Notes to the consolidated statement of cash flows

Sprint has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since April 1, 2020. As such, the development of cash flows in the reporting period can only be compared with the prior-year period to a limited extent.

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 and other transactions.”

Net cash from operating activities

Net cash from operating activities increased by EUR 7.3 billion year-on-year to EUR 16.4 billion. The strong performance of the operating segments both in the United States and outside of the United States had a positive effect on net cash from operating activities. In addition, the increase is attributable to the business combination of T‑Mobile US and Sprint effective April 1, 2020. Net cash from operating activities had been negatively affected in the prior-year period by interest payments totaling EUR 1.6 billion for zero-coupon bonds as well as by a net increase of EUR 0.6 billion in interest payments, mainly as a result of the financial liabilities recognized and the restructuring begun in connection with the acquisition of Sprint, and the related increase in financing. Income tax payments increased by EUR 0.3 billion compared with the prior-year period. Factoring agreements of EUR 0.1 billion had a positive impact on net cash used in operating activities in the reporting period. In the prior-year period, factoring agreements had had negative effects of EUR 0.5 billion, mainly as a result of the contractual termination of a revolving factoring agreement in the Germany operating segment.

Net cash used in investing activities

At EUR 16.6 billion, cash capex was EUR 8.5 billion higher than in the prior-year period. In the United States operating segment, FCC mobile licenses were acquired mainly as part of the concluded C-band auction for a total of EUR 8.0 billion and, in the Europe operating segment, mobile spectrum licenses were acquired for a total of EUR 0.1 billion in the reporting period. The figure for the prior-year period included EUR 1.1 billion for the acquisition of mobile spectrum licenses, EUR 0.9 billion of which related to the United States operating segment and EUR 0.2 billion to the Europe operating segment. Excluding investments in mobile spectrum licenses, cash capex was up EUR 1.5 billion year-on-year. This change was primarily attributable to an increase of EUR 1.8 billion in the United States operating segment on account of the inclusion of Sprint and as a result of the further build-out of the 5G network. A decline of EUR 0.3 billion in the Germany operating segment had an offsetting effect. Investments in optical fiber were lower due to bad weather. Also, construction work planned for 2021 had been brought forward to the fourth quarter of 2020.

Net cash from/used in financing activities

Non-cash transactions

Deutsche Telekom did not choose financing options to a significant extent either in the reporting period or in the prior-year period under which the payments for trade payables from operating and investing activities become due at a later point in time primarily by involving banks in the process.

In the first half of 2021, Deutsche Telekom leased assets of EUR 2.9 billion, mainly network equipment, and land and buildings (prior-year period: EUR 2.3 billion). As a result, these assets are recognized in the statement of financial position under right-of-use assets and the related liabilities under lease liabilities. Future repayments of the liabilities will be recognized in net cash from/used in financing activities. The year-on-year increase was mainly attributable to the further build-out of the 5G network, the inclusion of Sprint in the United States operating segment, and the sale-and-leaseback agreements in connection with the combination of the cell tower business in the Netherlands.

Consideration for the acquisition of broadcasting rights is paid by Deutsche Telekom in accordance with the terms of the contract on the date of its conclusion or spread over the term of the contract. Financial liabilities of EUR 0.1 billion were recognized in the first half of 2021 for future consideration for acquired broadcasting rights (prior-year period: EUR 0.1 billion). The payment of the consideration will be recognized in net cash from/used in financing activities.

In the United States operating segment, EUR 0.7 billion was recognized for mobile handsets under property, plant and equipment in the first half of 2021 (H1 2020: EUR 1.6 billion). These relate to the terminal equipment lease model at T‑Mobile US, under which customers do not purchase the devices but lease them. The cash outflows are presented under net cash from operating activities. The decline was primarily due to the withdrawal from the terminal equipment lease model.

The combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund in the Group Development operating segment resulted in the following non-cash transactions: First, the stake in T‑Mobile Infra was contributed into Cellnex Netherlands in exchange for the granting of a stake of 37.65 % in the “new” company, Cellnex Netherlands. Second, in order to ensure T‑Mobile Netherlands’ continued access to the contributed passive mobile infrastructure, a long-term agreement, primarily on the lease of corresponding infrastructure components, was concluded in the form of a sale-and-leaseback transaction.

For further information on the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund, please refer to the section “Changes in the composition of the Group and other transactions.”