Deutsche Telekom at a glance Net revenue Net revenue decreased by EUR 1.2 billion to EUR 36.3 billion. Adjusted for exchange rate effects and the slightly negative effects of changes in the composition of the Group, net revenue rose 2.2 percent. Our United States operating segment posted a decline in revenue of 5.2 percent; in U.S. dollars, the continuing success of our U.S. operations was evident in revenue growth of 6.0 percent. The business trend was stable in our Germany operating segment, with revenue down by a marginal 1.1 percent due to the first-time application of the IFRS 15 accounting standard. Revenue edged up 1.2 percent at our Europe operating segment, while revenue decreased by 1.6 percent in our Systems Solutions operating segment. Revenue also declined in our Group Development operating segment, mainly as a result of the deconsolidation of Strato. Net revenue billions of € Adjusted EBITDA Adjusted EBITDA was stable. Excluding exchange rate effects and slightly negative effects from changes in the composition of the Group, adjusted EBITDA rose 5.2 percent. Adjusted EBITDA for our United States operating segment decreased by 2.8 percent; in U.S. dollars, it rose 8.6 percent. Our Germany and Europe operating segments posted increases in adjusted EBITDA of 1.6 percent and 1.5 percent respectively, while adjusted EBITDA declined in our Systems Solutions and Group Development operating segments. At 31.6 percent, the Group’s adjusted EBITDA margin increased against the prior-year level of 30.6 percent. The EBITDA margin was 39.5 percent in Germany, 32.7 percent in Europe, and 28.3 percent in the United States. Adjusted EBITDA billions of € EBIT EBIT decreased by EUR 1.1 billion to EUR 4.5 billion. Negative special factors affecting EBIT were EUR 1.1 billion higher year-on-year. Special factors in connection with staff-related measures were EUR 0.4 billion higher than in the same period of last year. Additionally, the prior-year period had benefited from positive special factors, namely from the sale of Strato (EUR 0.5 billion) and the sale of further shares in Scout24 AG (EUR 0.2 billion). At EUR 6.3 billion, depreciation, amortization and impairment losses were at the same on a par with the prior-year period. EBIT billions of € Net profit Net profit decreased from EUR 1.6 billion to EUR 1.5 billion. At EUR 1.6 billion, the loss from financial activities was EUR 1.4 billion smaller than a year earlier, offsetting the effects of the reduction in EBIT. The loss in the prior-year period was attributable to the EUR 1.1 billion impairment of our financial stake in BT recognized in profit or loss, as well as to higher negative effects from the exercise and remeasurement of derivatives at T-Mobile US. While the settlement amount of EUR 0.6 billion agreed in the Toll Collect arbitration proceedings had a negative impact in the reporting period, finance costs improved by EUR 0.2 billion year-on-year. The tax expense of EUR 0.9 billion was EUR 0.3 billion higher than in the prior-year period. Profit attributable to non-controlling interests increased by EUR 0.2 billion. Net Profit billions of € Equity ratio The equity ratio decreased by 0.4 percentage points to 29.6 percent. Total assets decreased by EUR 1.6 billion compared with the end of 2017. Shareholders’ equity decreased from EUR 42.5 billion as of December 31, 2017 to EUR 41.4 billion. Shareholders’ equity was reduced in particular by the dividend payment to Deutsche Telekom AG shareholders in the amount of EUR 3.1 billion, by EUR 0.9 billion for T-Mobile US’ share buy-back program, and by an impairment loss of EUR 0.7 billion on the financial stake in BT recognized directly in equity. By contrast, profit of EUR 2.1 billion and an effect of EUR 1.5 billion recognized directly in equity, attributable to the transition to IFRS 9 and IFRS 15, had an increasing effect. Currency translation effects recognized directly in equity increased shareholders’ equity by EUR 0.5 billion. Equity ratio % Cash capex Cash capex (including spectrum investment) decreased from EUR 13.5 billion to EUR 6.2 billion. In the prior-year period, mobile spectrum licenses had been acquired for EUR 7.3 billion, mainly in the United States operating segment, compared with cash outflows in the reporting period of EUR 0.1 billion, primarily in the United States. Excluding the effects of spectrum acquisitions, cash capex declined by EUR 0.1 billion; adjusted for currency translation effects, cash capex was up year-on-year. Capital expenditures were focused primarily on the United States, Germany, and Europe operating segments and went toward the build-out and upgrade of our networks. Cash Capex billions of € Free cashflow(before dividend payments and spectrum investment) Free cash flow was up by EUR 0.4 billion to EUR 2.9 billion. Net cash from operating activities increased by EUR 0.1 billion year-on-year. Lower net interest payments had a positive effect. The positive business development in our United States operating segment was adversely affected by currency translation effects. The year-on-year decrease of EUR 0.1 billion in cash capex (before spectrum investment) enhanced free cash flow. Free cashflow (before dividend payments and spectrum investment) billions of € Net debt Net debt increased from EUR 50.8 billion at the end of 2017 to EUR 54.8 billion. The positive effect of free cash flow (EUR 2.9 billion) only partially offset the increase in net debt caused by the dividend payment – including to non-controlling interests – (EUR 3.1 billion), T-Mobile US’ share buy-back program (EUR 0.9 billion), further purchases of shares in T-Mobile US and OTE (EUR 0.4 billion), and the acquisition of Layer3 TV (EUR 0.3 billion). Exchange rate effects of EUR 0.7 billion were another factor increasing net debt. Net debt billions of € For a more detailed explanation, please refer to the section “Development of business in the Group”.
