Selected notes to the consolidated statement of financial position

Trade receivables

At EUR 15.5 billion, trade receivables increased by EUR 0.2 billion against the 2021 year-end level. The increase was primarily driven by higher receivables under the Equipment Installment Plan, customer additions, and exchange rate effects in the United States operating segment. This increase was partially offset by lower receivables in the Germany and Europe operating segments.

Contract assets

The carrying amount of contract assets at the reporting date totaled EUR 2.1 billion compared with EUR 2.0 billion as of December 31, 2021. Contract assets relate to receivables that have not yet legally come into existence, which arise from the earlier – as compared to billing – recognition of revenue, in particular from the sale of goods and merchandise. Furthermore, receivables from long-term construction contracts are recognized under contract assets.

Inventories

The carrying amount of inventories increased by EUR 0.4 billion compared to December 31, 2021 to EUR 3.2 billion, mainly due to higher inventories of high-priced mobile terminal equipment in the Germany and United States operating segments. Positive exchange rate effects, mainly from the translation from U.S. dollars into euros, also increased the carrying amount.

Intangible assets

The carrying amount of intangible assets increased by EUR 4.6 billion to EUR 137.2 billion, primarily due to additions of EUR 3.8 billion, EUR 2.6 billion of which resulted from the acquisition of mobile spectrum for 199 mobile licenses acquired in January 2022 at the 3,450 MHz auction held by the Federal Communications Commission (FCC). Positive exchange rate effects of EUR 2.3 billion, primarily from the translation of U.S. dollars into euros, and effects of changes in the composition of the Group of EUR 0.1 billion also increased the carrying amount, while amortization and impairment losses of EUR 1.6 billion reduced it.

Property, plant and equipment

The carrying amount of property, plant and equipment increased by EUR 1.4 billion compared to December 31, 2021 to EUR 63.2 billion. Additions of EUR 4.4 billion for the upgrade and build-out of the network and in connection with the broadband/fiber-optic build-out and mobile infrastructure build-out in the Germany and Europe operating segments increased the carrying amount. The modification of the arrangements between T‑Mobile US and Crown Castle regarding existing cell sites increased the carrying amount by EUR 0.8 billion. Positive exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 0.6 billion, while depreciation and impairment losses totaling EUR 3.3 billion and disposals of EUR 0.4 billion had an offsetting effect.

For more information on the modification of the arrangements between T‑Mobile US and Crown Castle, please refer to the section “Right-of-use assets.”

Right-of-use assets

The carrying amount of the right-of-use assets increased by EUR 6.3 billion compared to December 31, 2021 to EUR 37.0 billion. This increase was driven by additions of EUR 7.6 billion, primarily as a result of the agreement signed between T‑Mobile US and Crown Castle in January 2022 on the modification of existing arrangements, mainly concerning the lease of Crown Castle’s cell sites. This agreement includes a modification of the monthly lease payments for existing cell sites and an extension of the non-cancelable lease term until December 31, 2033 (with additional extension options). The modification of the arrangements results in an increase of USD 7.3 billion (EUR 6.6 billion) each in the right-of-use assets and in lease liabilities, and an increase of USD 0.9 billion (EUR 0.8 billion) each in property, plant and equipment and in other financial liabilities for contract components that, due to their financing character, do not fall under the scope of IFRS 16. Positive exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 0.7 billion. The carrying amount was reduced by depreciation, amortization and impairment losses of EUR 1.8 billion. This included a EUR 0.4 billion increase in depreciation and amortization due to a reduction in the useful life of leased network technology for cell sites in the United States operating segment following the business combination of T‑Mobile US and Sprint. Reclassifications of lease assets at the end of the contractual lease term to property, plant and equipment, in the United States operating segment in particular, also reduced the carrying amount by EUR 0.1 billion.

Capitalized contract costs

As of March 31, 2022, the carrying amount of capitalized contract costs was up by EUR 0.2 billion against the level of December 31, 2021 to EUR 2.8 billion. The capitalized contract costs primarily relate to the United States, Germany, and Europe operating segments.

Investments accounted for using the equity method

The carrying amount of investments accounted for using the equity method increased from EUR 1.0 billion on December 31, 2021 to EUR 2.0 billion, mainly in connection with the completed sale of a 50 % stake in GlasfaserPlus. Following the loss of control as a result of the transaction, the GlasfaserPlus entities were deconsolidated as of February 28, 2022. Since this date, the remaining 50 % of the shares in the joint venture have been included in the consolidated financial statements as an investment accounted for using the equity method with a carrying amount of EUR 0.9 billion. After the transaction was consummated, EUR 0.1 billion was paid into the reserves of GlasfaserPlus as per agreement.

For further information on the joint venture GlasfaserPlus with IFM, please refer to the section “Changes in the composition of the Group and other transactions.”

Other financial assets

The carrying amount of current and non-current other financial assets decreased from EUR 8.9 billion as of December 31, 2021 to EUR 8.3 billion. The carrying amount of derivatives with a hedging relationship decreased by EUR 0.8 billion to EUR 0.7 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 the interest rate level. The carrying amount of derivatives without a hedging relationship increased by a net effect of EUR 0.1 billion to EUR 1.3 billion. In connection with the stock options received from SoftBank to purchase shares in T‑Mobile US, the carrying amount of the stock options remaining after the partial exercise in June 2021 increased by EUR 0.2 billion compared with December 31, 2021. This was thanks to the positive development of the T‑Mobile US share price and the amortization from the initial measurement of the stock options at fair value. The carrying amount was also increased by positive measurement effects of EUR 0.1 billion from energy forward agreements embedded in contracts. In connection with negative measurement effects from derivatives embedded in bonds issued by T‑Mobile US, the carrying amount of derivatives without a hedging relationship decreased by EUR 0.3 billion. The net total of originated loans and receivables increased by EUR 0.1 billion to EUR 5.6 billion. A contingent consideration receivable of EUR 0.5 billion was recorded in connection with the sale of a 50 % stake in GlasfaserPlus. As the remainder of the purchase price, this receivable will arise in stages upon achieving certain build-out milestones. In connection with receivables from grants still to be received from funding projects for the broadband build-out in Germany, originated loans and receivables increased by EUR 0.1 billion. By contrast, cash collateral deposited decreased by EUR 0.1 billion.

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

For further information on the joint venture GlasfaserPlus with IFM, please refer to the section “Changes in the composition of the Group and other transactions.”

Non-current assets and disposal groups held for sale

The carrying amount of non-current assets and disposal groups held for sale decreased by EUR 4.8 billion compared with December 31, 2021 to EUR 0.1 billion. EUR 4.7 billion of this decrease related to the sale of T‑Mobile Netherlands on March 31, 2022 and EUR 0.1 billion to the sale of the 50 % stake in GlasfaserPlus on February 28, 2022. Both these companies were classified as held for sale as of December 31, 2021 on account of the specific intention to sell them.

For further information on these corporate transactions, please refer to the section “Changes in the composition of the Group and other transactions.”

Financial liabilities and lease liabilities

The following table shows the composition and maturity structure of financial liabilities as of March 31, 2022:

The carrying amount of current and non-current financial liabilities decreased by EUR 0.9 billion compared with year-end 2021 to EUR 110.6 billion, primarily due to the factors described below. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 1.4 billion.

The carrying amount of bonds and other securitized liabilities decreased by EUR 0.6 billion. Repayments by T‑Mobile US of a bond with a volume of USD 0.5 billion (EUR 0.5 billion) and in the Group of a euro bond in the volume of EUR 0.1 billion reduced the carrying amount in the reporting period. In addition, the carrying amount decreased by EUR 1.3 billion in connection with measurement effects from derivatives with a hedging relationship, the offsetting entry for which is posted under bonds and other securitized liabilities. This decrease was mainly due to the increase in negative fair values from interest rate swaps in fair value hedges, which is primarily the result of a rise in the interest rate level. The carrying amount of bonds and other securitized liabilities increased by EUR 1.2 billion due to exchange rate effects, especially from the translation of U.S. dollars into euros.

The carrying amount of liabilities to banks decreased by EUR 0.2 billion compared with December 31, 2021 to EUR 3.8 billion, mainly due to the repayments made in the reporting period.

The liabilities with the right of creditors to priority repayment in the event of default of EUR 3.2 billion (December 31, 2021: EUR 3.2 billion) relate primarily to bonds issued by Sprint. Collateral was provided for these bonds, hence they constitute a separate class of financial instruments. Repayments in the reporting period in the amount of EUR 0.1 billion when translated into euros reduced the carrying amount. Exchange rate effects from the translation of U.S. dollars into euros raised the carrying amount by EUR 0.1 billion.

The carrying amount of other interest-bearing liabilities decreased by EUR 0.3 billion compared with December 31, 2021 to EUR 7.0 billion. The carrying amount of other interest-bearing liabilities decreased by a total of EUR 1.2 billion in connection with collateral received for derivative financial instruments. The modification of the arrangements between T‑Mobile US and Crown Castle regarding cell sites increased the carrying amount by EUR 0.8 billion.

For further information on cash collateral, please refer to the section “Disclosures on financial instruments.”

For more information on the modification of the arrangements between T‑Mobile US and Crown Castle, please refer to the section “Right-of-use assets.”

The carrying amount of derivative financial liabilities increased by EUR 0.1 billion to EUR 0.8 billion, driven by negative measurement effects of derivatives with a hedging relationship, mainly due to the increase in negative fair values from interest rate swaps in fair value hedges, which is primarily the result of a rise in the interest rate level. The carrying amount was reduced by positive measurement effects from a forward transaction to hedge the price of acquiring T‑Mobile US shares in the future.

For further information on derivative financial liabilities, please refer to the section “Disclosures on financial instruments.”

The carrying amount of current and non-current lease liabilities increased by EUR 7.0 billion to EUR 40.1 billion compared with December 31, 2021. This increase primarily relates to the modification of the arrangements between T‑Mobile US and Crown Castle, which resulted in an increase in the carrying amounts of lease liabilities of EUR 6.6 billion. By contrast, the carrying amount was reduced by EUR 0.2 billion, in part in connection with the decommissioning of former Sprint cell sites and the closure of some former Sprint shops in the United States operating segment. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 0.7 billion.

For more information on the modification of the arrangements between T‑Mobile US and Crown Castle, please refer to the section “Right-of-use assets.”

Trade and other payables

The carrying amount of trade and other payables increased by EUR 0.4 billion to EUR 10.9 billion, due in particular to higher liabilities to terminal equipment vendors in the United States operating segment. Liabilities also increased in the Systems Solutions and Germany operating segments, but declined in the Europe operating segment. Exchange rate effects, primarily from the translation of U.S. dollars into euros, increased the carrying amount.

Provisions for pensions and other employee benefits

The carrying amount of provisions for pensions and other employee benefits decreased by EUR 1.1 billion as of December 31, 2021 to EUR 5.0 billion, mainly due to interest rate adjustments. Overall, the remeasurement of defined benefit plans resulted in an actuarial gain of EUR 1.1 billion.

Current and non-current other provisions

The carrying amount of current and non-current other provisions decreased by EUR 0.9 billion compared with the end of 2021 to EUR 8.5 billion. Other provisions for personnel costs decreased by EUR 0.5 billion, mainly in connection with the bonuses paid out to employees in the United States operating segment and a decline in the provision recognized for the Civil Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK). The latter was primarily attributable to the subsequent measurement of the present value determined using actuarial principles (interest effect). The provisions for restoration obligations decreased by EUR 0.2 billion.

Other liabilities

The carrying amount of current and non-current other liabilities increased by EUR 0.5 billion to EUR 6.1 billion, EUR 0.3 billion of which was attributable to an increase in liabilities from other taxes. Liabilities due to existing build-out obligations in connection with grants still to be received from funding projects for the broadband build-out in Germany increased by EUR 0.1 billion.

Contract liabilities

The carrying amount of current and non-current contract liabilities increased by EUR 0.1 billion compared with December 31, 2021 to EUR 2.3 billion. These mainly comprise deferred revenues.

Liabilities directly associated with non-current assets and disposal groups held for sale

The carrying amount of liabilities directly associated with non-current assets and disposal groups held for sale decreased by EUR 1.4 billion against December 31, 2021 to EUR 0.0 billion, in connection with the sale of T‑Mobile Netherlands on March 31, 2022. This company was classified as held for sale as of December 31, 2021 on account of the specific intention to sell it.

For further information on the sale of T-Mobile Netherlands, please refer to the section “Changes in the composition of the Group and other transactions.”

Shareholders’ equity

The carrying amount of shareholders’ equity increased from EUR 81.5 billion as of December 31, 2021 to EUR 87.7 billion. Profit of EUR 4.4 billion and capital increases from share-based payments of EUR 0.1 billion increased shareholders’ equity, as did other comprehensive income of EUR 2.4 billion, primarily as a result of currency translation effects of EUR 1.4 billion recognized directly in equity and the remeasurement of defined benefit plans accounting for EUR 1.1 billion, as well as gains from hedging instruments of EUR 0.2 billion. By contrast, income taxes relating to components of other comprehensive income of EUR 0.3 billion had a negative impact on other comprehensive income. Changes in the composition of the Group – mainly due to the sale of T‑Mobile Netherlands in the Group Development operating segment – reduced the carrying amount of shareholders’ equity by EUR 0.6 billion and transactions with owners by EUR 0.1 billion.

The following table shows the changes in the composition of the Group, the development of transactions with owners, and the capital increase made against contribution in kind in the previous financial year:

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