Selected notes to the consolidated statement of financial position

Trade receivables

At EUR 15.7 billion, trade receivables decreased by EUR 1.1 billion against the 2022 year-end level. This was due to lower receivables in the United States and Germany operating segments. By contrast, receivables increased in the Europe operating segment. Exchange rate effects, mainly from the translation from U.S. dollars into euros, also increased the carrying amount.

Contract assets

The carrying amount of contract assets at the reporting date totaled EUR 2.5 billion compared with EUR 2.4 billion as of December 31, 2022. Contract assets relate to receivables that have not yet legally come into existence, which arise from the earlier – as compared to billing – recognition of revenue, in particular from the sale of goods and merchandise. Furthermore, receivables from long-term construction contracts are recognized under contract assets.

Inventories

The carrying amount of inventories remained unchanged at the 2022 year-end level of EUR 2.6 billion. The sale of older terminal equipment and reduced stocks due to the closure of former Sprint sites in the United States operating segment reduced the carrying amount. Stockpiling in the fixed network for the fiber-optic build-out in Germany and for terminal equipment in the Germany operating segment had an offsetting effect.

Intangible assets

The carrying amount of intangible assets increased by EUR 0.4 billion compared to December 31, 2022 to EUR 141.0 billion. Additions amounted to EUR 4.4 billion, of which EUR 0.9 billion related to the acquisition of mobile spectrum in the United States and Europe operating segments. Exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 1.0 billion. By contrast, amortization and impairment losses of EUR 4.9 billion reduced the carrying amount.

The following transactions will have an impact on the presentation of Deutsche Telekom’s results of operations and financial position in the future:

On August 8, 2022, T‑Mobile US entered into agreements with Channel 51 License Co LLC and LB License Co, LLC (Sellers) for the acquisition of spectrum licenses in the 600 MHz band for an aggregate purchase price of USD 3.5 billion (EUR 3.4 billion). The licenses are to be acquired without any associated network assets. T‑Mobile US currently utilizes these licenses under an existing arrangement with the Sellers covering fixed-term spectrum leases. On March 30, 2023, the contractual parties further agreed that the transaction be divided into two separate tranches. The transfer of the licenses in accordance with the agreements is subject to regulatory approvals and certain other customary closing conditions. The first tranche is not expected to be closed before the first half of 2024, while the second tranche is expected to be closed in late 2024 or early 2025.

On July 1, 2020, T‑Mobile US and DISH Network Corporation (DISH) reached an agreement on the sale of spectrum licenses, under which DISH receives an option to purchase certain 800 MHz spectrum licenses from T‑Mobile US for USD 3.6 billion (EUR 3.4 billion). The transaction is subject to approval by the Federal Communications Commission (FCC). On October 15, 2023, T‑Mobile US and DISH modified the agreement to include, among other changes, a non-refundable extension fee of USD 100 million which DISH will pay to T‑Mobile US, as well as the requirement that the purchase of the spectrum licenses must be finalized by April 1, 2024. The extension fee is fully creditable against the purchase price provided DISH exercises its option to purchase the spectrum by this date. If DISH does not purchase the spectrum licenses, T‑Mobile US is obligated to put the licenses up for sale at auction. Should bidding not reach the defined minimum purchase price of USD 3.6 billion, T‑Mobile US would be released from its obligation to sell the licenses.

On September 12, 2023, T‑Mobile US agreed with U.S. cable network operator Comcast to acquire spectrum in the 600 MHz band in exchange for total cash consideration of between USD 1.2 billion and USD 3.3 billion (EUR 1.1 billion and EUR 3.1 billion). The final purchase price will be determined at the time the parties make the required transfer filings with the FCC once it is decided which spectrum Comcast intends to sell. The transaction is expected to close in the first half of 2028, pending approval from the FCC. At the same time, T‑Mobile US and Comcast have agreed exclusive leasing arrangements. The leasing rights for T‑Mobile US will apply for at least two years, even if Comcast elects to remove some of its licenses from the purchase agreement.

Property, plant and equipment

The carrying amount of property, plant and equipment increased by EUR 0.4 billion compared to December 31, 2022 to EUR 66.1 billion. Additions, primarily for the upgrade and build-out of the network (broadband, fiber-optic, and mobile infrastructure build-out) increased the carrying amount by EUR 9.0 billion. Exchange rate effects, primarily from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 0.3 billion. Reclassifications of lease assets to property, plant and equipment upon expiry of the contractual lease term, primarily for network technology, in the United States operating segment in particular, also increased the carrying amount by EUR 0.3 billion. Depreciation charges of EUR 8.8 billion decreased the carrying amount, as did disposals in the amount of EUR 0.2 billion.

Right-of-use assets

The carrying amount of the right-of-use assets increased by EUR 0.8 billion compared to December 31, 2022 to EUR 34.5 billion. The carrying amount was increased by additions of EUR 5.1 billion, resulting in part from the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of the GD tower companies. In this context, retained right-of-use assets of EUR 2.0 billion were recognized in the consolidated statement of financial position. Exchange rate effects, primarily from the translation of U.S. dollars into euros, increased the carrying amount by EUR 0.2 billion. Depreciation and impairment losses decreased the carrying amount by EUR 4.1 billion. This included a EUR 0.2 billion increase in depreciation 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. Reclassifications of lease assets to property, plant and equipment upon expiry of the contractual lease term, primarily for network technology, in the United States operating segment in particular, also reduced the carrying amount by EUR 0.3 billion. Disposals reduced the carrying amount by EUR 0.1 billion.

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Capitalized contract costs

As of September 30, 2023, the carrying amount of capitalized contract costs was up by EUR 0.3 billion against the level of December 31, 2022 to EUR 3.5 billion. The capitalized contract costs primarily relate to the United States and Germany operating segments.

Investments accounted for using the equity method

The carrying amount of investments accounted for using the equity method increased by EUR 6.1 billion compared to December 31, 2022, to EUR 7.4 billion, essentially as a result of the sale of the 51.0 % stake in the GD tower companies. Following the loss of control pursuant to the IFRSs as a result of the transaction, the companies were deconsolidated as of February 1, 2023. Since this date, the remaining 49.0 % of the shares have been included in the consolidated financial statements as an investment accounted for using the equity method. The carrying amount of the investment amounted to EUR 6.1 billion as of September 30, 2023.

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Other financial assets

The carrying amount of current and non-current other financial assets increased by EUR 0.5 billion compared to December 31, 2022 to EUR 10.4 billion.

The net total of originated loans and receivables increased by EUR 0.3 billion to EUR 6.6 billion. The carrying amount was increased by an existing shareholder loan to the GD tower companies, which must be recognized in the consolidated statement of financial position as a result of the deconsolidation of the companies. As of September 30, 2023, this loan had a carrying amount of EUR 0.3 billion. In addition, government bonds were bought during the course of the year as short-term investments. As of September 30, 2023, they had a carrying amount of EUR 0.1 billion.

In connection with receivables from grants still to be received from funding projects for the broadband build-out in Germany, the carrying amount of other receivables stood at the 2022 year-end level of EUR 2.0 billion.

For further information on cash collateral deposited and on derivatives, please refer to the section “Disclosures on financial instruments.”

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Other assets

The carrying amount of current and non-current other assets increased by EUR 0.4 billion to EUR 3.7 billion. As of September 30, 2023, the carrying amount included various advance payments, totaling EUR 2.9 billion (December 31, 2022: EUR 2.7 billion), mainly including advance payments for maintenance, repairs, and in connection with agreements on services for certain mobile communications equipment that do not fall under the scope of IFRS 16. Receivables from other taxes also increased by EUR 0.1 billion.

Non-current assets and disposal groups held for sale

The carrying amount of non-current assets and disposal groups held for sale decreased by EUR 4.4 billion compared with December 31, 2022 to EUR 0.2 billion. The sale of the GD tower companies as of February 1, 2023 reduced the carrying amount by EUR 4.2 billion, and the sale of the wireline business at T‑Mobile US as of May 1, 2023 by EUR 0.3 billion. The corresponding assets had previously been reported as held for sale on account of the sales agreements concluded.

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

Financial liabilities and lease liabilities

The following table shows the composition and maturity structure of financial liabilities as of September 30, 2023:

The carrying amount of current and non-current financial liabilities decreased by EUR 4.3 billion compared with year-end 2022 to EUR 108.8 billion, primarily due to the factors described below. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 0.7 billion.

The carrying amount of bonds and other securitized liabilities decreased by EUR 3.5 billion to EUR 90.3 billion. Early repayments of bonds with terms ending between 2023 and 2028, made in February, March, and July 2023, including EUR bonds of EUR 2.4 billion, GBP bonds of GBP 0.2 billion (EUR 0.3 billion), and USD bonds of USD 1.4 billion (EUR 1.3 billion), reduced the carrying amount. The carrying amount was further reduced by scheduled repayments of bonds, including EUR bonds of EUR 1.3 billion, USD bonds of USD 4.3 billion (EUR 4.0 billion), and NOK bonds of NOK 0.7 billion (EUR 0.1 billion). Net repayments of commercial paper also decreased the carrying amount by EUR 2.3 billion. The carrying amount was increased by senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 8.5 billion (EUR 7.9 billion) with terms ending between 2028 and 2054 and bearing interest of between 4.80 % and 6.00 %. In addition, the carrying amount decreased by EUR 0.2 billion in connection with measurement effects from derivatives with a hedging relationship, the offsetting entry for which is posted under bonds and other securitized liabilities. Exchange rate effects increased the carrying amount of bonds and other securitized liabilities by EUR 0.7 billion.

The carrying amount of liabilities to banks decreased by EUR 0.5 billion compared with December 31, 2022 to EUR 3.6 billion, mainly due to scheduled repayments of EUR 0.3 billion and by the net increase of EUR 0.2 billion in the balance of short-term borrowings.

The liabilities with the right of creditors to priority repayment in the event of default of EUR 2.4 billion (December 31, 2022: EUR 2.9 billion) relate primarily to bonds issued by Sprint. Collateral was provided for these bonds, hence they constitute a separate class of financial instruments. The main factor reducing the carrying amount was repayments made in the reporting period in the amount of EUR 0.5 billion when translated into euros. At the reporting date, cash and cash equivalents with a carrying amount of EUR 71 million (December 31, 2022: EUR 63 million) when translated into euros were pledged as collateral for these bonds.

The carrying amount of other interest-bearing liabilities decreased by EUR 0.4 billion compared with December 31, 2022 to EUR 7.1 billion. Repayments by T‑Mobile US reduced the carrying amount by EUR 0.3 billion, of which EUR 0.2 billion, when translated into euros, related to payments made in connection with the existing agreement on IP transit services, concluded with Cogent as part of the sale of the wireline business.

For further information 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.”

The carrying amount of other non-interest-bearing liabilities increased by EUR 0.4 billion to EUR 1.2 billion. In connection with the resolution adopted by the T‑Mobile US Board of Directors on September 25, 2023 to pay out a cash dividend of USD 0.65 per share for the fourth quarter of 2023, non-interest-bearing liabilities increased by EUR 0.3 billion, the amount of the stake attributable to non-controlling interests in T‑Mobile US.

For further information on the shareholder return program at T‑Mobile US, please refer to the section “Other transactions that had no effect on the composition of the Group.”

The carrying amount of derivative financial liabilities increased by EUR 0.2 billion to EUR 3.0 billion, primarily in connection with interest rate swaps to hedge the fair value of bonds.

For further information on derivative financial liabilities, please refer to the section “Disclosures on financial instruments.”

The carrying amount of current and non-current lease liabilities increased by EUR 3.8 billion to EUR 42.6 billion compared with December 31, 2022, mainly resulting from the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of the GD tower companies. As a result of this transaction, lease liabilities increased by EUR 5.0 billion. By contrast, lease liabilities in the United States operating segment decreased by EUR 1.2 billion due to the decommissioning of the former Sprint’s wireless network, the closure of former Sprint shops, and a decline in network and build-out investments, primarily on account of higher capital efficiency resulting from the accelerated build-out of the nationwide 5G network in the prior year. Exchange rate effects, in particular from the translation of U.S. dollars into euros, raised the carrying amount by EUR 0.3 billion.

For further information on the sale of the GD tower companies, please refer to the section “Changes in the composition of the Group and other transactions.”

Trade and other payables

The carrying amount of trade and other payables decreased by EUR 1.8 billion to EUR 10.2 billion, due in particular to lower liabilities in the United States operating segment, which primarily resulted from a lower procurement volume, and to lower liabilities in the Europe operating segment. By contrast, the Germany operating segment recorded an increase in liabilities. Exchange rate effects, in particular from the translation from U.S. dollars into euros, also increased the carrying amount.

Provisions for pensions and other employee benefits

The carrying amount of provisions for pensions and other employee benefits decreased by EUR 0.5 billion compared with December 31, 2022 to EUR 3.6 billion, mainly due to the increase in the discount rate compared with December 31, 2022 and the increase in the fair values of plan assets. Overall, the remeasurement of defined benefit plans resulted in an actuarial gain of EUR 0.5 billion to be recognized directly in equity.

Current and non-current other provisions

The carrying amount of current and non-current other provisions decreased by EUR 0.6 billion compared with the end of 2022 to EUR 7.6 billion. Other provisions for personnel costs decreased by EUR 0.3 billion, partly in connection with the performance-based remuneration components for the prior year paid out to employees in 2023. Provisions for procurement and sales support decreased by EUR 0.2 billion, mainly in connection with the bonuses paid out to sales partners in the United States operating segment. Provisions for restoration obligations also decreased by EUR 0.2 billion and miscellaneous other provisions by EUR 0.2 billion, due in particular to the decommissioning of the former Sprint mobile network and due to shop closures. By contrast, provisions for termination benefits increased by EUR 0.4 billion. In August 2023, T‑Mobile US began implementing an initiative to reduce its workforce by just under 7 % of the total employee base, primarily targeting corporate and back-office functions and some technology roles. T‑Mobile US does not expect this program to incur substantial additional expenses in subsequent periods. The associated cash outflows will continue essentially until mid-2024.

Other liabilities

The carrying amount of current and non-current other liabilities increased by EUR 0.5 billion to EUR 6.1 billion, mainly due to an increase in liabilities from other taxes. Liabilities due to existing build-out obligations in connection with grants still to be received from funding projects for the broadband build-out in Germany declined by EUR 0.1 billion compared with December 31, 2022 to EUR 1.6 billion.

Contract liabilities

The carrying amount of current and non-current contract liabilities increased by EUR 0.4 billion compared with December 31, 2022 to EUR 2.9 billion. These substantially include deferred revenues. The increase was mainly due to higher contract liabilities in the Germany and United States operating segments.

Liabilities directly associated with non-current assets and disposal groups held for sale

The carrying amount of liabilities directly associated with non-current assets and disposal groups held for sale decreased by EUR 3.3 billion against December 31, 2022 to EUR 0.0 billion. The sale of the GD tower companies as of February 1, 2023 reduced the carrying amount by EUR 3.0 billion, and the sale of the wireline business at T‑Mobile US as of May 1, 2023 by EUR 0.4 billion. The corresponding liabilities had previously been reported as held for sale on account of the sales agreements concluded.

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

Shareholders’ equity

The carrying amount of shareholders’ equity increased from EUR 87.3 billion as of December 31, 2022 to EUR 96.6 billion, with profit of EUR 22.0 billion and capital increases from share-based payments of EUR 0.5 billion having an increasing effect. Other comprehensive income also increased the carrying amount by EUR 1.2 billion, mainly as a result of currency translation effects of EUR 0.6 billion recognized directly in equity and the remeasurement of defined benefit plans accounting for EUR 0.5 billion, as well as gains from hedging instruments of EUR 0.5 billion. Income taxes relating to components of other comprehensive income of EUR 0.3 billion had an offsetting effect. Transactions with owners reduced the carrying amount of shareholders’ equity by EUR 10.4 billion, mainly in connection with T‑Mobile US’ 2022 share buy-back program and the resolution adopted by the T‑Mobile US Board of Directors on September 25, 2023 to pay out a cash dividend of USD 0.65 per share for the fourth quarter of 2023. The carrying amount was also reduced in connection with dividend payments for the 2022 financial year to Deutsche Telekom AG shareholders in the amount of EUR 3.5 billion and to other shareholders of subsidiaries in the amount of EUR 0.5 billion.

For further information on the share buy-back/shareholder return programs at T‑Mobile US, please refer to the section “Other transactions that had no effect on the composition of the Group.”

The following table shows the changes in the composition of the Group and the development of transactions with owners: