The economic environment

This section provides important additional information and explains recent changes in the economic environment compared to those described in the 2023 combined management report (2023 Annual Report), focusing on macroeconomic developments, the overall economic outlook including the currently prevailing economic risks, and the regulatory environment in the first half of 2024.

Macroeconomic development

The global economic outlook brightened somewhat in the first half of 2024. Global growth was surprisingly robust over the last year. Lower energy prices and declining pressure on supply chains contributed to inflation falling faster than expected. However, a strong global upswing is still not in sight.

In its July 2024 forecast, the International Monetary Fund (IMF) expects global economic output to grow by 3.2 % in the current year compared to growth of 3.3 % in the prior year. The IMF also forecasts growth this year in the economic output of the national economies in our core markets in North America and Europe: of 2.6 % in the United States, 0.9 % in the eurozone, and 0.2 % in Germany.

According to the Bitkom-ifo-Digitalindex, the business climate in Germany’s digital sector brightened slightly by the end of the first half of 2024. This was tempered somewhat in June 2024 by a slight deterioration in the index for the current business situation, although business expectations remained well above the prior-month level. The digital economy remains more optimistic than the economy as a whole.

Overall economic outlook

In Germany, stagnant inflation and restrained consumer sentiment are dampening the economic outlook. Unlike other major member states of the European Economic and Monetary Union, Germany may face an economic downturn in the current year. By contrast, the U.S. economy clearly gained momentum in spring 2024. According to the World Bank’s forecast, the gross domestic product (GDP) in the United States is expected to grow by up to 2.5 % in 2024. However, significant downside risks continue to weigh on the economic outlook – in particular, the current geopolitical crises carry with them high risks for economic growth and inflation.

Regulation

European Commission publishes white paper. On February 21, 2024, the European Commission published a white paper entitled “How to master Europeʼs digital infrastructure needs?” This white paper compiles proposals for measures by the European Union in preparation for a planned Digital Networks Act. Deutsche Telekom submitted its view on the proposals on June 28, 2024 during the open consultation process. Legislative initiatives based on the white paper and the responses to the public consultation are expected from 2025.

The white paper identifies future action areas as the build-out of digital networks of the future, managing the transition to new technologies and business models, covering the future need for connectivity, and the safeguarding of economic competitiveness and of secure, resilient infrastructure in the EU. As a result, a far-reaching revision of the current regulatory framework is expected.

Bundesnetzagentur’s regulatory procedures based on the decision on access regulation including FTTB/H network access. On April 10, 2024, the Bundesnetzagentur published a draft consultation for the charges for access to civil engineering infrastructure regulated under the access regulation. After the subsequent national consultation, the Bundesnetzagentur formally notified the European Commission in Brussels of its draft on June 14, 2024. In this draft, a number of charges were increased in Deutsche Telekom’s favor. The Bundesnetzagentur issued the final version of the approval on charges on July 17, 2024, without further changes to the notified version. The parallel Bundesnetzagentur regulatory procedure concerning the related reference offer has not yet been decided.

Awarding of spectrum

In the first half of 2024, spectrum in the 26 GHz band and residual spectrum in the 3.4 to 3.8 GHz band were auctioned off in Austria. In the 26 GHz band, T‑Mobile Austria secured 400 MHz of nationwide spectrum for itself, and in the 3.4 to 3.8 GHz band, 40 MHz in Vienna and 60 MHz in Carinthia, for EUR 10.5 million in total. In the United States, the spectrum in the 2.5 GHz band acquired in Auction 108 in September 2022 for around USD 0.3 billion (EUR 0.3 billion) was allocated. The majority of this spectrum was connected immediately. In the Czech Republic, the 900/1,800 MHz GSM license expiring in 2024 was extended at a cost of around EUR 28 million for T‑Mobile Czech Republic.

In Germany, the regulatory authority Bundesnetzagentur consulted on a draft decision concerning the extension of usage rights for the 800 MHz, 1,800 MHz, and 2,600 MHz mobile frequencies, which expire at the end of 2025, by five years. The extension is to replace the originally planned auction to award these frequencies. In return, the draft stipulates requirements such as further coverage obligations for the existing frequency owners as well as the obligation to allow network provider 1&1 to co-use frequencies below the 1 GHz band. The consultation on the draft continued until July 8, 2024; the regulatory authority’s final decision is expected in the second half of 2024.

Proceedings to re-award spectrum in the 2,600 MHz band expiring at the end of 2026 and possibly spectrum in the 2,300 MHz band are starting in Austria. In Poland, the award procedure for the 700 MHz band and potentially also for spectrum in the 26 GHz band could begin in 2024. In Slovakia, the procedure (auction) to re-award 900 MHz and 2,100 MHz spectrum originally planned for late 2023 was called into question. Instead, a comprehensive multi-band auction for the 800, 900, 1,500, 2,100, and 2,600 MHz bands expiring in 2025, 2026, and 2028 is under discussion. To enable the multi-band auction to go ahead, the 900 MHz and 2,100 MHz band licenses were extended on a short-term basis.

The following table provides an overview of the main ongoing and planned spectrum awards and auctions as well as license extensions. It also indicates spectrum to be awarded in the near future in various countries.

Agreements on spectrum licenses

On August 8, 2022, T‑Mobile US entered into agreements with Channel 51 License and LB License for the acquisition of spectrum licenses in the 600 MHz band in exchange for a total cash consideration of USD 3.5 billion (EUR 3.3 billion). 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. On December 29, 2023, the Federal Communications Commission (FCC) approved the transfer of the licenses in the first tranche. The first tranche was concluded on June 24, 2024. The corresponding purchase price payment of USD 2.4 billion (EUR 2.2 billion) was made on August 5, 2024. The second tranche is expected to be concluded in late 2024/early 2025.

On July 1, 2020, T‑Mobile US and DISH Network Corporation (DISH) reached an agreement on the sale of spectrum licenses, under which DISH agreed to purchase certain 800 MHz spectrum licenses from T‑Mobile US for USD 3.6 billion (EUR 3.4 billion). On October 15, 2023, T‑Mobile US and DISH modified the agreement to include, among other changes, a non-refundable extension fee of USD 0.1 billion (EUR 0.1 billion) which DISH will pay to T‑Mobile US, as well as the requirement that the purchase of the spectrum licenses must be finalized by April 1, 2024. DISH did not exercise its purchase option by April 1, 2024. The extension fee already paid on October 25, 2023 was retained in accordance with the agreement. T‑Mobile US is now obligated to put the licenses up for sale at auction and has initiated the corresponding auction process. Should bidding not reach the defined minimum purchase price of USD 3.6 billion by the end of the auction on October 1, 2024, T‑Mobile US would be released from its obligation to sell the licenses.