros, increased the carrying amount.

Provisions for pensions and other employee benefits decreased from EUR 7.7 billion as of December 31, 2020 to EUR 6.6 billion, mainly due to an increase in the share prices of plan assets and interest rate adjustments. All this resulted in an actuarial gain of EUR 1.0 billion from the remeasurement of defined benefit plans to be recognized directly in equity.

Other liabilities increased by EUR 0.6 billion compared to December 31, 2020 to EUR 9.0 billion, mainly due to an increase of EUR 0.5 billion in other liabilities in connection with grants still to be received from funding projects for the broadband build-out in Germany, as well as exchange rate effects, primarily from the translation of U.S. dollars into euros.

Shareholders’ equity increased by EUR 4.9 billion as of December 31, 2020 to EUR 77.5 billion. This growth was attributable to profit of EUR 1.3 billion and to the increase in other comprehensive income of EUR 3.6 billion, primarily as a result of currency translation effects of EUR 2.7 billion recognized directly in equity and the remeasurement of defined benefit plans accounting for EUR 1.0 billion. By contrast, income taxes relating to components of other comprehensive income of EUR 0.2 billion had a negative impact on other comprehensive income.

For further information on the statement of financial position, please refer to the section “Selected notes to the consolidated statement of financial position” in the interim consolidated financial statements.

Changes in net debt

millions of €

Other effects of EUR 0.5 billion included effects from the measurement of derivatives mainly at T‑Mobile US, the recognition of liabilities for the acquisition of broadcasting rights, as well as a large number of smaller effects.

Free cash flow AL (before dividend payments and spectrum investment) increased by EUR 1.3 billion year-on-year to EUR 2.6 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 2.7 billion. This increase is primarily attributable to the business combination of T‑Mobile US and Sprint effective April 1, 2020. In addition, the continuing strong performance of the operating segments, especially in the United States, had an increasing effect on net cash from operating activities. The increase was partially offset in particular by a net increase of EUR 0.7 billion in interest payments, mainly as a result of the financial liabilities recognized and the restructuring begun in connection with the acquisition of Sprint, and the related increase in financing. Income tax payments increased by EUR 0.1 billion compared with the prior-year period. Factoring agreements did not result in any material effects on net cash from operating activities in the reporting year. In the prior-year period, factoring agreements had had negative effects of EUR 0.5 billion.

Cash capex (before spectrum investment) increased by EUR 0.9 billion to EUR 4.3 billion, mainly in the United States operating segment (EUR 1.1 billion) as a result of the inclusion of Sprint as well as the ongoing build-out of the 5G network. A decline of EUR 0.2 billion in cash capex in the Germany operating segment due to lower capital expenditure had an offsetting effect. Construction work had to be postponed in the first quarter of 2021 due to bad weather. Also, construction work planned for 2021 had been brought forward to the fourth quarter of 2020.

The increase in the principal portion of repayment of lease liabilities was due in particular to payments for leases in the United States operating segment as a result of the inclusion of Sprint.

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