Selected notes to the consolidated statement of financial position

Trade receivables

At EUR 15.8 billion, trade receivables decreased by EUR 1.0 billion against the 2022 year-end level. This was due to lower receivables in the United States and Germany operating segments. Exchange rate effects, mainly from the translation of U.S. dollars into euros, also decreased the carrying amount. By contrast, receivables increased in the Europe operating segment.

Contract assets

The carrying amount of contract assets at the reporting date totaled EUR 2.5 billion compared with EUR 2.4 billion as of December 31, 2022. Contract assets relate to receivables that have not yet legally come into existence, which arise from the earlier – as compared to billing – recognition of revenue, in particular from the sale of goods and merchandise. Furthermore, receivables from long-term construction contracts are recognized under contract assets.

Inventories

The carrying amount of inventories decreased by EUR 0.4 billion to EUR 2.2 billion, driven by the sale of older terminal equipment and reduced stocks due to the closure of former Sprint sites in the United States operating segment. Stockpiling in the fixed network for the fiber-optic build-out in Germany and for terminal equipment in the Germany operating segment had an offsetting effect.

Intangible assets

The carrying amount of intangible assets decreased by EUR 2.6 billion compared to December 31, 2022 to EUR 138.0 billion, mainly due to amortization and impairment losses of EUR 3.3 billion. Exchange rate effects, primarily from the translation of U.S. dollars into euros, also decreased the carrying amount by EUR 1.8 billion. By contrast, additions increased the carrying amount by EUR 2.5 billion. Of these additions, EUR 0.3 billion related to the acquisition of mobile spectrum in the Europe and United States operating segments.

On August 8, 2022, T‑Mobile US entered into agreements with Channel 51 License Co LLC and LB License Co, LLC (Sellers) for the acquisition of spectrum licenses in the 600 MHz band for an aggregate purchase price of USD 3.5 billion (EUR 3.4 billion). The licenses are to be acquired without any associated network assets. T‑Mobile US currently utilizes these licenses under an existing arrangement with the Sellers covering fixed-term spectrum leases. On March 30, 2023, the contractual parties further agreed that the transaction be divided into two separate tranches. The transfer of the licenses in accordance with the agreements is subject to regulatory approvals and certain other customary closing conditions. The first tranche is expected to be concluded by the end of 2023, while the second tranche is expected to be concluded in 2024.

On July 1, 2020, T-Mobile US and DISH Network Corporation (DISH) reached an agreement on the sale of spectrum licenses, under which DISH receives an option to purchase certain 800 MHz spectrum licenses from T-Mobile US for USD 3.6 billion (EUR 3.5 billion). The transaction is subject to approval by the Federal Communications Commission (FCC). Pursuant to the agreement, the application for approval would have had to be filed with the FCC at the latest by June 1, 2023. As of July 27, 2023, DISH has not fulfilled this obligation. At the request of the U.S. Department of Justice, T-Mobile US agreed not to take action to terminate the agreement until August 11, 2023. If the application is filed with the FCC before this date, and the FCC subsequently approves the transaction, the contractual parties are obligated to close the transaction within five days following approval. In the event of a breach of contract, DISH would have to pay a contractual penalty of USD 72 million to T‑Mobile US. However, should the transaction not be closed by April 1, 2024, without breach of contract, both parties are entitled to terminate the agreement. In this case, DISH would not be required to pay a contractual penalty. If DISH does not exercise its option to purchase the 800 MHz spectrum licenses, T-Mobile US is obligated to put the licenses up for sale at auction. Should bidding not reach the defined minimum purchase price of USD 3.6 billion, T‑Mobile US would be released from its obligation to sell the licenses.

Property, plant and equipment

The carrying amount of property, plant and equipment increased by EUR 0.1 billion compared to December 31, 2022 to EUR 65.8 billion. Additions, primarily for the upgrade and build-out of the network (broadband, fiber-optic, and mobile infrastructure build-out) increased the carrying amount by EUR 6.4 billion. Depreciation charges of EUR 5.9 billion had a decreasing effect. Exchange rate effects of EUR 0.4 billion, primarily from the translation of U.S. dollars into euros, and disposals of EUR 0.2 billion also reduced the carrying amount.

Right-of-use assets

The carrying amount of the right-of-use assets increased by EUR 0.6 billion compared to December 31, 2022 to EUR 34.3 billion. The carrying amount was increased by additions of EUR 4.0 billion, mainly resulting from the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of the GD tower companies. In this context, retained right-of-use assets of EUR 2.0 billion were recognized in the consolidated statement of financial position. Depreciation and impairment losses decreased the carrying amount by EUR 2.8 billion. This included a EUR 0.2 billion increase in depreciation due to a reduction in the useful life of leased network technology for cell sites in the United States operating segment following the business combination of T‑Mobile US and Sprint. Exchange rate effects of EUR 0.5 billion, primarily from the translation of U.S. dollars into euros, and disposals of EUR 0.1 billion reduced the carrying amount.

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Capitalized contract costs

As of June 30, 2023, the carrying amount of capitalized contract costs was up by EUR 0.1 billion against the level of December 31, 2022 to EUR 3.4 billion. The capitalized contract costs primarily relate to the United States, Germany, and Europe operating segments.

Investments accounted for using the equity method

The carrying amount of investments accounted for using the equity method increased by EUR 6.0 billion compared to December 31, 2022, to EUR 7.3 billion, essentially as a result of the sale of the 51.0 % stake in the GD tower companies. Following the loss of control pursuant to the IFRSs as a result of the transaction, the companies were deconsolidated as of February 1, 2023. Since this date, the remaining 49.0 % of the shares have been included in the consolidated financial statements as an investment accounted for using the equity method. The carrying amount of the investment amounted to EUR 6.1 billion as of June 30, 2023.

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Other financial assets

The carrying amount of current and non-current other financial assets increased by EUR 0.3 billion compared to December 31, 2022 to EUR 10.2 billion.

The net total of originated loans and receivables increased by EUR 0.3 billion to EUR 4.6 billion. The carrying amount was increased by an existing shareholder loan to the GD tower companies, which must be recognized in the consolidated statement of financial position as a result of the deconsolidation of the companies. As of June 30, 2023, this loan had a carrying amount of EUR 0.3 billion. In addition, government bonds were bought during the course of the year under short-term investments. As of June 30, 2023, they had a carrying amount of EUR 0.2 billion.

In connection with receivables from grants still to be received from funding projects for the broadband build-out in Germany, the carrying amount of other receivables increased by EUR 0.1 billion to EUR 2.1 billion.

For further information on cash collateral deposited and on derivatives, please refer to the section “Disclosures on financial instruments.”

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Other assets

The carrying amount of current and non-current other assets increased by EUR 0.5 billion to EUR 3.8 billion. As of June 30, 2023, the carrying amount included various advance payments, totaling EUR 3.0 billion (December 31, 2022: EUR 2.7 billion), mainly including advance payments for maintenance, repairs, and in connection with agreements on services for certain mobile communications equipment that do not fall under the scope of IFRS 16. Receivables from other taxes also increased.

Non-current assets and disposal groups held for sale

The carrying amount of non-current assets and disposal groups held for sale decreased by EUR 4.6 billion compared with December 31, 2022 to EUR 0.1 billion. The sale of the GD tower companies as of February 1, 2023 reduced the carrying amount by EUR 4.2 billion, and the sale of the wireline business at T‑Mobile US as of May 1, 2023 by EUR 0.3 billion. The corresponding assets had previously been reported as held for sale on account of the sales agreements concluded.

For further information on the corporate transactions, please refer to the section “Changes in the composition of the Group and other transactions.”

Financial liabilities and lease liabilities

The following table shows the composition and maturity structure of financial liabilities as of June 30, 2023:

The carrying amount of current and non-current financial liabilities decreased by EUR 3.1 billion compared with year-end 2022 to EUR 110.0 billion, primarily due to the factors described below. Exchange rate effects, in particular from the translation of U.S. dollars into euros, lowered the carrying amount by EUR 1.3 billion.

The carrying amount of bonds and other securitized liabilities decreased by EUR 2.0 billion to EUR 91.8 billion. Exchange rate effects decreased the carrying amount of bonds and other securitized liabilities by EUR 1.2 billion. Early repayments in the Group of premature buybacks of bonds with terms ending between 2023 and 2028, made in February and March 2023, including EUR bonds of EUR 2.4 billion, GBP bonds of GBP 0.2 billion (EUR 0.3 billion), and USD bonds of USD 0.6 billion (EUR 0.6 billion) reduced the carrying amount. It was further reduced by the scheduled repayments of EUR bonds in the amount of EUR 1.3 billion and by net repayments of commercial paper in the amount of EUR 2.3 billion. The carrying amount was increased by senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 6.5 billion (EUR 6.0 billion) with terms ending between 2028 and 2054 and bearing interest of between 4.80 % and 5.75 %. In addition, the carrying amount increased by EUR 0.2 billion in connection with measurement effects from derivatives with a hedging relationship, the offsetting entry for which is posted under bonds and other securitized liabilities.

The carrying amount of liabilities to banks decreased by EUR 0.5 billion compared with December 31, 2022 to EUR 3.6 billion, mainly due to scheduled repayments of EUR 0.3 billion and by the net increase of EUR 0.2 billion in the balance of short-term borrowings.

The liabilities with the right of creditors to priority repayment in the event of default of EUR 2.5 billion (December 31, 2022: EUR 2.9 billion) relate primarily to bonds issued by Sprint. Collateral was provided for these bonds, hence they constitute a separate class of financial instruments. The main factor reducing the carrying amount was repayments in the reporting period in the amount of EUR 0.3 billion when translated into euros. At the reporting date, cash and cash equivalents with a carrying amount of EUR 68 million (December 31, 2022: EUR 63 million) when translated into euros were pledged as collateral for these bonds.

The carrying amount of other interest-bearing liabilities decreased by EUR 0.4 billion compared with December 31, 2022 to EUR 7.1 billion. The main reducing factors were repayments at T‑Mobile US, accounting for EUR 0.2 billion, and exchange rate effects, in particular from the translation of U.S. dollars into euros, accounting for EUR 0.1 billion.

The carrying amount of derivative financial liabilities decreased by EUR 0.1 billion to EUR 2.8 billion. This was primarily driven by the early termination of a forward transaction to hedge the price of acquiring T‑Mobile US shares in the future.

For further information on derivative financial liabilities, please refer to the section “Disclosures on financial instruments.”

The carrying amount of current and non-current lease liabilities increased by EUR 3.2 billion to EUR 42.0 billion compared with December 31, 2022, mainly resulting from the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of the GD tower companies. As a result of this transaction, lease liabilities increased by EUR 5.0 billion. By contrast, lease liabilities in the United States operating segment decreased by EUR 1.1 billion due to the decommissioning of the former Sprint’s wireless network, the closure of former Sprint shops, and a decline in network and build-out investments, primarily on account of higher capital efficiency resulting from the accelerated build-out of the nationwide 5G network in the prior year. Exchange rate effects, in particular from the translation of U.S. dollars into euros, reduced the carrying amount by EUR 0.5 billion.

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Trade and other payables

The carrying amount of trade and other payables decreased by EUR 1.7 billion to EUR 10.4 billion, due in particular to lower liabilities in the United States operating segment, primarily due to a seasonally lower procurement volume and exchange rate effects with a reducing effect. By contrast, the Germany operating segment recorded an increase in liabilities.

Provisions for pensions and other employee benefits

The carrying amount of provisions for pensions and other employee benefits decreased by EUR 0.3 billion as of December 31, 2022 to EUR 3.9 billion, mainly due to an increase in the fair values of plan assets. The decline in the discount rate compared with December 31, 2022 had an offsetting effect. Overall, the remeasurement of defined benefit plans resulted in an actuarial gain of EUR 0.2 billion to be recognized directly in equity.

Current and non-current other provisions

The carrying amount of current and non-current other provisions decreased by EUR 1.0 billion compared with the end of 2022 to EUR 7.2 billion. Other provisions for personnel costs decreased by EUR 0.3 billion, mainly in connection with the performance-based remuneration components for the prior year paid out to employees in the first half of 2023. By contrast, other provisions for personnel costs recognized for the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK) increased as a result of the subsequent measurement of the present value determined using actuarial principles due to the decline in the interest rate level. Provisions for procurement and sales support decreased by EUR 0.3 billion, mainly in connection with the bonuses paid out to sales partners in the United States operating segment. Provisions for restoration obligations also decreased by EUR 0.2 billion, due in particular to the decommissioning of the former Sprint mobile network and due to shop closures. Exchange rate effects, in particular from the translation of U.S. dollars into euros, also contributed to the decrease in the carrying amount.

Other liabilities

The carrying amount of current and non-current other liabilities increased from EUR 5.6 billion to EUR 5.9 billion, mainly due to an increase in liabilities from other taxes. Liabilities due to existing build-out obligations in connection with grants still to be received from funding projects for the broadband build-out in Germany remained unchanged compared with December 31, 2022 at EUR 1.7 billion.

Contract liabilities

The carrying amount of current and non-current contract liabilities increased by EUR 0.3 billion compared with December 31, 2022 to EUR 2.9 billion. These substantially include deferred revenues. The increase was mainly due to higher contract liabilities in the Germany operating segment.

Liabilities directly associated with non-current assets and disposal groups held for sale

The carrying amount of liabilities directly associated with non-current assets and disposal groups held for sale decreased by EUR 3.3 billion against December 31, 2022 to EUR 0.0 billion. The sale of the GD tower companies as of February 1, 2023 reduced the carrying amount by EUR 3.0 billion, and the sale of the wireline business at T‑Mobile US as of May 1, 2023 by EUR 0.4 billion. The corresponding liabilities had previously been reported as held for sale on account of the sales agreements concluded.

For further information on the corporate transactions, please refer to the section “Changes in the composition of the Group and other transactions.”

Shareholders’ equity

The carrying amount of shareholders’ equity increased from EUR 87.3 billion as of December 31, 2022 to EUR 94.4 billion, with profit of EUR 19.0 billion and capital increases from share-based payments of EUR 0.2 billion having an increasing effect. By contrast, transactions with owners reduced shareholders’ equity by EUR 7.9 billion, mainly in connection with the share buy-back program at T-Mobile US. Shareholders’ equity was reduced in connection with dividend payments for the 2022 financial year to Deutsche Telekom AG shareholders in the amount of EUR 3.5 billion and to other shareholders of subsidiaries in the amount of EUR 0.2 billion. Other comprehensive income also decreased the carrying amount by EUR 0.6 billion. The main factors here were negative currency translation effects recognized directly in equity amounting to EUR 0.9 billion, offset by a positive effect of EUR 0.2 billion from the remeasurement of defined benefit plans.

For further information on the increase of the stake in T-Mobile US, please refer to the section “Other transactions that had no effect on the composition of the Group.”

The following table shows the changes in the composition of the Group and the development of transactions with owners: