Group Headquarters & Group Services

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

Development of operations

Total revenue

Total revenue in our Group Headquarters & Group Services segment in the first half of 2019 decreased by 6.3 percent year-on-year, mainly due to lower intragroup revenue at Deutsche Telekom IT from the licensing of the Group-wide ERP system, which does not impact on earnings at Group level. A slight negative factor resulted from the fact that, as of January 2016, the costs of intragroup development services newly commissioned from Deutsche Telekom IT in Germany are no longer charged internally.

EBITDA AL, adjusted EBITDA AL

Adjusted EBITDA AL at our Group Headquarters & Group Services segment decreased in the reporting period by EUR 150 million year-on-year due to two main effects: lower proceeds from real estate sales and lower revenue at Deutsche Telekom IT from the licensing of the Group-wide ERP system.

Overall, EBITDA AL was negatively impacted in the reporting period by special factors amounting to EUR 124 million, especially for staff-related measures. Negative net special factors affecting EBITDA AL in the prior-year period had amounted to EUR 146 million – with expenses for staff-related measures being partially offset by the positive effect of the reversal of provisions for legal risks in connection with the conclusion of the Toll Collect arbitration proceedings.

EBIT

The year-on-year decrease of EUR 102 million in EBIT was mainly due to the effects described under EBITDA AL. 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. Other depreciation, amortization and impairment losses were slightly below the prior-year level, largely as a result of a slight decrease in depreciation and amortization at Deutsche Telekom IT. This reflects two contrasting effects: On the one hand, depreciation, amortization and impairment losses decreased as a result of lower capitalization in connection with the decline in the licensing of the Group-wide ERP system. On the other, depreciation, amortization and impairment losses increased as a result of the fact that the costs of intragroup development services newly commissioned in Germany are no longer charged internally but are instead capitalized at Deutsche Telekom IT. In addition, slightly lower depreciation, amortization and impairment losses from land and buildings as a result of our continued optimization of the real estate portfolio also had an effect.

Cash capex

Cash capex increased by EUR 10 million year-on-year, primarily owing to increased investment in technology and innovation, mainly for development activities. The slight decline in cash capex for vehicles had an offsetting effect.