Selected notes to the consolidated income statement

As a result of the agreement concluded on July 13, 2022, 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 disclosed in aggregate form in the item “Profit/loss after taxes from discontinued operation.”

For further information on the discontinued operation, please refer to the section “Changes in the composition of the Group and other transactions.”

Net revenue

Net revenue breaks down into the following revenue categories:

For further information on changes in net revenue, please refer to the section “Development of business in the Group” in the interim Group management report.

Other operating income

Income from the disposal of non-current assets of EUR 0.1 billion resulted from the sale of IP addresses related to the former Sprint’s fiber-optic-based wireline network in the United States. Income from insurance compensation mainly resulted from payments on account from insurance companies in connection with damage sustained in the catastrophic flooding in North Rhine-Westphalia and Rhineland-Palatinate in July 2021. Gains resulting from deconsolidations and from the sale of stakes accounted for using the equity method of EUR 1.7 billion were attributable to the loss of control over the GlasfaserPlus entities. The sale of T‑Mobile Netherlands resulted in a gain on deconsolidation of EUR 0.9 billion, which was determined taking the repayment of internal shareholder loans and the net assets on the date of deconsolidation into account. The loss of control over DIV II gave rise to a gain on deconsolidation of EUR 0.1 billion. Other operating income also includes a payment of EUR 0.2 billion in connection with the settlement of a series of patent disputes between T‑Mobile US and a competitor as well as a large number of individual items at marginal amounts.

For further information on these corporate transactions, please refer to the section “Changes in the composition of the Group and other transactions.”

Other operating expenses

The year-on-year increase in impairment losses on financial assets was mainly attributable to allowances of customer receivables primarily in the United States operating segment. These resulted from higher receivables and potential future macroeconomic effects. Expenses for legal and audit fees included, among other factors, expenses in connection with the proceedings brought in consequence of the cyberattack on T‑Mobile US. Miscellaneous other operating expenses included expenses of EUR 0.7 billion in connection with the payment obligations entered into under the agreement to sell the wireline business in the United States. This item also includes expenses of EUR 0.4 billion for data storage in data centers, in cloud applications or other IT services, and of EUR 0.2 billion for regulatory duties in the United States.

For further information on the agreement on the sale of the wireline business in the United States, please refer to the section “Changes in the composition of the Group and other transactions.”

Depreciation, amortization and impairment losses

At EUR 21.2 billion, depreciation, amortization and impairment losses on intangible assets; property, plant and equipment; and right-of-use assets were EUR 0.8 billion higher overall in the first three quarters of 2022 than in the prior-year period, with depreciation and amortization unchanged year-on-year. In the Group Development operating segment, depreciation and amortization were down on the prior-year level in connection with the fact that T‑Mobile Netherlands had been held for sale until it was sold and accordingly the related depreciation and amortization had been suspended, and in connection with its subsequent sale. Depreciation on property, plant and equipment in the United States operating segment declined due to the ongoing strategic withdrawal from the terminal equipment lease business. By contrast, in the United States operating segment, a reduction in the useful life of leased network technology for cell sites following the business combination of T‑Mobile US and Sprint increased depreciation of the corresponding right-of-use assets by EUR 1.4 billion. Impairment losses increased year-on-year by EUR 0.8 billion to EUR 0.9 billion. The impairment losses recorded in the reporting period were mainly attributable to the former Sprint’s fiber-optic-based wireline assets and related in part to the sale of the business to Cogent agreed in September 2022.

For further information on impairment losses, please refer to the section “Property, plant and equipment.”

Profit/loss from financial activities

The loss from financial activities decreased from EUR 3.5 billion in the first three quarters of 2021 to EUR 2.6 billion, with other financial income/expense improving from EUR -0.2 billion to EUR 1.3 billion. This was attributable in particular to positive measurement effects from a forward transaction to hedge the price of acquiring T‑Mobile US shares in the future and positive measurement effects from the amortization and subsequent measurement of the stock options received from SoftBank in June 2020 to buy shares in T‑Mobile US. Measurement effects from currency hedges and less pronounced negative measurement effects from derivatives of T‑Mobile US embedded in bonds compared with the prior-year period also contributed to this. The interest component from the measurement of provisions and liabilities increased by EUR 0.4 billion. This increase was mainly attributable to the subsequent measurement using actuarial principles of the present value of the provision recognized for the Civil Service Health Insurance Fund. However, finance costs also increased from EUR 3.3 billion to EUR 3.9 billion. Overall, the share of profit/loss of associates and joint ventures accounted for using the equity method was on a par with the prior-year period.

For further information on embedded derivatives at T‑Mobile US, please refer to the section “Disclosures on financial instruments.”

Income taxes

In the first three quarters of 2022, a tax expense of EUR 1.6 billion was recorded. The tax amount reflects the shares of the different countries in profit before income taxes and their respective national tax rates. However, the effective tax rate was reduced by the realization of tax-free income from the sale of T‑Mobile Netherlands and the shares in GlasfaserPlus. Taxes were furthermore reduced by deferred tax effects in the United States operating segment. In the prior-year period, a tax expense of EUR 1.7 billion had been recorded despite lower profit/loss before income taxes.

Profit/loss after taxes from discontinued operation

The following table provides a breakdown of profit/loss after taxes from the discontinued operation:

Value contributions by GD tower companies are presented separately in the income statement of the discontinued operation. Since Deutsche Telekom will continue to use the sold, passive network infrastructure after consummation of the transaction, the intragroup elimination of income and expenses between the discontinued operation and continuing operations are disclosed at the level of the discontinued operation. So, for example, goods and services purchased include eliminations of intragroup onward charging of purchased services of GD tower companies mainly to Telekom Deutschland GmbH. In this way, the net effect is that internal cost allocations are no longer included in Deutsche Telekom’s interim consolidated financial statements. Due to continuing contractual relationships, the corresponding expenses for purchased services will continue to be incurred after the sale of the GD tower companies.

For further information on the discontinued operation, please refer to the section “Changes in the composition of the Group and other transactions.”