Financial position of the Group

Total assets/total liabilities and shareholders’ equity amounted to EUR 273.4 billion as of September 30, 2021, up by EUR 8.4 billion against December 31, 2020. This increase is mainly attributable to investments in intangible assets for spectrum acquisition in the United States operating segment. Positive exchange rate effects and effects of changes in the composition of the Group, mainly from the first-time inclusion of Shentel, acquired by T‑Mobile US, also increased the carrying amount. This effect was offset in part by a decline in cash and cash equivalents.

On the assets side, trade receivables amounted to EUR 14.1 billion, up by EUR 0.6 billion against the 2020 year-end. The increase resulted from higher receivables in the United States operating segment due to the reporting date and exchange rate effects. Lower receivables in the Group Development operating segment, primarily as a result of the reclassification of T‑Mobile Netherlands’ assets to non-current assets and disposal groups held for sale in connection with the agreed sale, and in the Germany operating segment had an offsetting effect.

Intangible assets and property, plant and equipment increased by EUR 11.7 billion to EUR 190.8 billion in total. This is mainly due to the conclusion of the C-band auction in the United States, at which T‑Mobile US purchased 142 licenses for around EUR 7.8 billion (USD 9.3 billion) and made initial “relocation payments” of EUR 0.2 billion to relocate incumbent licensees. Furthermore, in the Europe operating segment, T‑Mobile Czech Republic purchased 5G licenses for EUR 0.1 billion at auction in November 2020. In Hungary, proceedings to re-award 900 and 1,800 MHz spectrum licenses were held on January 28, 2021 and concluded the same day. Magyar Telekom acquired spectrum licenses for EUR 0.1 billion. Capital expenditure to upgrade and build out the network and acquire mobile terminal equipment in our United States operating segment and in connection with the broadband/fiber-optic build-out and mobile infrastructure in the Germany and Europe operating segments also increased the carrying amount. Positive exchange rate effects of EUR 7.5 billion and effects of changes in the composition of the Group of EUR 1.6 billion, mainly from the first-time inclusion of Shentel, acquired by T‑Mobile US, also increased the carrying amount. Depreciation, amortization and impairment losses reduced the net carrying amounts by EUR 16.0 billion in total. The reclassification of T‑Mobile Netherlands’s assets, in connection with the agreed sale, to non-current assets and disposal groups held for sale and disposals reduced the carrying amounts by EUR 2.9 billion and EUR 1.3 billion respectively.

For further information on the acquisition of Shentel and the agreed sale of T‑Mobile Netherlands, please refer to the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.

Right-of-use assets increased by EUR 0.5 billion year-on-year to EUR 30.8 billion, mainly due to the following effects: The carrying amount was increased by additions of EUR 4.3 billion, partly as a result of a sale-and-leaseback transaction concluded after the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund, and by positive exchange rate effects of EUR 1.5 billion and effects of changes in the composition of the Group, mainly in connection with the acquisition of Shentel, of EUR 0.3 billion. The carrying amount was decreased by depreciation, amortization, and impairment losses of EUR 4.6 billion. This included a EUR 0.6 billion increase in depreciation and amortization due to a reduction in the useful life of leased network technology for cell sites in the United States operating segment following the business combination of T‑Mobile US and Sprint. The reclassification of T‑Mobile Netherlands’s assets to non-current assets and disposal groups held for sale in the amount of EUR 0.5 billion and disposals of EUR 0.2 billion also reduced the carrying amount.

For further information on these business transactions and others, please refer to the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.

Current and non-current financial assets decreased by EUR 1.3 billion to EUR 8.4 billion. The carrying amount of derivatives with a hedging relationship decreased by EUR 0.5 billion to EUR 1.6 billion, mainly due to the decrease in positive fair values from interest rate swaps in fair value hedges, which is primarily the result of a rise in the interest rate level. The carrying amount of derivatives without a hedging relationship decreased by a net effect of EUR 0.7 billion to EUR 1.3 billion. Taking into account the partial exercising of the stock options received from SoftBank in June 2020 to purchase shares in T‑Mobile US, as well as measurement effects due to the negative development of the T‑Mobile US share price, the carrying amount of these stock options decreased by EUR 0.5 billion compared with December 31, 2020. Negative measurement effects also resulted from the subsequent measurement of embedded derivatives at T‑Mobile US and arose in part in connection with the premature repayment of bonds. By contrast, the carrying amount was increased by positive measurement effects of EUR 0.2 billion from energy forward agreements embedded in contracts and of EUR 0.2 billion from receivables from grants still to be received from funding projects for the broadband build-out in Germany.

Non-current assets and disposal groups held for sale increased by EUR 3.4 billion compared with December 31, 2020 to EUR 4.6 billion. Of this increase, EUR 4.5 billion resulted from the reclassification of T‑Mobile Netherlands’ assets in connection with the sale agreed on September 6, 2021. By contrast, the sale of the Dutch company T‑Mobile Infra as of June 1, 2021 and of Telekom Romania Communications as of September 30, 2021 in particular had decreasing effects on the carrying amount of EUR 0.4 billion and EUR 0.6 billion respectively.

For further information on these business transactions and others, please refer to the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.

Other assets increased by EUR 0.5 billion to EUR 10.9 billion, primarily due to the increase in the carrying amount of investments accounted for using the equity method, mainly as a result of the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund. As a result of the transaction, 37.65 % of the shares in Cellnex NL with a carrying amount of EUR 0.4 billion were included in the Group Development operating segment in the consolidated financial statements using the equity method. Exchange rate effects also increased the carrying amount.

For further information on the combination of the cell tower business in the Netherlands and on the set-up of an infrastructure fund, please refer to the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities increased by EUR 1.8 billion compared with the end of 2020 to a total of EUR 108.9 billion. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 3.6 billion. T‑Mobile US issued senior notes in the first nine months of 2021 with a total volume of USD 11.8 billion (EUR 9.8 billion) and made early repayments on bonds with a total volume of USD 5.8 billion (EUR 4.9 billion). Furthermore, bonds with a volume of USD 2.3 billion (EUR 1.9 billion) were repaid on schedule by T‑Mobile US, and euro bonds with a volume of EUR 1.7 billion and U.S. dollar bonds with a volume of USD 0.3 billion (EUR 0.2 billion) were repaid on schedule in the Group. The carrying amount of liabilities to banks decreased by EUR 1.4 billion compared with December 31, 2020. Financial liabilities decreased by EUR 0.2 billion in connection with collateral received for derivative financial instruments.

Current and non-current lease liabilities increased by EUR 0.1 billion to EUR 32.8 billion compared with December 31, 2020. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 1.6 billion. Effects of changes in the composition of the Group, mainly from the first-time inclusion of Shentel, acquired by T‑Mobile US, also increased the carrying amount. This was offset in particular by the decommissioning of former Sprint cell sites and the closure of some former Sprint shops in the United States operating segment and by an advance payment for the lease of sites of EUR 0.9 billion made by T‑Mobile US to a U.S. cell tower company in September 2021 in connection with a change to the existing lease agreed in the reporting period.

Trade and other payables decreased by EUR 1.5 billion to EUR 8.2 billion, due in particular to lower liabilities to terminal equipment vendors and declines in liabilities for purchased services in the United States operating segment. In addition, liabilities in the Group Development operating segment decreased as a result of the reclassification of T‑Mobile Netherlands’ liabilities. Liabilities also decreased in the Europe operating segment. By contrast, exchange rate effects, primarily from the translation of U.S. dollars into euros, increased the carrying amount.

Provisions for pensions and other employee benefits decreased by EUR 1.2 billion compared with December 31, 2020 to EUR 6.4 billion, mainly due to an increase in the share prices of plan assets and interest rate adjustments. All this resulted in an actuarial gain of EUR 1.1 billion from the remeasurement of defined benefit plans to be recognized directly in equity.

Liabilities directly associated with non-current assets and disposal groups held for sale increased by EUR 0.8 billion against December 31, 2020 to EUR 1.3 billion. Of this increase, EUR 1.3 billion resulted from the reclassification of T‑Mobile Netherlands’ liabilities in connection with the agreed sale. By contrast, the sale of the Dutch company T‑Mobile Infra as of June 1, 2021 and of Telekom Romania Communications as of September 30, 2021 in particular had decreasing effects on the carrying amounts of EUR 0.2 billion and EUR 0.3 billion respectively.

For further information on these business transactions and others, please refer to the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.

Other liabilities increased by EUR 0.8 billion compared to December 31, 2020 to EUR 9.1 billion, mainly due to an increase of EUR 0.4 billion in other liabilities, partly in connection with grants still to be received from funding projects for the broadband build-out in Germany as well as exchange rate effects.

Shareholders’ equity increased from EUR 72.6 billion as of December 31, 2020 to EUR 78.9 billion. This growth was attributable to profit of EUR 5.3 billion and to the increase in other comprehensive income of EUR 4.9 billion. Shareholders’ equity was reduced in connection with dividend payments for the 2020 financial year to Deutsche Telekom AG shareholders in the amount of EUR 2.8 billion and to other shareholders of subsidiaries in the amount of EUR 0.2 billion. The carrying amount of shareholders’ equity also decreased by a net EUR 0.8 billion due to the acquisition of T‑Mobile US shares by way of a capital increase against a non-cash contribution. This acquisition of T‑Mobile US shares by way of a capital increase against a non-cash contribution increased Deutsche Telekom AG’s stake in T‑Mobile US by 3.6 percentage points to 46.8 %. Taking into account a fair value of EUR 0.8 billion for the exercised stock options, which were recognized directly in equity as part of the consideration paid to SoftBank, the issued capital and reserves attributable to owners of the parent increased by a total of EUR 1.5 billion, while those attributable to non-controlling interests decreased by EUR 2.4 billion. As a result, the share of profit and consequently earnings per share attributable to the owners of the parent increased. Changes in the composition of the Group – mainly due to the sale of Telekom Romania Communications in the Europe operating segment – of EUR 0.2 billion and transactions with owners of EUR 0.1 billion decreased the carrying amount.

For further information on the statement of financial position, please refer to the section “Selected notes to the consolidated statement of financial position” in the interim consolidated financial statements.

Changes in net debt

millions of €

Other effects of EUR 157 million include, among other factors, the recognition of liabilities for the acquisition of broadcasting rights.

Free cash flow AL (before dividend payments and spectrum investment) increased from EUR 5.3 billion in the prior-year period to EUR 8.3 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 5.4 billion. The strong performance of the operating segments both in the United States and outside of the United States had a positive effect on net cash from operating activities. In addition, the increase is attributable to the business combination of T‑Mobile US and Sprint effective April 1, 2020. The increase was partially offset in particular by a net increase of EUR 0.5 billion in interest payments, mainly as a result of the financial liabilities recognized and the restructuring carried out in connection with the acquisition of Sprint, and the related increase in financing. Income tax payments increased by EUR 0.2 billion compared with the prior-year period. Factoring agreements accounting for EUR 0.2 billion had a positive impact on net cash from operating activities in the first nine months of 2021. In the prior-year period, factoring agreements had had negative effects of EUR 0.6 billion, mainly as a result of the contractual termination of a revolving factoring agreement in the Germany operating segment.

Cash capex (before spectrum investment) increased from EUR 11.5 billion to EUR 12.9 billion, mainly in the United States operating segment (EUR 1.7 billion) as a result of the inclusion of Sprint as well as the ongoing build-out of the 5G network. A decline of EUR 0.2 billion in cash capex in the Germany operating segment due to lower capital expenditure had an offsetting effect: construction measures planned for 2021 were brought forward to the fourth quarter of 2020 and investments in optical fiber were lower in the first and second quarter of 2021 due to bad weather. In the third quarter, it was possible to step up investments again, thus partially making up for the decline.

The increase in the principal portion of repayment of lease liabilities was due in particular to payments for leases in the United States operating segment resulting from the inclusion of Sprint and an advance payment for the lease of sites made by T‑Mobile US in September 2021.

For further information on the statement of cash flows, please refer to the section “Notes to the consolidated statement of cash flows” in the interim consolidated financial statements.