The economic environment

This section provides additional information on, and explains recent changes to, the economic situation as described in the combined management report of the 2020 Annual Report, focusing on macroeconomic developments in the first three months of 2021, the outlook, the currently prevailing economic risks, and the regulatory environment. The macroeconomic outlook is provided contingent on the understanding that the further course of the pandemic will have a major effect on quantifying the impact of the coronavirus pandemic.

Macroeconomic development

The global economy continues to recover, albeit in the shadow of the coronavirus pandemic. In the April 2021 update to its outlook, the International Monetary Fund (IMF) announced it expected the global economy to expand by 6.0 % in 2021, followed by growth of 4.4 % in 2022.

For the German economy, the IMF expects GDP to grow by 3.6 % in the current year. The coronavirus crisis is affecting individual industry sectors to varying extents. The business climate in the information and communications technology sector has recently brightened again to a substantial extent: The Bitkom-ifo-Digitalindex, calculated on the basis of the business situation and expectations, reached a two-year high in March 2021.

The economies of our core markets in North America and Europe, too, will expand this year, with the IMF predicting growth of 6.4 % in the U.S. economy and of 4.4 % in the eurozone.

Outlook

The U.S. economy recovered in the first quarter of 2021. Stronger growth is expected following the recent announcement of a USD 1,900 billion stimulus package. In Europe, the economic situation is divided: While many service areas continue to be impacted by measures implemented to contain the pandemic, industrial activity remains robust. Economic development over the coming months will depend on the spread of infection.

Overall economic risks

Apart from the prevailing uncertainty relating to the further course of the coronavirus pandemic, there is a concomitant risk of companies encountering liquidity problems despite the relief measures implemented in many countries. Moreover, risks regarding the stability of global finance markets can arise from an expansionary monetary and fiscal policy. Further risks to economic development arise from the smoldering trade conflicts between the United States and China, as well as from other geopolitical risks.

Regulation

Partnership agreements take effect. After agreeing to extend our long-standing partnership agreements in the fixed network with Telefónica and Vodafone in the fourth quarter of 2020, we also signed corresponding long-term agreements with 1&1 and NetCologne in the first quarter of 2021. These cover the existing broadband networks as well as the FTTH fiber-optic networks to be continuously built out by Deutsche Telekom in the years to come. Since there were no regulatory objections to the agreements on the part of the Bundesnetzagentur, they entered into force effective April 1, 2021. The agreements establish solid terms for cooperation in the fixed network over the next ten years.

Awarding of spectrum

The assignment phase of the C-band auction (3.7 to 4.2 GHz) in the United States ended on February 17, 2021. On February 24, 2021, the FCC announced the number of licenses obtained by participating companies. Verizon paid around USD 45 billion for 3,511 licenses, AT&T over USD 23 billion for 1,621 licenses, and T‑Mobile US USD 9.3 billion for 142 licenses. A total of 280 MHz was sold at the C-band auction. The new license holders must make relocation payments over the next three years to cover the transfer of licenses from the former holders. The payments T‑Mobile US will have to make are expected to amount to USD 1.2 billion. 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 2x 8 MHz and 2x 20 MHz in the respective bands for a total price of EUR 123 million (when translated into euros).

Croatia is preparing to award the 700 MHz; 3,400 to 3,800 MHz; and 26,000 MHz bands in the second and third quarter of 2021. A public consultation on the award rules and spectrum usage conditions began on April 2, 2021 and is expected to conclude at the end of July 2021. As previously, Poland has made no further announcements regarding a new start date for the postponed auction for 3,400 to 3,800 MHz. The process is being held up by incomplete legislative procedures. Romania plans to hold a large spectrum auction for the 700; 800; 1,500; 2,600; and 3,400 to 3,800 MHz bands, which is expected to take place in the second half of 2021. The Slovakian regulatory authority is preparing to allocate the 3,400 to 3,800 MHz band, which will become available for mobile broadband usage in 2024. While a public consultation on this is now underway, a possible postponement to the following year cannot be ruled out.

The following table provides an overview of the main ongoing and planned spectrum awards and auctions as well as license extensions. It also indicates spectrum to be awarded in the near future in various countries.