Financial position of the Group

Total assets amounted to EUR 303.8 billion as of March 31, 2023, up by EUR 5.2 billion against December 31, 2022. The main contributing factors were the cash proceeds from the sale of GD Towers, the sale-and-leaseback transaction concluded in this connection to lease the sold passive network infrastructure in Germany and Austria, and the inclusion of the remaining 49.0 % stake. Total assets were reduced in connection with the derecognition of the assets and liabilities that had been fully consolidated until the transaction was closed. Exchange rate effects, primarily from the translation of U.S. dollars into euros, decreased the carrying amount of total assets.

On the assets side, trade receivables amounted to EUR 15.9 billion, down by EUR 0.9 billion against the 2022 year-end. This was due to lower receivables in the United States and Germany, operating segments. Exchange rate effects, mainly from the translation of U.S. dollars into euros, also decreased the carrying amount.

Intangible assets decreased by EUR 2.5 billion to EUR 138.1 billion, due in particular to exchange rate effects of EUR 2.0 billion, primarily from the translation of U.S. dollars into euros. Amortization and impairment losses of EUR 1.7 billion also reduced it. By contrast, additions had an increasing effect of EUR 1.2 billion on the carrying amount.

Property, plant and equipment decreased by EUR 0.2 billion compared with December 31, 2022 to EUR 65.5 billion. Depreciation charges of EUR 2.9 billion had a decreasing effect on the carrying amount. Exchange rate effects of EUR 0.5 billion, primarily from the translation of U.S. dollars into euros, and disposals of EUR 0.1 billion also reduced the carrying amount. By contrast, additions for the upgrade and build-out of the network (broadband, fiber-optic, and mobile infrastructure build-out) increased the carrying amount by EUR 3.3 billion.

Compared with December 31, 2022, right-of-use assets increased by EUR 0.8 billion to EUR 34.5 billion. The carrying amount was increased by additions of EUR 2.8 billion, mainly due to the sale and leaseback of sold passive network infrastructure in Germany and Austria in connection with the sale of the GD Towers. In this connection, retained right-of-use assets of EUR 2.0 billion were recognized. Depreciation, amortization and impairment losses of EUR 1.4 billion and exchange rate effects of EUR 0.5 billion, primarily from the translation of U.S. dollars into euros, decreased the carrying amount.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Investments accounted for using the equity method increased by EUR 6.0 billion compared to December 31, 2022, to EUR 7.3 billion, essentially as a result of the sale of the 51.0 % stake in GD Towers. Following the loss of control pursuant to the IFRSs as a result of the transaction, the companies were deconsolidated as of February 1, 2023. Since this date, the remaining 49.0 % of the shares have been included in the consolidated financial statements as an investment accounted for using the equity method. The carrying amount of the investment amounted to EUR 6.0 billion as of March 31, 2023.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Current and non-current financial assets increased by EUR 1.0 billion to EUR 10.9 billion. The net total of originated loans and receivables increased by EUR 1.0 billion to EUR 5.3 billion. Under short-term investments, government bonds were bought during the course of the year. As of March 31, 2023, they had a carrying amount of EUR 0.8 billion. The carrying amount was also increased by an existing shareholder loan to GD Towers of EUR 0.4 billion, which must be reported in the consolidated statement of financial position as a result of the deconsolidation of the companies. By contrast, the carrying amount of cash collateral deposited was reduced by EUR 0.2 billion.

Non-current assets and disposal groups held for sale decreased by EUR 4.2 billion compared with December 31, 2022 to EUR 0.5 billion. The sale of GD Towers as of February 1, 2023 had a reducing effect of EUR 4.2 billion. Up until this date, the assets had been classified as held for sale on account of the sales agreement concluded.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Other assets increased by EUR 0.5 billion to EUR 12.3 billion. Current and non-current other assets contributed EUR 0.3 billion to this increase, due to an increase in receivables from other taxes. In addition, contract assets and capitalized contract costs each increased by EUR 0.1 billion.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities decreased by EUR 4.6 billion compared with the end of 2022 to a total of EUR 108.4 billion. The carrying amount of bonds and other securitized liabilities decreased by EUR 3.9 billion, with exchange rate effects, in particular from the translation of U.S. dollars into euros, accounting for EUR 1.3 billion of this decrease. Early repayments in the Group by way of early buy-backs in February and March 2023 of EUR, GBP, and USD bonds with a total volume of EUR 3.3 billion, and the scheduled repayment of a EUR bond of EUR 0.2 billion also reduced the carrying amount. Net repayments of commercial paper also decreased the carrying amount by EUR 2.3 billion. The carrying amount was increased by the senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 3.0 billion (EUR 2.8 billion). The carrying amounts of liabilities to banks, liabilities with the right of creditors to priority repayment in the event of default, other interest-bearing liabilities, and derivative financial liabilities all recorded minor decreases.

Current and non-current lease liabilities increased by EUR 3.7 billion to EUR 42.5 billion compared with December 31, 2022, mainly resulting from the sale and leaseback of sold passive network infrastructure in Germany and Austria in connection with the sale of GD Towers. As a result of this transaction, lease liabilities increased by EUR 5.0 billion. By contrast, lease liabilities in the United States operating segment decreased by EUR 0.6 billion due to a decline in network and build-out investments and the closure of former Sprint shops. Exchange rate effects, in particular from the translation of U.S. dollars into euros, reduced the carrying amount by EUR 0.6 billion.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Trade and other payables decreased by EUR 0.9 billion to EUR 11.1 billion, due in particular to lower liabilities following a sharp decline in procurement volumes in the United States and Europe operating segments owing to seasonal effects. Exchange rate effects, mainly from the translation of U.S. dollars into euros, also decreased the carrying amount.

Provisions for pensions and other employee benefits decreased by EUR 0.5 billion compared with December 31, 2022 to EUR 3.7 billion, mainly due to an increase in the fair values of plan assets. The decline in the discount rate compared with December 31, 2022 had an offsetting effect. Overall, the remeasurement of defined benefit plans resulted in an actuarial gain of EUR 0.4 billion recognized directly in equity.

Current and non-current other provisions decreased by EUR 0.5 billion compared with the end of 2022 to EUR 7.8 billion. Other provisions for personnel costs decreased by EUR 0.2 billion, and the provisions for procurement and sales support by EUR 0.1 billion, mainly in connection with the bonuses paid out to employees and sales partners in the United States operating segment. Provisions for restoration obligations also decreased by EUR 0.1 billion, due in particular to the decommissioning of the former Sprint mobile network and shop closures. Exchange rate effects, in particular from the translation of U.S. dollars into euros, also contributed to the decrease in the carrying amount.

Liabilities directly associated with non-current assets and disposal groups held for sale decreased by EUR 3.0 billion against December 31, 2022 to EUR 0.4 billion. The sale of GD Towers as of February 1, 2023 reduced the carrying amount by EUR 3.0 billion. Up until this date, the liabilities had been classified as held for sale on account of the sales agreement concluded.

Miscellaneous liabilities increased by EUR 0.6 billion compared to December 31, 2022 to EUR 9.5 billion, mainly due to an increase in other liabilities of EUR 0.4 billion, driven by an increase in liabilities from other taxes. In addition, income tax liabilities increased by EUR 0.2 billion and contract liabilities by EUR 0.1 billion.

Shareholders’ equity increased from EUR 87.3 billion as of December 31, 2022 to EUR 98.7 billion, with profit of EUR 16.4 billion and capital increases from share-based payments of EUR 0.1 billion having an increasing effect. By contrast, transactions with owners reduced shareholders’ equity by EUR 4.5 billion, mainly in connection with the share buy-back program at T‑Mobile US. Other comprehensive income also decreased the carrying amount by EUR 0.7 billion. The main factors here were negative currency translation effects recognized directly in equity amounting to EUR 1.1 billion, offset by a positive effect of EUR 0.4 billion from the remeasurement of defined benefit plans.

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 0.3 billion include, among other factors, the acquisition of spectrum, the recognition of liabilities for the acquisition of media broadcasting rights, share buy-backs at our subsidiaries, and contrasting measurement effects in connection with derivatives.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Free cash flow AL (before dividend payments and spectrum investment) decreased by EUR 0.2 billion year-on-year to EUR 3.6 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 0.2 billion to EUR 9.6 billion on the back of the good business performance. Lower cash outflows in connection with the integration of Sprint in the United States and exchange rate effects also had an increasing effect. The increase in net interest payments of EUR 0.3 billion and the increase in tax payments of EUR 0.1 billion, in particular, had a reducing effect.

Cash capex (before spectrum investment) increased slightly by EUR 0.1 billion to EUR 4.8 billion. In the Germany operating segment, capital expenditure totaled around EUR 1.2 billion in the first quarter of 2023, EUR 0.3 billion more than in the prior-year period, with much of this figure going towards the fiber-optic build-out. Cash outflows in the Europe operating segment increased by EUR 0.1 billion to 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. By contrast, cash capex in the United States operating segment decreased by EUR 0.2 billion to EUR 2.8 billion, mainly as a result of higher cash outflows in the prior year for the accelerated build-out of the 5G network and the integration of Sprint. In the Systems Solutions operating segment, our capital expenditure was EUR 0.1 billion. The increase is mainly due to catch-up effects in the Cloud Services and Road Charging portfolio areas following supply shortages in 2022. In the Group Development operating segment, cash capex decreased, mainly due to the sales of T‑Mobile Netherlands and GD Towers.

An increase of EUR 0.3 billion in cash outflows for the repayment of lease liabilities reduced free cash flow AL. This mainly related to 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.