Development of selected financial data
Net revenue, service revenuea, b
- Net revenue decreased by 1.0 % to EUR 55.1 billion; in organic terms, it decreased only slightly by 0.4 %. High-value service revenue increased by 2.5 % to EUR 45.8 billion; in organic terms, the increase was 2.9 %.
- Our Germany segment increased revenue by 2.4 % year-on-year, on the back of strong development of service revenues.
- In the United States segment, revenue declined by 1.4 %; on an organic basis, revenue was down 2.2 % against the prior year.
- Revenue in our Europe segment grew by 5.0 % on account of higher mobile service revenues.
- Revenue in Systems Solutions was up 1.9 % year-on-year on the back of growth in the Digital, Road Charging, and Advisory portfolio areas.
- In Group Development, revenue declined significantly due to the sale of T-Mobile Netherlands and GD Towers, but was up 3.1 % against the prior year on an organic basis.
EBITDA AL (adjusted for special factors)a
- Adjusted EBITDA AL grew by 1.2 % to EUR 20.0 billion. In organic terms, it increased by 2.4 %.
- In our Germany segment, adjusted EBITDA AL was up 4.0 %, driven by high-value revenue growth and enhanced cost efficiency.
- In the United States, adjusted EBITDA AL increased by 4.6 %, partly due to exchange rate effects. In organic terms, it increased by 3.1 %. Adjusted core EBITDA AL grew by 10.1 % to EUR 12.9 billion.
- Adjusted EBITDA AL in the Europe segment increased by 2.3 %.
- In Systems Solutions, adjusted EBITDA AL grew by 8.2 % due to efficiency effects and increased revenue in our Digital and Road Charging portfolio areas.
- In Group Development, adjusted EBITDA AL declined significantly due to the sale of T-Mobile Netherlands and GD Towers. In organic terms, it increased by 47.1 %.
- At 36.3 %, the Group’s adjusted EBITDA AL margin held steady at a high level. The adjusted EBITDA AL margin was 40.8 % in the Germany segment, 36.5 % in the United States segment, and 35.3 % in the Europe segment.
Profit/loss from operations (EBIT)a
- EBIT increased substantially to EUR 23.2 billion, mainly as a result of the gain on deconsolidation from the sale of GD Towers.
- Special factors had a positive effect of EUR 11.8 billion on EBITDA AL. Deconsolidations, disposals, and acquisitions generated proceeds of EUR 12.4 billion, most of which was attributable to the sale of GD Towers. In the prior-year period, the special factors affecting EBITDA AL totaled EUR 1.2 billion.
- EBITDA AL thus increased by EUR 13.2 billion to EUR 31.8 billion.
- At EUR 11.9 billion, depreciation, amortization and impairment losses were lower than in the prior-year period, with the decrease being almost exclusively attributable to the United States and Group Development operating segments.
- Our net profit increased significantly to EUR 16.9 billion due to the sale of GD Towers.
- Loss from financial activities increased by EUR 1.4 billion to EUR 3.0 billion, with other financial income/expense decreasing in particular in connection with the measurement of provisions and liabilities. Finance costs increased from EUR 2.5 billion to EUR 2.9 billion.
- The tax expense decreased by EUR 0.2 billion to EUR 1.2 billion.
- Profit attributable to non-controlling interests increased by EUR 1.8 billion to EUR 2.1 billion, a trend mainly attributable to the United States segment.
- Adjusted earnings per share decreased from EUR 0.94 to EUR 0.77.
For a reconciliation for the organic development of key figures for the prior-year comparative period, please refer to the section “Additional information.”
- The equity ratio increased by 2.3 percentage points against December 31, 2022 to 31.5 %.
- The increase in shareholders’ equity from EUR 87.3 billion to EUR 94.4 billion is primarily attributable to profit of EUR 19.0 billion.
- Shareholders’ equity was reduced in particular by transactions with owners (EUR 7.9 billion), mainly in connection with the share buy-back program at T-Mobile US. Dividend payments to our shareholders (EUR 3.5 billion) and to other shareholders of subsidiaries (EUR 0.2 billion) also reduced shareholders’ equity. Other comprehensive income also decreased the carrying amount (EUR 0.6 billion).
- Net debt decreased by EUR 5.5 billion compared with the end of 2022 to EUR 136.9 billion.
- The main factors reducing net debt were the cash inflow of EUR 10.7 billion from the sale of GD Towers, and free cash flow (before dividend payments and spectrum investment) of EUR 9.7 billion. Exchange rate effects totaling EUR 1.7 billion also reduced net debt.
- Net debt was increased in particular by the share buy-back program at T-Mobile US (EUR 7.6 billion), the dividend payment – including to non-controlling interests – (EUR 3.6 billion), the sale-and-leaseback transaction entered into in connection with the sale of GD Towers (EUR 3.0 billion), and additions of lease liabilities and right-of-use assets (EUR 2.0 billion). Other effects of EUR 0.4 billion also had an increasing effect.
Cash capex (before spectrum investment)
- Cash capex (before spectrum investment) decreased from EUR 9.6 billion to EUR 9.2 billion.
- In the United States segment, cash capex decreased by EUR 1.0 billion 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. By contrast, cash capex in the Germany segment increased by EUR 0.5 billion.
- Cash capex (including spectrum investment) decreased by EUR 2.8 billion to EUR 9.4 billion. Spectrum licenses were acquired in the Europe operating segment for a total of EUR 0.2 billion and in the United States segment for a total of EUR 0.1 billion in the reporting period. In the prior-year period, the United States segment had acquired spectrum licenses for a total amount of EUR 2.6 billion.
Free cash flow AL (before dividend payments and spectrum investment)
- Free cash flow AL was up by EUR 0.6 billion to EUR 7.1 billion.
- The sound business performance in the operating segments had an increasing effect on net cash from operating activities. Lower cash outflows in connection with the integration of Sprint in the United States and lower cash capex (before spectrum investment) also had a positive impact.
- Free cash flow AL was reduced by an increase of EUR 0.8 billion in cash outflows for the repayment of lease liabilities, mainly in the United States and Germany segments, an increase of EUR 0.2 billion in interest payments (net), and an increase of EUR 0.2 billion in tax payments.
For further information, please refer to the section “Development of business in the Group” in the interim Group management report.
For further information on the development of business in the operating segments, please refer to the section “Development of business in the operating segments” in the interim Group management report and to the IR back-up on our Investor Relations website.
For further information on our performance indicators and alternative performance measures, please refer to the section “Management of the Group” in the 2022 combined management report (2022 Annual Report) and our Investor Relations website.
a aThe GD Towers business entity, which operated the cell tower business in Germany and Austria and was assigned to the Group Development operating segment, was recognized as a discontinued operation in the interim consolidated financial statements 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. For information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management” in the interim Group management report and the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.
b bAs of the third quarter of 2022 the principal/agent consideration regarding the recognition of gross and net revenues was changed. Prior-year comparatives were adjusted retrospectively.
c cIncluding net debt reported under liabilities directly associated with non-current assets and disposal groups held for sale.