Group Headquarters & Group Services

For information on changes resulting from the first-time application of the IFRS 16 “Leases” accounting standard, please refer to the section “Group organization, strategy, and management.”

Development of operations

Total revenue

Total revenue in our Group Headquarters & Group Services segment decreased in the reporting period by 6.4 percent year-on-year, mainly due to lower intragroup revenue at Deutsche Telekom IT from the licensing of the Group-wide ERP system, which does not impact on earnings at Group level. A slight negative factor resulted from the fact that, as of January 2016, the costs of intragroup development services newly commissioned from Deutsche Telekom IT in Germany are no longer charged internally.

EBITDA AL, adjusted EBITDA AL

Adjusted EBITDA AL at our Group Headquarters & Group Services segment decreased in the reporting period by EUR 161 million year-on-year due to two main effects: lower proceeds from real estate sales and lower revenue at Deutsche Telekom IT from the licensing of the Group-wide ERP system. By contrast, the reduction in headcount at Vivento brought about by ongoing staff restructuring had a positive effect.

Overall, EBITDA AL was negatively impacted in the reporting period by special factors amounting to EUR 146 million, especially for staff-related measures. Negative net special factors affecting EBITDA AL in the prior-year period had amounted to EUR 214 million – with expenses for staff-related measures being partially offset by the positive effect of the reversal of provisions for legal risks in connection with the conclusion of the Toll Collect arbitration proceedings.

EBIT

The year-on-year decrease of EUR 92 million in EBIT was mainly due to the effects described under EBITDA AL. Whereas previously expenses had been recognized in connection with operating leases, the right-of-use assets recognized in this context since the application of accounting standard IFRS 16 as of January 1, 2019 result in particular in higher depreciation charges. Other depreciation, amortization and impairment losses were slightly above the prior-year level, largely as a result of higher depreciation and amortization following the decision to capitalize newly commissioned intragroup development services at Deutsche Telekom IT instead of charging them internally. By contrast, depreciation, amortization and impairment losses decreased as a result of lower capitalization in connection with declines both in the licensing of the Group-wide ERP system and in land and buildings due to the ongoing optimization of our real estate portfolio.

Cash capex

Cash capex decreased by EUR 9 million year-on-year. Lower cash capex for vehicles was offset by higher investments in technology and innovation, primarily for development services.