Deutsche Telekom at a glance

Net revenue

• Net revenue increased by 20.0 percent to EUR 47.0 billion. Excluding the acquisition of Sprint and adjusted for exchange rate effects, revenue grew by EUR 0.1 billion or 0.1 percent.
• Including the revenue contributions from the acquired entity Sprint and including exchange rate differences, our United States operating segment posted an increase in revenue of 39.9 percent. In organic terms, revenue was on a par with the prior year.
• Despite the deteriorated economic situation in consequence of the coronavirus pandemic, our Germany operating segment posted an increase in revenue of 1.0 percent. In organic terms, revenues in our Europe operating segment stabilized at the prior-year level, while reported revenue was down by 2.1 percent.
• Revenue in our Systems Solutions operating segment decreased year-on-year by 1.8 percent due primarily to the contraction of the IT market induced by the coronavirus pandemic.
• Revenue growth of 4.4 percent at our Group Development operating segment was mainly attributable to growth at T‑Mobile Netherlands and DFMG.

Net revenue

billions of €

EBITDA AL
(adjusted for special factors)

• Adjusted EBITDA AL grew by 34 percent to EUR 16.4 billion. All operating segments – with the exclusion of Systems Solutions, which posted a decline in adjusted EBITDA AL of 9.1 percent, partly driven by the coronavirus pandemic – contributed to this increase. Excluding exchange rate effects and changes in the composition of the Group, our adjusted EBITDA AL increased by EUR 1.3 billion or 8.6 percent.
• Adjusted EBITDA AL rose sharply by 70.5 percent in our United States operating segment as a result of the acquisition of Sprint and, in particular, the growth in service and terminal equipment revenues. These positive effects were largely offset by higher operating expenses, primarily in connection with the Sprint acquisition.
• Our Germany operating segment recorded an increase in adjusted EBITDA AL of 2.8 percent and our Europe operating segment a slight increase of 0.2 percent. Adjusted EBITDA AL also grew substantially in our Group Development operating segment, by 9.1 percent.
• At 34.8 percent, the Group’s adjusted EBITDA AL margin increased by 3.6 percentage points against the prior-year level. The adjusted EBITDA AL margin was 40.4 percent in Germany, 33.8 percent in Europe, and 34.5 percent in the United States.

EBITDA AL
(adjusted for special factors)

billions of €

EBIT

• EBIT increased by EUR 1.0 billion year-on-year to EUR 5.6 billion, as a result of the effects described under adjusted EBITDA AL.
• EBITDA AL was negatively affected by special factors of EUR 1.9 billion compared to expenses of EUR 1.0 billion in the prior-year period. Expenses of EUR 0.8 billion were recorded in connection with the business combination of T‑Mobile US and Sprint; this contrasted with expenses of EUR 0.3 billion in the prior-year period. Further expenses of EUR 0.4 billion in connection with the coronavirus pandemic were classified as special factors in the United States operating segment.
• Depreciation and amortization were EUR 2.8 billion higher than in the prior-year period due in particular to the acquisition of Sprint.

EBIT

billions of €

Net profit

• Net profit decreased by EUR 0.1 billion to EUR 1.7 billion.
• Loss from financial activities increased by EUR 1.3 billion to EUR 2.2 billion, largely in connection with an increase in finance costs of EUR 0.8 billion from the transfer of Sprint’s financial liabilities and the restructuring activities and measures to increase the financing volume begun in the context of the business combination. Finance costs were further negatively impacted by provisioning fees in the amount of EUR 0.3 billion for a short-term bridge loan facility. Gains from financial instruments decreased by EUR 0.3 billion to become losses of EUR 0.1 billion.
• At EUR 1.0 billion, the tax expense was the same as in the prior-year period.
• Profit attributable to non-controlling interests decreased year-on-year by EUR 0.1 billion to EUR 0.7 billion.
• Adjusted earnings per share increased slightly to EUR 0.54 from EUR 0.53 in the prior-year period.

Net profit

billions of €

Equity ratio

• At 27.3 percent, the equity ratio remained stable at the end of the first half of 2020: Total assets/total liabilities and shareholders’ equity increased by EUR 99.3 billion to EUR 270.0 billion, and shareholders’ equity by EUR 27.2 billion to EUR 73.5 billion.
• Shareholders’ equity increased by EUR 30.7 billion in connection with the business combination of T‑Mobile US and Sprint. Profit after taxes (EUR 2.4 billion), income taxes relating to components of other comprehensive income (EUR 0.3 billion), and capital increases from share-based payment (EUR 0.2 billion) also had an increasing effect.
• The carrying amount was reduced by dividend payments to shareholders (EUR 2.8 billion) and other shareholders of subsidiaries (EUR 0.2 billion), the remeasurement of defined benefit plans (EUR 1.4 billion), currency translation effects recognized directly in equity (EUR 1.0 billion), and actuarial losses from hedging instruments (EUR 1.0 billion) – mainly in connection with forward-payer swaps concluded for borrowings at T‑Mobile US which were terminated prematurely in April 2020.

Equity ratio

%

Cash capex
(before spectrum investment)

• Cash capex (before spectrum investment) amounted to EUR 7.0 billion, on a par with the level in the prior-year period. We continue to invest in our European fiber-optic network and are forging ahead with the build-out of mobile infrastructure including the fifth-generation mobile communications standard, 5G. In the United States operating segment, cash capex increased as a result of the inclusion of Sprint and as a result of the continued build-out of the 5G network.
• Cash capex (including spectrum investment) increased by EUR 0.1 billion to EUR 8.1 billion. In the United States operating segment, FCC mobile licenses were acquired for a total of EUR 0.9 billion and in the Europe operating segment, mobile spectrum licenses were acquired for a total of EUR 0.2 billion in the reporting period. The prior-year figure included EUR 1.0 billion for the acquisition of mobile spectrum licenses, which primarily related to the United States operating segment.

Cash capex
(before spectrum investment)

billions of €

Free cash flow AL
(before dividend payments and spectrum investment)^{a, b}

• Free cash flow AL was up by EUR 0.6 billion to EUR 3.7 billion.
• Excluding interest payments for zero-coupon bonds and the premature repayment of forward-payer swaps in the United States operating segment, net cash from operating activities increased by EUR 1.3 billion. This was attributable in particular to the continuing positive performance of the operating segments, especially in the United States, which now includes Sprint.
• The increase was partially offset in particular by higher interest payments, mainly due to the transfer of Sprint’s financial liabilities, and restructuring activities and measures to increase the financing volume begun in the same context. Our contractual termination of a revolving factoring agreement in the Germany operating segment, and higher repayments of lease liabilities primarily in the United States operating segment, also had a negative effect.

Free cash flow AL
(before dividend payments and spectrum investment)^{a, b}

billions of €

Net debt

• Net debt increased by EUR 44.9 billion to EUR 120.9 billion compared with the end of 2019.
• The main factor in this increase was the transfer of financial liabilities in connection with the business combination with Sprint (EUR 44.1 billion). Other factors with an increasing effect were dividend payments (EUR 2.9 billion), including to subsidiaries, forward-payer swaps concluded for borrowings at T‑Mobile US (EUR 1.1 billion), and the acquisition of spectrum (EUR 1.1 billion).
• Free cash flow (EUR 6.0 billion) and exchange rate effects (EUR 1.0 billion) in particular reduced net debt.

Net debt

billions of €

^a Before interest payments for zero-coupon bonds.

^b Before repayment of forward-payer swaps at T‑Mobile US.

For further information, please refer to the section “Development of business in the Group.”