Financial position of the Group

Total assets amounted to EUR 292.4 billion as of March 31, 2022, up by EUR 10.8 billion against December 31, 2021. The increase relates in part to spectrum acquired in the United States operating segment. The agreement signed between T‑Mobile US and Crown Castle on the modification of existing arrangements concerning the lease of cell sites also increased total assets, as did positive exchange rate effects, primarily from the translation of U.S. dollars into euros, and higher cash and cash equivalents. Total assets were reduced due to the sale of T‑Mobile Netherlands.

On the assets side, trade receivables amounted to EUR 15.5 billion, up by EUR 0.2 billion against the 2021 year-end. 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.

Intangible assets and property, plant and equipment increased by EUR 6.0 billion to EUR 200.4 billion in total, EUR 2.6 billion of which was attributable to the mobile spectrum acquired in the United States in January 2022. Capital expenditure for the upgrade and build-out the network and in connection with the broadband/fiber-optic build-out and mobile infrastructure in the Germany and Europe operating segments also increased the carrying amounts. The modification of the arrangements between T‑Mobile US and Crown Castle for existing cell sites increased the carrying amount by EUR 0.8 billion. Positive exchange rate effects additionally increased the carrying amounts by EUR 2.9 billion. Depreciation charges reduced the carrying amounts by EUR 4.9 billion overall and disposals by EUR 0.4 billion.

Compared with December 31, 2021, right-of-use assets increased by EUR 6.3 billion to EUR 37.0 billion. The increase of the carrying amount was driven by additions of EUR 7.6 billion, primarily as a result of the agreement signed between T‑Mobile US and Crown Castle on the modification of existing arrangements, mainly concerning the lease of Crown Castle’s cell sites. As a result of the modification of the arrangements, right-of-use assets increased by EUR 6.6 billion. 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 decreased 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.

Current and non-current financial assets decreased by EUR 0.5 billion 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 increased by EUR 0.2 billion, mainly due to the positive development of the T‑Mobile US share price. 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. This increased the net total of originated loans and receivables.

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 and others, please refer to the section “Group organization, strategy, and management.”

Other assets increased by EUR 1.9 billion to EUR 13.8 billion, EUR 1.0 billion of which was due to the increase in the carrying amount of investments accounted for using the equity method, essentially as a result of the sale of a 50 % stake in GlasfaserPlus. Following the loss of control as a result of the transaction, GlasfaserPlus was 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. Higher inventories of high-priced mobile terminal equipment in the Germany and United States operating segments also contributed to the increase, as did exchange rate effects.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities decreased by EUR 0.9 billion compared with the end of 2021 to a total of EUR 110.6 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 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. 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 other interest-bearing liabilities decreased by EUR 0.3 billion compared with December 31, 2021. 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 for existing cell sites increased the carrying amount by EUR 0.8 billion. The carrying amount of derivative financial liabilities increased by EUR 0.1 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.

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.

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 decreased by EUR 1.1 billion compared with December 31, 2021 to EUR 5.0 billion, mainly due to interest rate adjustments that resulted in an actuarial gain of EUR 1.1 billion from the remeasurement of defined benefit plans to be recognized directly in equity.

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.

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.

Other liabilities increased by EUR 0.8 billion compared to December 31, 2021 to EUR 9.2 billion, mainly due to an increase in other liabilities of EUR 0.5 billion, driven by an increase in liabilities from other taxes of EUR 0.3 billion. In addition, income tax liabilities increased by EUR 0.2 billion.

Shareholders’ equity increased from EUR 81.5 billion as of December 31, 2021 to EUR 87.7 billion. Profit of EUR 4.4 billion, other comprehensive income of EUR 2.4 billion, and capital increases from share-based payments of EUR 0.1 billion increased shareholders’ equity. 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.

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 €

The modification of the arrangements between T‑Mobile US and Crown Castle resulted in an overall increase in net debt of EUR 7.4 billion, due to an increase in right-of-use assets and in lease liabilities of EUR 6.6 billion each and an increase in property, plant and equipment and in other financial liabilities of EUR 0.8 billion each.

Free cash flow AL (before dividend payments and spectrum investment) increased by EUR 1.2 billion year-on-year to EUR 3.8 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 1.1 billion. The strong performance both in the United States and outside of the United States had a positive effect on net cash from operating activities. Positive effects resulting in particular from a decrease in income tax payments of EUR 0.2 billion and a decrease in net interest payments of EUR 0.1 billion. Factoring agreements of EUR 0.1 billion had a positive impact on net cash from operating activities in the first quarter of 2022. Factoring agreements had had no material effects in the prior-year period.

Cash capex (before spectrum investment) increased by EUR 0.4 billion to EUR 4.7 billion, mainly as a result of the ongoing build-out of the 5G network in the United States operating segment where cash capex increased by EUR 0.4 billion to EUR 3.0 billion. In the Germany operating segment, capital expenditure totaled around EUR 0.9 billion in the first quarter of 2022, with much of this figure going towards the build-out of our fiber-optic and 5G networks. In the Europe operating segment, our investments totaled EUR 0.4 billion. Here, we also continue to invest in the provision of broadband and fiber-optic technology and in 5G as part of our integrated network strategy.

The decrease in the principal portion of repayment of lease liabilities was due in particular to payments for leases in the United States operating segment.

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.