Group organization, strategy, and management

With regard to our Group organization, strategy, and management, please refer to the explanations in the 2022 combined management report (2022 Annual Report). From the Group’s point of view, the following significant events in the first half of 2023 resulted in changes and/or additions.

Group organization

Sale of GD Towers. On July 13, 2022, Deutsche Telekom agreed to sell a 51.0 % stake in the cell tower business companies in Germany and Austria (GD Towers), hitherto assigned to the Group Development operating segment, to DigitalBridge and Brookfield. After all necessary regulatory approvals had been duly granted and all other closing conditions met, the transaction was closed on February 1, 2023. The sale price is based on an enterprise value of EUR 17.5 billion. The total preliminary gain on deconsolidation resulting from the sale amounts to EUR 15.9 billion, of which EUR 12.9 billion is included in profit/loss from discontinued operation as other operating income in the consolidated income statement as of the deconsolidation date. As Deutsche Telekom has largely leased back the sold passive network infrastructure in Germany and Austria under a sale and leaseback transaction, a further EUR 3.0 billion will be recognized pro rata in subsequent periods. Overall, right-of-use assets were recognized in the amount of EUR 2.0 billion and lease liabilities in the amount of EUR 5.0 billion. The transaction resulted in preliminary cash proceeds of EUR 10.7 billion. The stake retained by Deutsche Telekom of 49.0 % has been included in the consolidated financial statements using the equity method since February 1, 2023. 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” in the interim consolidated financial statements.

Sale of the U.S. wireline business. On September 6, 2022, T-Mobile US reached an agreement with Cogent Infrastructure (Cogent) on the sale of T-Mobile US’ fiber-optic-based wireline business. Under the agreement, Cogent will take over all shares in the entity that holds all of the assets and liabilities related to the former Sprint’s fiber-optic-based wireline network. The transaction was closed on May 1, 2023. All necessary regulatory approvals had been duly granted and all other closing conditions met. The sale price was USD 1 and was subject to customary adjustments laid down in the purchase agreement. The cash proceeds received upon completion of the transaction amounted to USD 14 million (EUR 13 million). The loss on deconsolidation resulting from the sale amounted to EUR 4 million. In addition, upon completion of the transaction, T‑Mobile US undertook to enter into a separate agreement on IP transit services, according to which T‑Mobile US will pay a total of USD 0.7 billion (around EUR 0.6 billion) to Cogent in agreed installments over subsequent periods. In connection with the payment obligations entered into as part of the transaction, total liabilities of EUR 0.7 billion had already been recognized in the 2022 financial year. As a result of the concluded sales agreement, the assets and liabilities of the wireline business were reported in the consolidated statement of financial position as “held for sale” from September 30, 2022 up until their sale on May 1, 2023.

Share buy-back program continued and majority stake in T-Mobile US secured. In the first half of 2023, T-Mobile US bought back around 58 million additional shares with a total volume of USD 8.3 billion (EUR 7.7 billion) under its share buy-back program. Taking the treasury shares held by T-Mobile US into account, Deutsche Telekom’s stake in T-Mobile US stood at 51.3 % as of June 30, 2023.

Furthermore, the transaction described below will affect the segment and organizational structure of Deutsche Telekom in the future:

Agreement on the acquisition of Ka’ena in the United States. On March 9, 2023, T-Mobile US entered into a Merger and Unit Purchase Agreement for the acquisition of 100 % of the outstanding equity of Ka’ena Corporation and its subsidiaries including, among others, Mint Mobile, for a maximum purchase price of USD 1.35 billion to be paid out 39 % in cash and 61 % in shares of T-Mobile US common stock. Ka’ena Corporation is currently one of the wholesale partners of T-Mobile US, offering wireless telecommunications services to customers. The purchase price is variable dependent upon specified performance indicators of Ka’ena Corporation during certain periods before and after closing and consists of an upfront payment at deal close, subject to certain agreed-upon adjustments, and a variable earnout payable 24 months after the close of the transaction. The upfront payment is expected to be approximately USD 950 million, before working capital adjustments. The acquisition is subject to certain customary closing conditions, including certain regulatory approvals, and is expected to close by the end of 2023.

Management of the Group

Presentation of GD Towers according to the management approach. The GD Towers business entity had been recognized in the interim consolidated financial statements as a discontinued operation from the third quarter of 2022 until its sale on February 1, 2023. In the interim Group management report, we include the contributions by GD Towers in the results of operations according to the management approach for the period mentioned. The following table provides a reconciliation of the amounts recognized in the consolidated income statement to the financial performance indicators relevant for the management approach:

Broader definition of service revenue. Since January 1, 2023, service revenue additionally includes certain software revenues generated with ICT business in the Systems Solutions and Europe operating segments, as well as in the Group Headquarters & Group Services segment. Comparative figures have been adjusted retrospectively.