Selected notes to the consolidated income statement

As a result of the sales agreement concluded on July 13, 2022, the GD tower companies had been recognized as a discontinued operation from the third quarter of 2022 until their sale on February 1, 2023. Thus, the contributions by the GD tower companies were no longer included in the individual items of the consolidated income statement in the prior-year period. Instead, profit or loss after taxes was disclosed in aggregate form in the item “Profit/loss after taxes from discontinued operation.”

Net revenue

Net revenue breaks down into the following revenue categories:

The service revenues essentially comprise predictable and/or recurring revenues from Deutsche Telekom’s core activities. These relate to revenues that are generated from services (i.e., revenues from fixed and mobile network voice services, incoming and outgoing calls, as well as data services) plus roaming revenues, monthly basic charges and visitor revenues, as well as revenues from the ICT business. Service revenues also include revenues earned in connection with premium services for customers, such as reinsurance for device insurance policies and extended warranties.

In the reporting period, revenue from insurance contracts in the scope of IFRS 17 of EUR 1.1 billion (Q1 2023: EUR 1.1 billion) and insurance service expenses of EUR 0.8 billion (Q1 2023: EUR 0.7 billion) were recognized in the Group.

Non-service revenues mainly comprise one-time and variable revenues, e.g., revenue from the sale or rental of fixed-network or mobile devices, from value-added services, from application and contract services, revenue with virtual network operators, one-time revenue from the build-out of technical infrastructure, and revenue from vehicle and property leasing.

Net revenue includes revenue from the use of entity assets by others in the scope of IFRS 16 in the amount of EUR 0.2 billion (Q1 2023: EUR 0.4 billion). Of the revenue from the use of entity assets by others reported in net revenue, EUR 0.2 billion (Q1 2023: EUR 0.2 billion) relates to service revenues and EUR 0.1 billion (Q1 2023: EUR 0.2 billion) to non-service revenues.

For information on changes in net revenue, please refer to the section “Development of business in the Group” in the interim Group management report.

Other operating income

Income from insurance compensation in the first quarter of 2023 mainly related to further refunds from insurance companies for expenses incurred in connection with the cyberattack on T‑Mobile US in August 2021.

Other operating expenses

Miscellaneous other operating expenses include expenses of EUR 0.2 billion (Q1 2023: EUR 0.2 billion) for data storage in data centers, in cloud applications, or other IT services, and of EUR 0.1 billion (Q1 2023: EUR 0.1 billion) for regulatory duties in the United States operating segment.

Depreciation, amortization and impairment losses

At EUR 6.1 billion, depreciation, amortization and impairment losses on intangible assets, property, plant and equipment, and right-of-use assets were slightly up against the level of the prior-year period in the first quarter of 2024. Depreciation and amortization were slightly higher than in the prior-year period. In the United States operating segment, higher depreciation expense in connection with the acceleration of certain technology assets as part of T‑Mobile US modernizing its network, technology systems, and platforms was offset by lower depreciation of right-of-use assets. In the Germany operating segment, depreciation and amortization increased, partly as a result of the sale and leaseback of passive network infrastructure in connection with the sale of GD Towers. No significant impairment losses were recorded either in the reporting period or in the prior-year period.

Profit/loss from financial activities

Loss from financial activities increased year-on-year from EUR 1.3 billion to EUR 1.4 billion, which was mainly attributable to the slight increase in finance costs. Other financial income remained at the level of the prior-year period, with the decline in gains/losses from financial instruments offset by higher interest income from the measurement of provisions and liabilities. The latter was attributable to the subsequent measurement using actuarial principles of the present value of the provision recognized for the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK).

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

Income taxes

A tax expense of EUR 1.2 billion was recorded in the first quarter of 2024. The tax amount reflects the shares of the different countries in profit before income taxes and their respective national tax rates.

Profit/loss after taxes from discontinued operation

The sale of the GD tower companies was consummated on February 1, 2023, and these companies have not been part of the Group since that date. The development presented in the prior-year period contains the contributions to earnings for the first month of 2023.

The following table provides a breakdown of profit/loss after taxes from the discontinued operation:

Earnings contributions by GD tower companies were presented separately in the income statement of the discontinued operation up until their sale. Since Deutsche Telekom largely continues to use the sold passive network infrastructure after consummation of the transaction effective February 1, 2023, the intragroup eliminations of income and expenses between discontinued and continuing operations were disclosed at the level of the discontinued operation. So, for example, goods and services purchased included eliminations of intragroup charging of purchased services of GD tower companies mainly to Telekom Deutschland GmbH. In this way, the net effect was that internal cost allocations are no longer included in Deutsche Telekom’s interim consolidated financial statements. Due to continuing contractual relationships, the corresponding expenses for purchased services are also incurred after the sale of the GD tower companies.

In the prior-year period, other operating income of EUR 12.9 billion related to the deconsolidation gain realized from the loss of control over the GD tower companies. Income from income taxes resulted from deferred tax effects arising in connection with the concluded sale-and-leaseback transaction.