The economic environment

This section provides important additional information and explains recent changes in the economic environment compared to those described in the 2024 combined management report (2024 Annual Report), focusing on macroeconomic developments, the overall economic outlook including the currently prevailing economic risks, and the regulatory environment in the first three months of 2025.

Macroeconomic development

Current indicators suggest that the global economy developed robustly overall in the first quarter of 2025. However, the change in political direction in the United States has led to increased volatility in the financial markets and given rise to a tangible increase in uncertainty amongst both companies and private households.

The inflation rate in the United States was at 2.4 % in March 2025, and 2.2 % in the eurozone. While the European Central Bank cut the key interest rates further in February, March, and April 2025, the U.S. Federal Reserve (Fed) held its benchmark interest rate steady in the first third of 2025.

In Germany, the business climate in the digital economy brightened slightly at the start of 2025. The Bitkom-ifo-Digitalindex increased marginally in the first quarter of 2025 against December 2024. The digital economy remains more optimistic than the economy as a whole.

Overall economic outlook

The trade tariffs announced by the new U.S. government – some of which have already taken effect, some of which have already been revoked – have resulted in a significant shift in the global macroeconomic conditions. The extent to which the trade tariffs that have already taken effect and those further announced will be permanent, or for how long they will apply, or what retaliatory action may be taken, is still unclear.

Spurred by the trade tariffs and immediate market reactions, the global growth forecasts have been revised for 2025. In its April 2025 outlook, the International Monetary Fund (IMF) projects an increase in global economic growth of 2.8 %, down from the previous estimate of 3.3 %. For Germany, the IMF has downgraded its forecast to zero growth, from the slight growth of 0.3 % it had predicted in January 2025. In the United States, too, growth is expected to slow to 1.8 %, down from the 2.7 % initially projected in January 2025. In light of current developments, it cannot be ruled out that the U.S. and other economies could show signs of economic downturn as the year progresses.

The telecommunications industry is not directly affected by trade tariffs and, in the past, has proven to be relatively resilient in the face of economic fluctuations.

Regulation

Approval under merger control law for the joint venture Glasfaser NordWest. Following the Düsseldorf Higher Regional Court’s decision to annul the approval issued by the Bundeskartellamt, the Federal Court of Justice overturned this decision on February 25, 2025 and referred the matter back to the Düsseldorf Higher Regional Court. The Düsseldorf Higher Regional Court will now reach a new decision in consideration of the Federal Court of Justice’s legal position. Until a final substantive decision is reached on the legality of the Bundeskartellamt’s approval, these proceedings have no direct implications for the existence of the joint venture Glasfaser NordWest or for the local fiber build-out.

Awarding of spectrum

In Poland, the auction of frequencies in the 700 MHz and 800 MHz bands ended on March 25, 2025. T‑Mobile Polska secured one spectrum block in each band for a total of around EUR 185 million (PLN 781 million).

In Germany, the decision of the Bundesnetzagentur on the final award conditions for the 800 MHz, 1,800 MHz, and 2,600 MHz bands was published on March 24, 2025. Instead of an auction, the existing frequency owners have until May 23, 2025 to apply to extend the spectrum usage rights that are due to expire at the end of 2025. In addition, usage right holders are required to fulfill extensive build-out obligations, which include providing coverage for 99.5 % of Germany’s surface area. The negotiation requirement with service providers and MVNOs is also being specified in more detail. The extension fee for Telekom Deutschland will be EUR 200 million.

The award rules of the 2019 auction were declared unlawful by the Cologne Administrative Court on August 26, 2024. This ruling initially has no direct impact on our spectrum usage rights in the 2.1 and 3.6 GHz bands awarded in those proceedings, and the spectrum allocations will remain in effect until further notice. The ruling of the Cologne Administrative Court requires the Bundesnetzagentur to reach a new decision regarding the motions submitted by Freenet and EWE Tel in 2018 with respect to the imposition of a service provider obligation (instead of a negotiation obligation). On January 9, 2025, the Bundesnetzagentur filed a complaint against the non-allowance of appeal. If the ruling becomes final and legally binding, the Bundesnetzagentur will have to reach a new decision on the award and auction rules (Decisions III and IV).

Proceedings to re-award spectrum in the 2,600 MHz band expiring at the end of 2026 and spectrum in the 2,300 MHz band are starting in Austria. In Poland, preparations are under way to extend the 900 MHz licenses in the second half of 2025. If necessary, the procedure to award the 26 GHz band could also begin. In Slovakia, the auction for the 800, 900, 2,100, and 2,600 MHz bands expiring in 2025, 2026, and 2028, as well as the new 1,500 MHz band, is expected to begin in June 2025.

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.

Agreements on spectrum licenses

On September 10, 2024, T‑Mobile US and N77 License (N77) entered into an agreement on the sale of spectrum licenses, pursuant to which N77 has the option to purchase all or a portion of T‑Mobile US’ remaining 3.45 GHz licenses for a range of cash consideration. The number of licenses sold will be determined based upon the amount of committed financing granted to N77. As of March 31, 2025, the licenses concerned were reported as held for sale with a carrying amount of EUR 1.7 billion. The transaction was consummated on April 30, 2025 in exchange for a purchase price of USD 2.0 billion (EUR 1.8 billion), and following regulatory approvals by the U.S. Federal Communications Commission (FCC).

On August 8, 2022, T‑Mobile US entered into agreements with Channel 51 License and LB License (Channel 51) for the acquisition of spectrum licenses in the 600 MHz band in exchange for total cash consideration of USD 3.5 billion (EUR 3.2 billion). On March 30, 2023, the contractual parties further agreed that the transaction be divided into two separate tranches. The first tranche of licenses, along with certain additional licenses from the second tranche, was transferred in the 2024 financial year. The transfer of the remaining licenses in accordance with the agreements is subject to regulatory approvals and certain other customary closing conditions. The transaction for the remaining licenses from the second tranche of USD 0.6 billion (EUR 0.6 billion) is expected to close in the second quarter of 2025.

On March 20, 2025, T‑Mobile US entered into a non-binding term sheet on the sale of 800 MHz spectrum licenses to Grain Management (Grain). Under the agreement, T‑Mobile US would receive consideration for the spectrum licenses in the form of a combination of cash and 600 MHz spectrum from Grain. No definitive agreement has been executed so far. The transaction, if finalized, would be subject to approvals by the U.S. Federal Communications Commission (FCC) and certain other customary closing conditions.

On September 12, 2023, T‑Mobile US agreed with U.S. cable network operator Comcast to acquire spectrum in the 600 MHz band in exchange for total cash consideration of between USD 1.2 billion and USD 3.3 billion (EUR 1.1 billion and EUR 3.0 billion). The final purchase price will be determined at the time the parties make the required transfer filings with the FCC. At the same time, T‑Mobile US and Comcast have concluded exclusive leasing arrangements. The transaction is expected to be closed in the first half of 2028. On January 13, 2025, T‑Mobile US and Comcast entered into an amendment to the license purchase agreement pursuant to which T‑Mobile US will acquire additional spectrum. As a consequence of the amendment, the total cash consideration amounts to between USD 1.2 billion and USD 3.4 billion (EUR 1.1 billion and EUR 3.1 billion).