Group Development

For information on changes resulting from the first-time application of the IFRS 16 “Leases” accounting standard and changes in the organizational structure, please refer to the section “Group organization, strategy, and management.”

Since the spin-off from T-Mobile Netherlands on January 1, 2019, the cell tower business of T-Mobile Netherlands has been reported under GD Towers, the new unit set up in the Group Development operating segment. This unit comprises DFMG and the cell tower business of T-Mobile Netherlands. Prior-year comparatives were not adjusted.

Customer development

The number of mobile and fixed-network customers in the Netherlands increased significantly compared with the end of 2018 due to the customer base acquired in connection with Tele2 Netherlands. There was also clear customer growth in the operating business. Despite intense competition, customer additions were recorded in particular in mobile communications thanks to our attractive rate plan portfolio offering large data packages through to unlimited data volumes. The number of fixed-network consumers also increased further as a result of our attractive rate plan portfolio.

Development of operations

Total revenue

In the first half of 2019, total revenue in our Group Development operating segment increased by 28.3 percent year-on-year, primarily due to the inclusion of Tele2 Netherlands since the start of 2019. Both business customer and consumer operations contributed to this revenue growth, on the back of customer growth and a positive trend in business with MVNOs in the Netherlands. The GD Towers unit also recorded a year-on-year increase in revenue, driven by volume-based growth at DFMG.

EBITDA AL, adjusted EBITDA AL

EBITDA AL increased from EUR 443 million in the prior-year period to EUR 481 million. This growth was mainly attributable to the earnings contributed by Tele2 Netherlands and the aforementioned positive effects on revenue. Efficient cost management also contributed to the growth in EBITDA AL. EBITDA AL of the GD Towers unit is increasing steadily thanks to growing volumes. In addition to the positive effects from the acquisition of Tele2 Netherlands, EBITDA AL of T‑Mobile Netherlands was impacted by the transfer of the EBITDA AL contribution of the Dutch cell tower business to GD Towers. Revenue growth and efficiency enhancement measures also contributed to a positive trend in operations. For the same reasons, adjusted EBITDA AL increased from EUR 452 million to EUR 506 million. The decline in the adjusted EBITDA AL margin is attributable to the integration of Tele2 Netherlands.

EBIT

Due to the consolidation of Tele2 Netherlands at T-Mobile Netherlands and the associated increase in depreciation, amortization and impairment losses, as well as one-time effects resulting from the integration, EBIT decreased by EUR 70 million compared with the first half of 2018 to EUR 227 million. GD Towers’ high investments in new cell sites also increased depreciation, amortization and impairment losses. Whereas previously expenses had been recognized in connection with operating leases, the right-of-use assets recognized in this context since the application of accounting standard IFRS 16 as of January 1, 2019 result in particular in higher depreciation charges.

Cash capex

Cash capex increased by EUR 51 million or 36.2 percent compared with the prior-year period, due mainly to the additional investments required to integrate Tele2 Netherlands and higher capital expenditure at DFMG in connection with building out mobile infrastructure in Germany.