Financial position of the Group

Total assets amounted to EUR 299.7 billion as of June 30, 2023, up by EUR 1.1 billion against December 31, 2022. The main contributing factors were the cash proceeds from the sale of GD Towers, the sale-and-leaseback transaction concluded in this connection to lease the sold passive network infrastructure in Germany and Austria, and the inclusion of the remaining 49.0 % stake. Total assets were reduced in connection with the derecognition of the assets and liabilities that had been fully consolidated until the transaction was closed. Exchange rate effects, primarily from the translation of U.S. dollars into euros, decreased the carrying amount of total assets.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

On the assets side, trade receivables amounted to EUR 15.8 billion, down by EUR 1.0 billion against the 2022 year-end. 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.

Intangible assets decreased by EUR 2.6 billion 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.

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.

Compared with December 31, 2022, right-of-use assets increased by EUR 0.6 billion to EUR 34.3 billion. The carrying amount was increased by additions of EUR 4.0 billion, mainly as a result of the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of GD Towers. 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. 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.

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 GD Towers. 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.

Current and non-current financial assets increased by EUR 0.3 billion 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 also increased by an existing shareholder loan to GD Towers, which must be reported 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.

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 GD Towers 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 “Group organization, strategy, and management.”

Miscellaneous assets increased by EUR 0.3 billion to EUR 12.1 billion. Current and non-current other assets contributed EUR 0.5 billion to this increase, due in part to an increase in various advance payments, mainly in connection with agreements on services for certain mobile communications equipment. In addition, contract assets and capitalized contract costs each increased by EUR 0.1 billion. By contrast, inventories declined by EUR 0.4 billion, mainly due to the sale of older terminal equipment and to reduced stocks as a result of closures of former Sprint sites in the United States operating segment.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities decreased by EUR 3.1 billion compared with the end of 2022 to a total of EUR 110.0 billion. The carrying amount of bonds and other securitized liabilities decreased by EUR 2.0 billion, with exchange rate effects, in particular from the translation of U.S. dollars into euros, accounting for EUR 1.2 billion of this decrease. Early repayments in the Group by way of early buy-backs in February and March 2023 of EUR, GBP, and USD bonds with a total volume of EUR 3.3 billion, and scheduled repayments of EUR bonds of EUR 1.3 billion also reduced the carrying amount. Net repayments of commercial paper also decreased the carrying amount by EUR 2.3 billion. The carrying amount was increased by the senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 6.5 billion (EUR 6.0 billion). In addition, the carrying amounts of liabilities to banks, liabilities with the right of creditors to priority repayment in the event of default, and derivative financial liabilities decreased by EUR 1.0 billion overall.

Current and non-current lease liabilities increased by EUR 3.2 billion to EUR 42.0 billion compared with December 31, 2022, mainly as a result of the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of GD Towers. 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.

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 attributable to a seasonally lower procurement volume and exchange rate effects with a reducing effect on the carrying amount. By contrast, the Germany operating segment recorded an increase in liabilities.

Provisions for pensions and other employee benefits decreased by EUR 0.3 billion compared with 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 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.

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 GD Towers 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 corporate transactions, please refer to the section “Group organization, strategy, and management.”

Miscellaneous liabilities increased by EUR 0.8 billion compared to December 31, 2022 to EUR 9.8 billion, mainly due to an increase in other liabilities of EUR 0.4 billion, driven by an increase in liabilities from other taxes. In addition, contract liabilities increased by EUR 0.3 billion and income tax liabilities by EUR 0.1 billion.

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 decreased the carrying amount by EUR 0.6 billion.

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.

Changes in net debt

millions of €

Other effects of EUR 0.4 billion included, among other factors, the acquisition of spectrum, share buy-backs at subsidiaries, and the recognition of liabilities for the acquisition of broadcasting rights.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Free cash flow AL (before dividend payments and spectrum investment) increased by EUR 0.6 billion year-on-year to EUR 7.1 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 0.9 billion to EUR 18.9 billion on the back of the good business performance. Lower cash outflows in connection with the integration of Sprint in the United States also had an increasing effect. The increase in net interest payments of EUR 0.2 billion and the increase in tax payments of EUR 0.2 billion, in particular, had a reducing effect.

Cash capex (before spectrum investment) decreased from EUR 9.6 billion to EUR 9.2 billion. Cash capex in the United States operating segment decreased by EUR 1.0 billion to EUR 5.4 billion, mainly as a result of higher cash outflows in the prior year for the accelerated build-out of the 5G network and the integration of Sprint. In the Group Development operating segment, cash capex decreased, mainly due to the sales of T‑Mobile Netherlands and GD Towers. In the Germany operating segment, capital expenditure totaled around EUR 2.3 billion in the first half of 2023, EUR 0.5 billion more than in the prior-year period, with much of this figure going towards the fiber-optic build-out. Cash outflows in the Europe operating segment increased by EUR 0.1 billion to EUR 0.9 billion, largely due to the timing of the allocation of capital expenditure. We continue to invest here in the provision of broadband and fiber-optic technology and in 5G as part of our integrated network strategy. In the Systems Solutions operating segment, our capital expenditure was EUR 0.1 billion. The increase is mainly due to higher demand for on-board units in the Road Charging portfolio area and higher investments in the Digital portfolio area.

An increase of EUR 0.8 billion in cash outflows for the repayment of lease liabilities reduced free cash flow AL. This mainly related to leases in the United States and Germany operating segments.

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.

On May 19, 2023, the rating agency Standard & Poor’s raised the long-term rating from BBB to BBB+ with a stable outlook. We are therefore a solid investment-grade company with access to the international capital markets.

For more information on Deutsche Telekom AG’s rating, please refer to the section “Profitability and financial position of the Group” in the 2022 Annual Report.