Financial position of the Group

Total assets amounted to EUR 302.5 billion as of September 30, 2023, up by EUR 3.9 billion against December 31, 2022. The main contributing factors were the cash proceeds from the sale of GD Towers, the sale-and-leaseback transaction concluded in this connection to lease the sold passive network infrastructure in Germany and Austria, and the inclusion of the remaining 49.0 % stake. Total assets were reduced in connection with the derecognition of the assets and liabilities that had been fully consolidated until the transaction was closed. Exchange rate effects, primarily from the translation of U.S. dollars into euros, increased the carrying amount of total assets.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

On the assets side, trade receivables amounted to EUR 15.7 billion, down by EUR 1.1 billion against the 2022 year-end. 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.

Intangible assets increased by EUR 0.4 billion compared to December 31, 2022 to EUR 141.0 billion. Additions of EUR 4.4 billion had an increasing effect on the carrying amount. Of these additions, 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.

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, 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 had a decreasing effect on the carrying amount, as did disposals in the amount of EUR 0.2 billion.

Compared with December 31, 2022, right-of-use assets increased by EUR 0.8 billion to EUR 34.5 billion. The carrying amount was increased by additions of EUR 5.1 billion, in part as a result of the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of GD Towers. 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, 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.

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 GD Towers. 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.

Current and non-current financial assets increased by EUR 0.5 billion 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 also increased by an existing shareholder loan to GD Towers, which must be reported 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.

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 GD Towers 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 corporate transactions, please refer to the section “Group organization, strategy, and management.”

Miscellaneous assets increased by EUR 0.7 billion to EUR 12.5 billion. Current and non-current other assets contributed EUR 0.4 billion to this increase, due in part to an increase in various advance payments, mainly in connection with agreements on services for certain mobile communications equipment. In addition, capitalized contract costs increased by EUR 0.3 billion and contract assets by EUR 0.1 billion. Inventories remained unchanged at the 2022 year-end level of EUR 2.6 billion.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities decreased by EUR 4.3 billion compared with the end of 2022 to a total of EUR 108.8 billion. Bonds and other securitized liabilities decreased by EUR 3.5 billion, due in part to early repayments of EUR 4.0 billion and scheduled repayments of EUR 5.4 billion. Net repayments of commercial paper also decreased the carrying amount by EUR 2.3 billion. The carrying amount was increased by the senior notes issued in the reporting period by T‑Mobile US with a total volume of USD 8.5 billion (EUR 7.9 billion). In addition, the carrying amounts of liabilities to banks, liabilities with the right of creditors to priority repayment in the event of default, and other interest-bearing liabilities decreased by EUR 1.5 billion overall. By contrast, 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. Exchange rate effects, in particular from the translation of U.S. dollars into euros, also increased the carrying amount by EUR 0.7 billion.

Current and non-current lease liabilities increased by EUR 3.8 billion to EUR 42.6 billion compared with December 31, 2022, mainly as a result of the sale and leaseback of passive network infrastructure in Germany and Austria in connection with the sale of GD Towers. 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.

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 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 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 the first half of 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. These provisions include expenses incurred for the workforce reduction begun in the United States operating segment. In August 2023, T‑Mobile US began implementing an initiative to reduce its workforce by just under 7 % of the total employee base, primarily in corporate and back-office functions and some technology roles.

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 GD Towers 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 corporate transactions, please refer to the section “Group organization, strategy, and management.”

Miscellaneous liabilities increased from EUR 8.9 billion as of December 31, 2022 to EUR 10.0 billion, mainly due to an increase in other liabilities of EUR 0.5 billion, driven by an increase in liabilities from other taxes. In addition, contract liabilities increased by EUR 0.4 billion and income tax liabilities by EUR 0.2 billion.

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. 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 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 €

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Free cash flow AL (before dividend payments and spectrum investment) increased from EUR 9.4 billion in the prior-year period to EUR 11.8 billion. The following effects impacted on this development:

Net cash from operating activities increased by EUR 1.3 billion to EUR 28.6 billion on the back of the good business performance. Lower cash outflows in connection with the integration of Sprint in the United States also had an increasing effect. The increase in net interest payments of EUR 0.2 billion and the increase in tax payments of EUR 0.2 billion, in particular, had a reducing effect.

Cash capex (before spectrum investment) decreased by EUR 2.0 billion to EUR 13.2 billion. Cash capex in the United States operating segment decreased by EUR 2.5 billion to EUR 7.6 billion, mainly as a result of higher cash outflows in the prior year for the accelerated build-out of the 5G network and the integration of Sprint. In the Group Development operating segment, cash capex decreased, mainly due to the sales of T‑Mobile Netherlands and GD Towers. In the Germany operating segment, capital expenditure totaled around EUR 3.4 billion in the first three quarters of 2023, EUR 0.5 billion more than in the prior-year period due to different seasonal effects, with much of this figure going towards the fiber-optic build-out. Cash outflows in the Europe operating segment increased by EUR 0.1 billion to EUR 1.3 billion, also largely due to the timing of the allocation of capital expenditure. We continue to invest here in the provision of broadband and fiber-optic technology and in 5G as part of our integrated network strategy. In the Systems Solutions operating segment, our capital expenditure was EUR 0.2 billion, primarily due to increased demand for on-board units in the Road Charging portfolio area and higher investments in the Digital portfolio area.

An increase of EUR 0.7 billion in cash outflows – in particular in the Germany and United States operating segments – for the repayment of lease liabilities reduced free cash flow AL.

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.

On May 19, 2023, the rating agency Standard & Poor’s raised the long-term rating from BBB to BBB+ with a stable outlook. We are therefore still a solid investment-grade company with access to the international capital markets.

For more information on Deutsche Telekom AG’s rating, please refer to the section “Profitability and financial position of the Group” in the 2022 Annual Report.