Deutsche Telekom at a glance

Net revenue

Net revenue decreased by EUR 0.4 billion to EUR 55.4 billion. Adjusted for exchange rate effects and the slightly negative effects of changes in the composition of the Group, net revenue rose by EUR 1.5 billion or 2.8 percent.
Our United States operating segment posted a decline in revenue of 0.7 percent; in U.S. dollars, the continuing success of our U.S. operations was evident in revenue growth of 6.7 percent.
Revenue increased by 1.9 percent at our Europe operating segment.
The business trend was stable in our Germany operating segment, with revenue down 1.0 percent due to the first-time application of the IFRS 15 accounting standard.
Revenue remained on a par with the prior year in our Systems Solutions operating segment, while in our Group Development operating segment revenue declined.

Adjusted EBITDA grew by EUR 0.5 billion to EUR 17.7 billion. Adjusted for exchange rate effects and the slightly negative effects of changes in the composition of the Group, adjusted EBITDA rose by EUR 1.0 billion or 6.2 percent.
Adjusted EBITDA for our United States operating segment increased by 3.3 percent; in U.S. dollars, this growth reached as much as 11.0 percent.
Our Europe and Germany operating segments also posted increases in adjusted EBITDA of 2.9 percent and 1.8 percent respectively, while adjusted EBITDA declined in our Systems Solutions and Group Development operating segments.
At 31.9 percent, the Groups adjusted EBITDA margin increased against the prior-year level of 30.9 percent. The EBITDA margin was 40.0 percent in Germany, 33.4 percent in Europe, and 28.5 percent in the United States.

EBIT decreased by EUR 1.6 billion to EUR 7.1 billion.
EBITDA was negatively affected by special factors of EUR 1.0 billion in contrast to positive net special factors of EUR 2.1 billion in the previous year. Negative special factors in connection with staff-related measures were EUR 0.5 billion higher than in the same period of last year. The prior-year period had also benefited from positive special factors of EUR 1.7 billion from the reversal of impairment losses previously recognized for spectrum licenses at T-Mobile US, the sale of Strato (EUR 0.5 billion) and of further shares in Scout24 AG (EUR 0.2 billion), and a settlement agreement concluded with BT (EUR 0.2 billion).
At EUR 9.6 billion, depreciation, amortization and impairment losses were down EUR 0.9 billion on the prior-year period, which had included a special factor of EUR 1.2 billion for the impairment of goodwill in our Systems Solutions operating segment.

Net profit increased by EUR 0.5 billion to EUR 2.6 billion.
At EUR 2.1 billion, the loss from financial activities was EUR 1.6 billion smaller than a year earlier, offsetting the effects of the reduction in EBIT. The loss in the prior-year period was attributable to the EUR 1.3 billion impairment of our financial stake in BT recognized in profit or loss, as well as to higher negative effects from the exercise and remeasurement of derivatives at T-Mobile US. While the settlement amount of EUR 0.6 billion agreed in the Toll Collect arbitration proceedings had a negative impact in the reporting period, finance costs improved by EUR 0.3 billion year-on-year.
The tax expense of EUR 1.4 billion was EUR 0.5 billion lower than in the prior-year period.
Profit attributable to non-controlling interests decreased marginally year-on-year to EUR 0.9 billion.

The equity ratio increased by 0.6 percentage points to 30.6 percent.
Total assets increased by EUR 0.9 billion compared with the end of 2017.
Shareholders’ equity increased from EUR 42.5 billion as of December 31, 2017 to EUR 43.5 billion. By contrast, profit of EUR 3.5 billion, and an effect of EUR 1.5 billion recognized directly in equity, and attributable to the transition to IFRS 9 and IFRS 15, had an increasing effect. Currency translation effects recognized directly in equity increased shareholders’ equity by EUR 0.7 billion. Shareholders’ equity was reduced in particular by the dividend payment to Deutsche Telekom AG shareholders in the amount of EUR 3.1 billion, by EUR 0.9 billion for T-Mobile US’ share buy-back program, and by an impairment loss of EUR 0.7 billion on the financial stake in BT recognized directly in equity.

Cash capex (including spectrum investment) decreased from EUR 16.5 billion to EUR 9.4 billion.
In the prior-year period, mobile spectrum licenses had been acquired for EUR 7.3 billion, mainly in the United States operating segment, compared with cash outflows in the reporting period of EUR 0.2 billion, primarily in the United States.
Excluding the effects of spectrum acquisitions, cash capex declined by EUR 0.1 billion; adjusted for currency translation effects, cash capex was up year-on-year. Capital expenditures were focused primarily on the United States, Germany, and Europe operating segments and went toward the build-out and upgrade of our networks.

Free cash flow was up by EUR 0.4 billion to EUR 4.8 billion.
Net cash from operating activities increased by EUR 0.2 billion year-on-year. Lower net interest payments had a positive effect. The positive business development in our United States operating segment was adversely affected by currency translation effects.
The year-on-year decrease of EUR 0.1 billion in cash capex (before spectrum investment) enhanced free cash flow.

Net debt increased from EUR 50.8 billion at the end of 2017 to EUR 55.5 billion.
Factors in this increase included, in particular, the dividend payment (including to non-controlling interests) of EUR 3.3 billion, the acquisition of UPC Austria (EUR 1.8 billion), T-Mobile US’ share buy-back program (EUR 0.9 billion), exchange rate effects (EUR 0.8 billion), payment obligations arising out of the Toll Collect settlement (EUR 0.6 billion), additions to liabilities in connection with finance leases (EUR 0.6 billion), and further acquisitions of shares in T-Mobile US and OTE (EUR 0.4 billion).
The main factor reducing net debt was free cash flow of EUR 4.8 billion.

For a more detailed explanation, please refer to the section “Development of business in the Group.”