Development of selected financial data
Net revenue, service revenuea, b
- Net revenue increased slightly by 0.3 % to EUR 27.8 billion; in organic terms, it decreased slightly by 0.5 %. Service revenue increased by 3.5 % to EUR 22.8 billion; in organic terms, the increase was 2.6 %.
- Our Germany segment increased revenue by 3.0 % year-on-year, on the back of strong development of service revenues.
- The United States segment recorded revenue growth of 2.1 %, mainly due to exchange rate effects, but on an organic basis, revenue was down 2.3 % against the prior year.
- Revenue in our Europe segment grew by 3.8 % on account of the positive trend in mobile business and by 4.9 % in organic terms.
- Revenue in Systems Solutions was up 2.0 % year-on-year on the back of growth in the Digital, Road Charging, and Advisory portfolio areas.
- In Group Development, revenue declined by 87.6 % due to the sale of T‑Mobile Netherlands and GD Towers, but was up 4.2 % against the prior year on an organic basis.
EBITDA AL (adjusted for special factors)a
- Adjusted EBITDA AL grew slightly by 0.9 % to EUR 10.0 billion. In organic terms, it increased by 1.0 %.
- In our Germany segment, adjusted EBITDA AL was up 4.0 %, driven by high-value revenue growth and enhanced cost efficiency.
- In the United States, adjusted EBITDA AL increased by 5.9 %, mainly due to exchange rate effects. In organic terms, it increased by 1.3 %. Adjusted core EBITDA AL grew by 11.5 % to EUR 6.4 billion.
- Adjusted EBITDA AL in the Europe segment increased slightly by 0.7 %. In organic terms, it increased by 1.2 %.
- In Systems Solutions, adjusted EBITDA AL grew by 10.3 % due to efficiency effects and increased revenue in our Digital and Road Charging portfolio areas.
- In Group Development, adjusted EBITDA AL declined by 81.7 % due to the sale of T‑Mobile Netherlands and GD Towers. In organic terms, it increased by 32.0 %.
- At 35.8 %, the Group’s adjusted EBITDA AL margin remained at the same high level posted in the prior year. The adjusted EBITDA AL margin was 40.5 % in the Germany segment, 35.3 % in the Europe segment, and 35.8 % in the United States segment.
Profit/loss from operations (EBIT)a
- EBIT increased substantially to EUR 18.0 billion, mainly as a result of the gain on deconsolidation from the sale of GD Towers.
- Special factors had a positive effect of EUR 12.4 billion on EBITDA AL. Deconsolidations, disposals and acquisitions generated proceeds of EUR 12.6 billion, most of which was attributable to the sale of GD Towers. In the prior-year period, the special factors affecting EBITDA AL totaled EUR 1.2 billion.
- EBITDA AL thus increased by EUR 11.3 billion to EUR 22.4 billion.
- At EUR 6.0 billion, depreciation, amortization and impairment losses were lower than in the prior-year period, with the decrease being almost exclusively attributable to the United States and Group Development operating segments.
- Our net profit also increased significantly to EUR 15.4 billion due to the sale of GD Towers.
- The loss from financial activities increased by EUR 0.4 billion to EUR 1.3 billion, with other financial income decreasing in particular in connection with the measurement of provisions and liabilities. Finance costs increased by EUR 0.1 billion.
- The tax expense decreased by EUR 0.8 billion to EUR 0.3 billion.
- Profit attributable to non-controlling interests increased by EUR 0.6 billion to EUR 1.1 billion, a trend mainly attributable to the United States segment.
- Adjusted earnings per share decreased from EUR 0.45 to EUR 0.39.
For a reconciliation for the organic development of key figures for the prior-year comparative period, please refer to the section “Additional information.”
- The equity ratio increased by 3.3 percentage points against December 31, 2022 to 32.5 %.
- The increase in shareholders’ equity from EUR 87.3 billion to EUR 98.7 billion is primarily attributable to profit of EUR 16.4 billion.
- Shareholders’ equity was reduced in particular by transactions with owners (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 (EUR 0.7 billion). This mainly includes effects from currency translations recognized directly in equity (EUR ‑1.1 billion) and positive effects from the remeasurement of defined benefit plans (EUR 0.4 billion).
- Net debt decreased by EUR 8.9 billion compared with the end of 2022 to EUR 133.5 billion.
- The main reducing factor was cash proceeds of EUR 10.7 billion from the sale of GD Towers. It was further reduced by free cash flow (before dividend payments and spectrum investment) of EUR 4.8 billion and exchange rate effects of EUR 1.9 billion.
- The main factors increasing net debt were the share buy-back program at T‑Mobile US (EUR 4.3 billion) and the sale-and-leaseback transaction in connection with the sale of the GD Towers (EUR 3.0 billion). Additions of lease liabilities and right-of-use assets (EUR 0.8 billion) and other effects (EUR 0.3 billion) also had an increasing impact.
Cash capex (before spectrum investment)
- Cash capex (before spectrum investment) increased slightly by EUR 0.1 billion to EUR 4.8 billion.
- The increase resulted mainly from higher capital expenditure in the Germany and Europe operating segments. In the United States, cash capex decreased 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.
- By contrast, cash capex (including spectrum investment) decreased by EUR 2.3 billion to EUR 4.8 billion. Spectrum licenses were purchased for EUR 0.1 billion in the reporting period, in particular in the United States segment. In the prior-year period, the United States segment had acquired spectrum licenses for a total amount of EUR 2.5 billion.
Free cash flow AL (before dividend payments and spectrum investment)
- Free cash flow AL was down by EUR 0.2 billion to EUR 3.6 billion.
- It was reduced by a net increase of EUR 0.3 billion in interest payments, EUR 0.3 billion higher cash outflows for the repayment of lease liabilities, mainly in the United States operating segment, an increase of EUR 0.1 billion in cash capex (before spectrum investment), and an increase of EUR 0.1 billion in tax payments.
- The sound business performance in the operating segments had an increasing effect on net cash from operating activities. Lower cash outflows in connection with the integration of Sprint in the United States and exchange rate effects also had a positive impact.
For further information, please refer to the section “Development of business in the Group” in the interim Group management report.
For further information on the development of business in the operating segments, please refer to the section “Development of business in the operating segments” in the interim Group management report and to the IR back-up on our Investor Relations website.
a aThe GD Towers business entity, which operated the cell tower business in Germany and Austria and was assigned to the Group Development operating segment, was recognized as a discontinued operation in the interim consolidated financial statements from the third quarter of 2022 until its sale on February 1, 2023. In the interim Group management report, we include the contributions by GD Towers in the results of operations according to the management approach for the period mentioned. For information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management” in the interim Group management report and the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.
b bAs of the third quarter of 2022 the principal/agent consideration regarding the recognition of gross and net revenues was changed. Prior-year comparatives were adjusted retrospectively.
c cIncluding net debt reported under liabilities directly associated with non-current assets and disposal groups held for sale.