Deutsche Telekom at a glance

Net revenue

• Net revenue increased by EUR 6.0 billion or 12.8 % to EUR 53.0 billion. In organic terms, revenue increased by EUR 3.4 billion or 6.9 %.
• Our United States segment posted an increase in revenue of 20.7 %. In organic terms, revenue increased by 10.1 % year-on-year due to higher service and terminal equipment revenues.
• In our Germany and Europe segments, we increased revenue by 1.4 % and 1.6 % respectively, on account of strong business performance.
• Revenue in our Systems Solutions segment decreased year-on-year by 5.0 %, due primarily to the decline in traditional IT infrastructure business, in line with expectations.
• In the Group Development segment, revenue increased by 9.8 % year-on-year on the back of operational and structural growth at our T‑Mobile Netherlands and GD Towers business units. In organic terms, revenue increased by 4.4 %.

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EBITDA AL (adjusted for special factors)

• Adjusted EBITDA AL grew by EUR 2.3 billion or 14.0 % to EUR 18.7 billion, with all operating segments contributing to this positive trend. In organic terms, our adjusted EBITDA AL increased by EUR 0.8 billion or 4.6 %.
• Adjusted EBITDA AL rose sharply by 20.9 % in our United States segment, primarily as a result of the business combination of T‑Mobile US and Sprint. In organic terms, adjusted EBITDA AL grew by 4.6 %, despite negative effects of the initiated withdrawal from the terminal equipment lease model in the United States.
• Adjusted EBITDA AL increased by 3.5 % in our Germany segment and by 2.8 % in our Europe segment.
• Adjusted EBITDA AL grew substantially in our Group Development segment, by 14.9 %. This was driven primarily by revenue growth at T‑Mobile Netherlands and GD Towers, synergies from the acquisition of Tele2 Netherlands, the acquisition of Simpel, and efficient management of costs at T‑Mobile Netherlands.
• At 35.2 %, the Group’s adjusted EBITDA AL margin increased by 0.4 percentage points against the prior-year level. The adjusted EBITDA AL margin was 39.3 % in the Germany segment, 34.9 % in the Europe segment, and 34.5 % in the United States segment.

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EBIT

• EBIT increased by EUR 1.6 billion or 28.8 % year-on-year to EUR 7.2 billion, mainly as a result of the effects described under adjusted EBITDA AL.
• EBITDA AL was negatively affected by special factors of EUR 1.1 billion compared to expenses of EUR 1.9 billion in the prior-year period. Expenses of EUR 0.7 billion were recorded in connection with the business combination of T‑Mobile US and Sprint. These related to acquisition and integration costs, as well as the restructuring costs for realizing cost efficiencies; this contrasted with expenses of EUR 0.8 billion in the prior-year period. The sale of the Dutch cell tower business resulted in a gain on deconsolidation of EUR 0.2 billion, which was recognized as a special factor. Special factors in connection with staff restructuring measures were down year-on-year by EUR 0.2 billion. In addition, expenses in the prior year of EUR 0.4 billion, mainly in connection with the coronavirus pandemic, had been classified as special factors in the United States segment.
• Depreciation, amortization and impairment losses were EUR 2.3 billion higher than in the prior-year period due in particular to the acquisition of Sprint.

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Net profit

• Net profit increased by EUR 1.1 billion or 68.6 % to EUR 2.8 billion.
• Our loss from financial activities remained unchanged at EUR 2.2 billion, with finance costs increasing by EUR 0.3 billion to EUR 2.3 billion, mainly due to the financial liabilities acquired in connection with the acquisition of Sprint and the related restructuring and increase of financing. By contrast, other financial expense decreased by EUR 0.4 billion year-on-year to income of EUR 0.2 billion, mainly due to higher interest income from the measurement of provisions and liabilities.
• The tax expense increased year-on-year by EUR 0.3 billion to EUR 1.3 billion.
• Profit attributable to non-controlling interests increased by EUR 0.2 billion to EUR 1.0 billion.
• Adjusted earnings per share amounted to EUR 0.70 compared with EUR 0.54 in the prior-year period.

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Equity ratio

• The equity ratio increased by 1.1 percentage points against December 31, 2020 to 28.5 %.
• The EUR 4.5 billion increase in shareholders’ equity is primarily attributable to profit of EUR 3.8 billion and to other comprehensive income of EUR 3.7 billion. This mainly includes effects from currency translations (EUR 2.1 billion) and the remeasurement of defined benefit plans (EUR 1.6 billion).
• Shareholders’ equity was reduced in particular by dividend payments to our shareholders (EUR 2.8 billion) and other shareholders of subsidiaries (EUR 0.2 billion), as well as income taxes relating to components of other comprehensive income (EUR 0.3 billion).

%

Cash capex (before spectrum investment)

• Cash capex (before spectrum investment) increased from EUR 7.0 billion to EUR 8.6 billion.
• This increase is largely attributable to the inclusion of Sprint and the ongoing 5G network build-out in the United States. In the Germany segment, cash capex decreased due to reduced cash outflows and lower investments in optical fiber as a result of bad weather conditions. In the Europe segment, we continued to invest in our fiber-optic network and forged ahead with the build-out of our mobile communications infrastructure.
• Cash capex (including spectrum investment) increased from EUR 8.1 billion to EUR 16.6 billion. Spectrum licenses were purchased for EUR 8.0 billion in the reporting period, in particular FCC mobile licenses at the C-band auction in the United States segment. In the prior-year period, cash capex had included the acquisition of FCC mobile licenses for EUR 0.9 billion in the United States segment and of mobile spectrum licenses for EUR 0.2 billion in the Europe segment.

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Free cash flow AL (before dividend payments and spectrum investment)^a

• Free cash flow AL increased from EUR 3.7 billion to EUR 5.4 billion.
• This increase was attributable to the positive performance of the operating segments. Additionally, the prior-year period had included a negative effect in the amount of EUR 0.5 billion from factoring agreements that no longer applied in the reporting period.
• The increase was partially offset by EUR 1.5 billion higher cash capex (before spectrum investment) and in particular by EUR 0.6 billion higher interest payments (net), 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. The EUR 0.3 billion higher income tax payments also had a negative effect.

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Net debt

• Net debt increased from EUR 120.2 billion at the end of 2020 to EUR 128.0 billion.
• This increase was largely attributable to the purchase of spectrum for EUR 8.0 billion, primarily in the United States segment. The dividend payments to our shareholders – including to non-controlling interests – in the amount of EUR 2.9 billion, exchange rate effects of EUR 2.7 billion, and additions of lease liabilities of EUR 2.5 billion also had an increasing effect.
• The main factors reducing net debt were free cash flow (before dividend payments and spectrum investment) of EUR 7.9 billion and measurement effects in connection with the stock options received from SoftBank accounting for EUR 0.4 billion.

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