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 2021 Annual Report, focusing on macroeconomic developments in the first three months of 2022, the currently prevailing economic risks, and the regulatory environment. A macroeconomic outlook is currently only possible to a limited extent since the war in Ukraine has substantially increased economic uncertainty and downside risks.

Macroeconomic development

The war in Ukraine has had a significant negative impact on the global economic outlook. In response to the offensive, extensive sanctions have been imposed on Russia that largely exclude the country from the international financial markets and significantly curtail trade in goods. In addition, the development of the global economy continues to be impacted by the coronavirus pandemic. Due to the spread of the Omicron variant in China, largescale lockdowns have been imposed in Shanghai and other major Chinese cities.

In light of current developments, the International Monetary Fund (IMF) revised its forecasts downwards in April 2022 and now expects global economic output to grow by 3.6 % in 2022 and 2023.

For the German economy, the IMF expects GDP to grow by 2.1 % and inflation to increase by 5.5 % in the current year. Given the war in Ukraine and its economic consequences, the business climate has worsened in the economy as a whole as well as in the digital sector. In March 2022, the Bitkom-ifo index for the current business situation declined; business expectations for the coming six months also deteriorated substantially.

The economies of our core markets in North America and Europe will grow this year, albeit less than forecast prior to the start of the war in Ukraine. This year, the IMF expects economic output to grow by 3.7 % in the United States and by 2.8 % in the eurozone. In the United States, the war in Ukraine has intensified the inflation problem – the IMF expects inflation to hit 7.7 % in the current year. In view of the overheated economy, the U.S. Federal Reserve began to take countermeasures in March 2022 and increased the key interest rate by 25 base points.

Overall economic risks

Uncertainty about global economic development increased substantially in the first quarter of 2022. The main risks result from a possible ban on deliveries or imports of Russian energy sources, the effects of the lockdown measures in China on global supply chains, and a re-escalation of the global pandemic. In the United States, the U.S. Federal Reserve is likely to gradually further increase its base rate, which could put the brakes on overall economic demand. In March 2022, the European Central Bank (ECB) decided to stop its bond purchases in the third quarter of 2022 if the outlook for inflation does not come down again. The ECB has declared that it will only consider raising the base rate “some time” after its exit from bond purchases.

Regulation

European roaming regulation. On April 13, 2022, the European Commission published the new Roaming Regulation, which expands and extends until 2032 the existing Roaming Regulation. The Roam like at Home principle introduced in 2017, which allows consumers to make calls at domestic terms and conditions and use data volumes within the European Union, will thus apply for a further ten years. New rules were also added on transparency, and the new regulation will ensure that the quality of roaming services is not lower than mobile services at home. New, lower price caps through 2031 are being set for inter-operator rates for corresponding wholesale services, to be re-examined in 2024/2025. Steps to tighten regulation on voice calling and text messaging (SMS) between EU member states that had been discussed earlier were not included in the final regulation. The regulation will come into force as of July 1, 2022.

Approval of rates for copper-based wholesale services in Germany for 10 years. On April 13, 2022, the Bundesnetzagentur published a consultation draft setting out the rates for unbundled local loop lines (ULLs) for the period from July 2022 to June 2032, i.e., for 10 years. According to the draft, a rate of EUR 10.65/month is to apply for the (longer) copper line section between the end customer and the main distribution frame in the Telekom building and of EUR 6.92/month for the (shorter) copper line section between the end customer and the cable distribution box on the street from July 1, 2022. These rates are to increase by 4 % as of July 1, 2027 to EUR 11.08/month and EUR 7.20/month, respectively. The current draft ruling is out for consultation at national and EU level until June 2022. We expect a final decision to be reached at the end of June 2022.

Awarding of spectrum

In the United States, the assignment phase for Auction 110 ended on January 4, 2022, at which the Federal Communications Commission (FCC) assigned a total of 100 MHz frequencies in the 3,450 to 3,550 MHz band. T‑Mobile US paid USD 2.9 billion (EUR 2.6 billion) to secure itself a total of 199 licenses. In the first quarter of 2022, OTE in Greece participated successfully in the allocation of spectrum in the 430 MHz band. The company secured itself 2 x 2 MHz for a term of 15 years with an option to extend by 5 years for a starting bid of around EUR 1.2 million. Due to delays, the purchase price is not expected to be paid until the second quarter of 2022.

In Croatia, the regulatory authority is gearing up for a multi-band auction, expected to take place in the fourth quarter of 2022. Based on the consultation concluded in March 2022, it is likely that the auction will take an SMRA format. The window for applications is expected to open in the third quarter of 2022. 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. A further four 80 MHz licenses, capped at 80 MHz, are expected to be awarded by way of an SMRA. All further details of the auction are pending. Romania is planning the award of 5G spectrum in the 700 MHz and 1,500 MHz bands, which is expected to take place in the second half of 2022. The Slovakian regulatory authority is preparing to allocate the 3,400 to 3,800 MHz band, which will not become available for mobile broadband usage before 2024, however. A public consultation was held and the decision made to postpone the award until the second quarter of 2022. In the meantime, the previously unused 2,600 MHz TDD band (50 MHz) has been added to the spectrum award planning. In the United States, the FCC set the start date for the next spectrum Auction 108 (2.5 GHz band) for July 29, 2022. In Germany, the usage rights for 800; 1,800; and 2,600 MHz are due to expire at the end of 2025. According to its current consultation, the Bundesnetzagentur still sees a considerable need for clarification on a range of issues. Licenses are not expected to be awarded before 2024.

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.