Financial position of the Group (XLS:) Download Condensed consolidated statement of financial position millions of € June 30, 2020 % Dec. 31, 2019 % June 30, 2019 ASSETS Trade receivables 12,690 4.7 10,846 6.4 9,898 Intangible assets 126,372 46.8 68,202 40.0 66,266 Property, plant and equipment 62,912 23.3 49,548 29.0 49,119 Right-of-use assets 23,821 8.8 17,998 10.5 17,549 Current and non-current financial assets 9,492 3.5 7,250 4.2 4,918 Deferred tax assets 8,434 3.1 2,704 1.6 3,163 Non-current assets and disposal groups held for sale 1,786 0.7 97 0.1 94 Other assets 24,464 9.1 14,027 8.2 13,207 TOTAL ASSETS 269,971 100.0 170,672 100.0 164,214 LIABILITIES Current and non-current financial liabilities 116,610 43.2 66,349 38.9 64,187 Current and non-current lease liabilities 25,806 9.6 19,835 11.6 19,347 Trade and other payables 9,601 3.6 9,431 5.5 9,647 Provisions for pensions and other employee benefits 8,003 3.0 5,831 3.4 6,569 Deferred tax liabilities 18,716 6.9 8,954 5.2 8,935 Liabilities directly associated with non-current assets and disposal groups held for sale 541 0.2 29 0.0 0 Other liabilities 17,192 6.4 14,012 8.2 12,839 Shareholders’ equity 73,502 27.2 46,231 27.1 42,690 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 269,971 100.0 170,672 100.0 164,214 Total assets/total liabilities and shareholders’ equity amounted to EUR 270.0 billion as of June 30, 2020, up by EUR 99.3 billion against December 31, 2019. This significant increase is mainly due to the change in the composition of the Group in connection with the acquisition of Sprint in the United States operating segment. The acquired and remeasured assets and liabilities of Sprint were included in all items of the statement of financial position upon consummation of the transaction on April 1, 2020. For further information on the business combination of T‑Mobile US and Sprint, please refer to the section “Changes in the composition of the Group.” On the assets side, trade receivables amounted to EUR 12.7 billion, up by EUR 1.8 billion against the 2019 year-end. EUR 2.7 billion of this increase is attributable to the inclusion of Sprint as of April 1, 2020. Excluding this effect, receivables in the United States operating segment declined, mainly due to effects of the coronavirus pandemic, with the number of new contracts concluded for Equipment Installment Plans falling on account of the temporary store closures. In the Germany operating segment, receivables increased as a result of the contractual termination of a revolving factoring agreement for receivables from consumers and business customers. The carrying amounts of intangible assets and property, plant and equipment increased as a result of the business combination of T‑Mobile US and Sprint by a total of EUR 73.8 billion to EUR 189.3 billion. This also includes preliminary goodwill arising from the transaction of EUR 8.4 billion. Capital expenditure totaling EUR 9.5 billion, especially to upgrade and build out the network in our United States operating segment and in connection with the broadband/fiber-optic build-out, the IP transformation, and mobile infrastructure in the Germany and Europe operating segments, also increased the carrying amounts. This also includes, in the United States operating segment, FCC spectrum licenses of EUR 0.9 billion, primarily acquired at a frequency auction that ended in March 2020 and, in the Europe operating segment, spectrum licenses of EUR 0.3 billion acquired at a 5G frequency auction in Hungary that ended in March 2020. Depreciation and amortization reduced the net carrying amounts by EUR 9.0 billion in total. Negative exchange rate effects of EUR 2.0 billion, primarily from the translation of U.S. dollars into euros, reduced the carrying amounts, as did disposals of EUR 0.8 billion. The latter included EUR 0.2 billion in the United States for the derecognition of billing software for postpaid customers, which was still in development. Due to the migration of Sprint contract customers to the T‑Mobile US billing software, it was decided that this software was not suitable for the joint customer base and would not be put into operation. Rights to use lease assets were recognized in the amount of EUR 23.8 billion as of June 30, 2020. In connection with the business combination with Sprint, right-of-use assets of EUR 6.3 billion were recognized. Current and non-current financial assets increased by EUR 2.2 billion to EUR 9.5 billion. The acquisition of Sprint resulted in an increase of EUR 0.4 billion. Derivatives without a hedging relationship increased by EUR 0.5 billion, mainly in connection with new additions of embedded derivatives and embedded derivatives recognized in connection with the acquisition of Sprint at T‑Mobile US. Derivatives with a hedging relationship increased by EUR 1.7 billion, primarily due to the increase in positive fair values from interest rate swaps in fair value hedges. In addition, other financial assets increased by EUR 0.3 billion in connection with grants receivable from funding projects for the broadband build-out in Germany. In connection with cash collateral, in particular in connection with forward-payer swaps concluded for borrowings at T‑Mobile US, which were terminated prematurely in April 2020, the carrying amount of other financial assets decreased by EUR 0.6 billion overall. Non-current assets and disposal groups held for sale increased by EUR 1.7 billion in connection with the agreement concluded with the U.S. satellite TV operator DISH as part of the acquisition of Sprint by T‑Mobile US, to sell Sprint’s prepaid business to DISH. This transaction resulted from a condition of approval for the business combination with Sprint imposed by the U.S. Department of Justice and was duly concluded as of July 1, 2020. The increase in other assets by EUR 10.4 billion was also mainly due to the first-time inclusion of Sprint. Cash and cash equivalents increased by EUR 9.1 billion to EUR 14.5 billion. On the liabilities and shareholders’ equity side, current and non-current financial liabilities increased by EUR 50.3 billion compared with the end of 2019 to a total of EUR 116.6 billion. EUR 39.8 billion of this resulted from the transfer of liabilities from Sprint. Immediately after the transaction, liabilities of the former Sprint totaling USD 9.8 billion (EUR 8.9 billion) were repaid. In the course of the business combination, a number of refinancing measures were implemented in the second quarter of 2020. On April 1, 2020, T‑Mobile US raised a new term loan of USD 4 billion (EUR 3.7 billion). Senior secured notes, issued on April 9, 2020 for a total of USD 19 billion (EUR 17.3 billion) were used to repay a briefly utilized bridge loan facility. Furthermore, T‑Mobile US issued senior secured notes on June 24, 2020 for a total of USD 4.0 billion (EUR 3.6 billion). In the rest of the Group, bonds in various currencies with a total volume of EUR 1.6 billion when translated into euros were issued in the first half of the year. Bonds, also in various currencies, with a total volume of EUR 5.6 billion when translated into euros, were repaid. A Deutsche Bundespost treasury note (zero-coupon bond) issued in the past with a carrying amount of EUR 1.4 billion fell due on December 31, 2019. Financial liabilities increased by EUR 1.5 billion in connection with collateral received for derivative financial instruments. Current and non-current lease liabilities totaled EUR 25.8 billion as of June 30, 2020. The increase of EUR 6.0 billion was mainly due to the inclusion of Sprint. Trade and other payables increased by EUR 0.2 billion to EUR 9.6 billion. The inclusion of Sprint increased the carrying amount by EUR 2.9 billion. In operational terms, the United States operating segment recorded a decrease in trade payables compared with December 31, 2019, due in particular to lower liabilities to terminal equipment vendors and declines in liabilities as a result of reduced marketing activities, in part in consequence of the coronavirus pandemic. Liabilities also decreased in the other operating segments. Provisions for pensions and other employee benefits increased by EUR 2.2 billion compared with December 31, 2019 to EUR 8.0 billion, mainly due to the upheaval on the financial markets in the first half of 2020 and the associated decline in the prices of plan assets as well as the change in the composition of the Group in connection with the acquisition of Sprint. Liabilities directly associated with non-current assets and disposal groups held for sale increased by EUR 0.5 billion. This increase arose in connection with the agreement concluded and executed as of July 1, 2020 concerning the sale of Sprint’s prepaid business to DISH. Other liabilities increased compared with December 31, 2019, due in particular to higher current and non-current other liabilities, contract liabilities, and other provisions. The inclusion of Sprint increased other liabilities by EUR 0.9 billion. In addition, other liabilities increased by EUR 0.2 billion due to existing build-out obligations in connection with grants receivable from funding projects for the broadband build-out in the Germany operating segment. The carrying amounts of contract liabilities and other provisions also increased in particular as a result of the inclusion of Sprint. Shareholders’ equity increased from EUR 46.2 billion as of December 31, 2019 to EUR 73.5 billion. The business combination of T‑Mobile US and Sprint consummated on April 1, 2020 resulted in an increase in shareholders’ equity of EUR 30.7 billion as of the date of first-time consolidation. Profit of EUR 2.4 billion and capital increases from share-based payments of EUR 0.2 billion also increased the carrying amount. Shareholders’ equity was reduced in connection with dividend payments for the 2019 financial year to Deutsche Telekom AG shareholders in the amount of EUR 2.8 billion and to other shareholders of subsidiaries in the amount of EUR 0.2 billion. Other comprehensive income also reduced shareholders’ equity by EUR 3.0 billion. The main factors in this negative other comprehensive income were the remeasurement of defined benefit plans, currency translation effects recognized directly in equity, and losses from hedging instruments, mainly from forward-payer swaps concluded for borrowings at T‑Mobile US, which were terminated prematurely in April 2020 and for which the cumulative changes in value must be reversed over the terms of the loans. By contrast, income taxes relating to components of other comprehensive income had a positive impact on other comprehensive income. For further information on the statement of financial position, please refer to the section “Selected notes to the consolidated statement of financial position” in the interim consolidated financial statements. (XLS:) Download Calculation of net debt millions of € June 30, 2020 Dec. 31, 2019 Change Change % June 30, 2019 Financial liabilities (current) 13,567 11,463 2,104 18.4 13,582 Financial liabilities (non-current) 103,043 54,886 48,157 87.7 50,605 Lease liabilities 25,806 19,835 5,971 30.1 19,347 FINANCIAL LIABILITIES AND LEASE LIABILITIES 142,416 86,184 56,232 65.2 83,534 Accrued interest (1,097) (748) (349) (46.7) (717) Other (852) (739) (113) (15.3) (924) GROSS DEBT 140,467 84,697 55,770 65.8 81,893 Cash and cash equivalents 14,537 5,393 9,144 n.a. 3,894 Derivative financial assets 4,598 2,333 2,265 97.1 2,031 Other financial assets 435 940 (505) (53.7) 259 NET DEBT 120,897 76,031 44,866 59.0 75,709 Changes in net debt millions of € Other effects of EUR 0.4 billion included effects from the measurement of embedded derivatives at T‑Mobile US and a large number of smaller effects. (XLS:) Download Calculation of free cash flow AL millions of € Q1 2020 Q2 2020 Q2 2019 Change % H1 2020 H1 2019 Change % FY 2019 a Before interest payments for zero-coupon bonds. b Before repayment of forward-payer swaps at T-Mobile US. c Excluding finance leases at T-Mobile US. NET CASH FROM OPERATING ACTIVITIES 3,960 5,148 5,598 (8.0) 9,107 11,607 (21.5) 23,074 Interest payments for zero-coupon bonds 1,600 0 0 n.a. 1,600 0 n.a. 0 Repayment of forward-payer swaps at T-Mobile US 0 2,158 0 n.a. 2,158 0 n.a. 0 NET CASH FROM OPERATING ACTIVITIESa,b 5,560 7,306 5,598 30.5 12,865 11,607 10.8 23,074 Cash capex (3,570) (4,547) (4,199) (8.3) (8,117) (8,027) (1.1) (14,357) Spectrum investment 217 878 875 0.3 1,095 1,020 7.4 1,239 CASH CAPEX (BEFORE SPECTRUM INVESTMENT) (3,353) (3,669) (3,324) (10.4) (7,022) (7,006) (0.2) (13,118) Proceeds from the disposal of intangible assets (excluding goodwill) and property, plant and equipment 87 41 38 7.9 128 82 56.1 176 FREE CASH FLOW (BEFORE DIVIDEND PAYMENTS AND SPECTRUM INVESTMENT)a,b 2,294 3,677 2,312 59.0 5,970 4,682 27.5 10,133 Principal portion of repayment of lease liabilitiesc (1,007) (1,251) (766) (63.3) (2,258) (1,580) (42.9) (3,120) FREE CASH FLOW AL (BEFORE DIVIDEND PAYMENTS AND SPECTRUM INVESTMENT)a,b 1,287 2,425 1,546 56.9 3,712 3,103 19.6 7,013 Free cash flow AL (before dividend payments and spectrum investment) increased by EUR 0.6 billion year-on-year to EUR 3.7 billion. The following effects impacted on this development: Excluding interest payments for zero-coupon bonds and the premature repayment of forward-payer swaps concluded for borrowings at T‑Mobile US, net cash from operating activities increased by EUR 1.3 billion. In particular, the continuing strong performance of the operating segments, especially the United States, which now includes Sprint, had an increasing effect on net cash from operating activities. Higher (net) interest payments, which were up by EUR 0.8 billion in total, mainly as a result of the financial liabilities recognized in connection with the acquisition of Sprint and the restructuring begun in connection with this acquisition and related increase in financing, including the handling charges incurred for a briefly utilized bridge loan facility, had a negative effect. Income tax payments decreased by EUR 0.3 billion compared with the prior-year period. Factoring agreements of EUR 0.5 billion had a negative impact on net cash from operating activities in the first half of 2020, mainly as a result of the contractual termination of a revolving factoring agreement in the Germany operating segment. In the prior-year period, factoring agreements had had a positive effect of EUR 0.3 billion. Cash capex (before spectrum investments) was at the same level as in the prior-year period. In the Germany operating segment, the decline is mainly a result of the changed accounting treatment of grants receivable from funding projects for the broadband build-out as of the start of the third quarter of 2019. Since then, the grants received and payments made for the build-out are no longer part of cash capex. In the United States operating segment, cash capex increased as a result of the inclusion of Sprint and the continued build-out of the 5G network. The increase in repayments of lease liabilities was due in particular to payments for leases in the United States operating segment, partly as a result of the inclusion of Sprint, and partly as a result of payments for new leases concluded in 2019 for network technology and cell sites in connection with the 5G network build-out. For further information on the statement of cash flows, please refer to the section “Notes to the consolidated statement of cash flows” in the interim consolidated financial statements. schließen IP - Internet Protocol Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications. schließen 5G New communications standard, which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things – rollout starting 2020. schließen Postpaid Customers who pay for communication services after receiving them (usually on a monthly basis). schließen Prepay/prepaid In contrast to postpay contracts, prepay communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.