Changes in the composition of the Group and other transactions
In the first nine months of 2022, Deutsche Telekom conducted the following transactions, which had an impact on the composition of the Group. Other changes to the composition of the Group not shown here were of no material significance for Deutsche Telekom’s interim consolidated financial statements.
Sale of T‑Mobile Netherlands
On September 6, 2021, Deutsche Telekom and Tele2 signed an agreement to sell T‑Mobile Netherlands to WP/AP Telecom Holdings IV, a private equity consortium advised by Apax Partners and Warburg Pincus. The transaction was consummated on March 31, 2022 after obtaining the necessary approvals from the authorities and satisfying the other closing conditions. The sale price is based on an enterprise value of EUR 5.1 billion. The cash proceeds – based on Deutsche Telekom’s overall shareholding of 75 % – amounted to EUR 3.6 billion. The gain on deconsolidation resulting from the sale amounted to EUR 0.9 billion. Until the transaction was closed, the entity had been assigned to the Group Development operating segment. As of December 31, 2021, the assets and liabilities of T‑Mobile Netherlands were classified as held for sale on account of the specific intention to sell them.
For further information on the assets and liabilities of T‑Mobile Netherlands included in the consolidated financial statements as of December 31, 2021, please refer to Note 5 “Non-current assets and disposal groups held for sale and liabilities directly associated with non-current assets and disposal groups held for sale” in the notes to the consolidated financial statements in the 2021 Annual Report.
Joint venture GlasfaserPlus with IFM
On November 5, 2021, Deutsche Telekom announced that IFM Global Infrastructure Fund would acquire a stake of 50 % in GlasfaserPlus GmbH, a fiber-optic build-out entity. The sale of a 50 % stake in GlasfaserPlus was consummated on February 28, 2022, after the EU Commission had approved the transaction on January 25, 2022 and the other closing conditions had been satisfied. The sale price was EUR 0.9 billion. The first tranche of the purchase price of EUR 0.4 billion was paid upon completion of the transaction. The remainder will arise in stages upon achieving certain build-out milestones. In this connection, a contingent consideration receivable of EUR 0.5 billion was recognized under other financial assets upon completion of the transaction. The resulting joint venture is to build out an additional four million gigabit-capable FTTH lines in rural and development areas by 2028. Following the loss of control as a result of the transaction, the GlasfaserPlus entities were deconsolidated as of February 28, 2022. Until the transaction was closed, the entity had been assigned to the Germany operating segment. The resulting gain on deconsolidation of EUR 1.7 billion is included in other operating income. The portion of the gain on deconsolidation attributable to the shares in the GlasfaserPlus entities remaining at Deutsche Telekom at the date when control was lost, calculated at their fair value, amounted to EUR 0.9 billion. The stakes in the joint venture have been included in the consolidated financial statements in the Germany operation segment using the equity method since February 28, 2022. The carrying amount of the investment amounted to EUR 1.0 billion as of September 30, 2022.
For further information on the carrying amount of the contingent consideration receivable, please refer to the section “Disclosures on financial instruments.”
New limited partners admitted to infrastructure fund (DIV II)
In August and September 2022, Digital Transformation Capital Partners (DTCP Infra) admitted new investors to the investment company Digital Infrastructure Vehicle II SCSp SICAV-RAIF (DIV II). As a result, Deutsche Telekom’s share in DIV II decreased from 66.67 % to 41.25 %. At the same time, an advisory committee has been set up, which will comprise up to ten of the most important investors. By admitting new limited partners, Deutsche Telekom lost control over DIV II. As a result, the entity was deconsolidated on August 2, 2022. Until the transaction was closed, the entity had been assigned to the Group Development operating segment. The resulting gain on deconsolidation of EUR 0.1 billion is included in other operating income. Since then, the stake retained by the Group of 41.25 % has been included in the consolidated financial statements as an associate using the equity method in the Group Development operating segment. The carrying amount of the investment amounted to EUR 0.3 billion as of September 30, 2022. There are plans to admit further investors. In the future, Deutsche Telekom’s stake is expected to fall to around 25 %, in line with the target structure.
The following transactions will change the composition of the Deutsche Telekom Group in the future.
Agreement with DigitalBridge and Brookfield on the Group’s cell tower business in Germany and Austria and recognition of the GD tower companies as a discontinued operation
On July 13, 2022, Deutsche Telekom agreed to sell a 51.0 % stake in companies comprising the tower assets in Germany and Austria, currently assigned to the Group Development operating segment (GD tower companies), to DigitalBridge and Brookfield. The preliminary sale price is based on an enterprise value of EUR 17.5 billion. The estimated cash proceeds from the transaction are expected to be EUR 10.9 billion. Once the transaction is complete, Deutsche Telekom will lose control over the GD tower companies. The stake retained by Deutsche Telekom of 49.0 % will then be included in the consolidated financial statements using the equity method. The transaction is subject to approval by the regulatory authorities and is expected to be completed at the start of 2023. Once the transaction is complete, Deutsche Telekom will lease back most of the sold passive network infrastructure in Germany and Austria under a sale and leaseback arrangement.
As a result of the agreement, from the third quarter of 2022, the GD tower companies are recognized in the interim consolidated financial statements as a discontinued operation. The consolidated income statement has been adjusted accordingly with retrospective effect. Thus the contributions by the GD tower companies are no longer included in the individual items of the consolidated income statement. Instead, profit or loss after taxes is recognized in the item “Profit/loss after taxes from discontinued operation”. Assets and the directly associated liabilities are shown as held for sale in the consolidated statement of financial position. In the consolidated statement of cash flows, the contributions by the GD tower companies are each stated in a separate “of which” line item.
Agreement with Cogent to sell the U.S. wireline business
On September 6, 2022, T‑Mobile US reached an agreement with Cogent Infrastructure (Cogent) on the sale of T‑Mobile US’ fiber-optic-based wireline business. Under the agreement, Cogent will take over all shares in the entity that holds all of the assets and liabilities related to the former Sprint’s fiber-optic-based wireline network. The sale price is USD 1 and is subject to customary adjustments laid down in the purchase agreement. In addition, upon completion of the transaction, T‑Mobile US undertakes to enter into a separate agreement on IP transit services, according to which T‑Mobile US will pay a total of USD 700 million to Cogent, comprising USD 350 million in equal monthly installments in the first year following completion of the transaction and USD 350 million in equal monthly installments over the following 42 months. The transaction is subject to approval by the authorities as well as other closing conditions. The assets and liabilities of the wireline business as of September 30, 2022 are reported in the consolidated statement of financial position as “held for sale.” The transaction is expected to be completed in the second half of 2023. In connection with the agreement concluded, T‑Mobile US recognized an impairment loss of EUR 375 million on the underlying assets in the third quarter of 2022. Furthermore, liabilities totaling EUR 706 million were recognized in connection with payment obligations entered into as part of the transaction. These liabilities included, under financial liabilities, the present value of the future payments for IP transit services. Since a specific use for these services has not yet been identified, the corresponding expense has already been recognized in full in the reporting period under other operating expenses.