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Disclosures on financial instruments

Carrying amounts, amounts recognized, and fair values by class and measurement category

millions of €

 

 

 

 

 

 

 

 

 

 

Amounts recognized in the statement of financial position in accordance with IFRS 9

 

 

 

Measurement category in accordance with IFRS 9

Carrying amount Sept. 30, 2024

Amortized cost

Fair value through other comprehensive income without recycling to profit or loss

Fair value through other comprehensive income with recycling to profit or loss

Fair value through profit or loss a

Fair value Sept. 30, 2024 b

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

AC

12,204

12,204

 

 

 

 

 

Trade receivables

 

14,340

 

 

 

 

 

 

At amortized cost

AC

6,880

6,880

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

7,460

 

 

7,460

 

7,460

 

Other financial assets

 

7,917

 

 

 

 

 

 

Originated loans and other receivables

 

6,035

 

 

 

 

 

 

At amortized cost

AC

5,777

5,777

 

 

 

5,788

 

Of which: collateral paid

AC

1,349

1,349

 

 

 

 

 

Of which: publicly funded projects

AC

1,712

1,712

 

 

 

 

 

At fair value through profit or loss

FVTPL

258

 

 

 

258

258

 

Equity instruments

 

530

 

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

526

 

526

 

 

526

 

At fair value through profit or loss

FVTPL

4

 

 

 

4

4

 

Derivative financial assets

 

1,173

 

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

479

 

 

 

479

479

 

Of which: termination rights embedded in bonds issued

FVTPL

101

 

 

 

101

101

 

Of which: energy forward agreements

FVTPL

141

 

 

 

141

141

 

Derivatives with a hedging relationship

n.a.

694

 

 

663

31

694

 

Lease assets

n.a.

180

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Trade payables

AC

7,718

7,718

 

 

 

 

 

Financial liabilities

 

107,878

 

 

 

 

 

 

Bonds and other securitized liabilities

AC

92,131

92,131

 

 

 

90,505

 

Of which: asset-backed securities collateralized by trade receivables

AC

1,114

1,114

 

 

 

1,124

 

Liabilities to banks

AC

3,226

3,226

 

 

 

3,158

 

Liabilities with the right of creditors to priority repayment in the event of default

AC

1,422

1,422

 

 

 

1,400

 

Other interest-bearing liabilities c

AC

6,174

6,174

 

 

 

6,073

 

Of which: collateral received

AC

33

33

 

 

 

 

 

Liabilities from deferred interest

AC

1,160

1,160

 

 

 

 

 

Other non-interest-bearing liabilities

AC

1,379

1,379

 

 

 

 

 

Derivative financial liabilities

 

2,386

 

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

363

 

 

 

363

363

 

Of which: energy forward agreements

FVTPL

25

 

 

 

25

25

 

Derivatives with a hedging relationship

n.a.

2,023

 

 

515

1,508

2,023

 

Lease liabilities

n.a.

38,426

 

 

 

 

 

 

Aggregated by measurement category (IFRS 9)

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Financial assets at amortized cost

AC

24,861

24,861

 

 

 

5,788

 

Financial assets at fair value through other comprehensive income with recycling to profit or loss

FVOCI

7,460

 

 

7,460

 

7,460

 

Financial assets at fair value through other comprehensive income without recycling to profit or loss

FVOCI

526

 

526

 

 

526

 

Financial assets at fair value through profit or loss

FVTPL

740

 

 

 

740

740

 

Liabilities

 

 

 

 

 

 

 

 

Financial liabilities at amortized cost

AC

113,210

113,210

 

 

 

101,135

 

Financial liabilities at fair value through profit or loss

FVTPL

363

 

 

 

363

363

 

a

For energy forward agreements please refer to the detailed comments in the following section.

b

The practical expedient under IFRS 7.29 was applied for disclosures on specific fair values.

c

For information on the contingent consideration payable in connection with the acquisition of Ka’ena measured at fair value through profit or loss, please refer to the section “Changes in the composition of the Group and other transactions.”

Carrying amounts, amounts recognized, and fair values by class and measurement category

millions of €

 

 

 

 

 

 

 

 

 

 

Amounts recognized in the statement of financial position in accordance with IFRS 9

 

 

Measurement category in accordance with IFRS 9

Carrying amount Dec. 31, 2023

Amortized cost

Fair value through other comprehensive income without recycling to profit or loss

Fair value through other comprehensive income with recycling to profit or loss

Fair value through profit or loss a

Fair value Dec. 31, 2023 b

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

AC

7,274

7,274

 

 

 

 

Trade receivables

 

16,157

 

 

 

 

 

At amortized cost

AC

7,710

7,710

 

 

 

 

At fair value through other comprehensive income

FVOCI

8,446

 

 

8,446

 

8,446

Other financial assets

 

9,593

 

 

 

 

 

Originated loans and other receivables

 

7,190

 

 

 

 

 

At amortized cost

AC

6,538

6,538

 

 

 

6,550

Of which: collateral paid

AC

1,708

1,708

 

 

 

 

Of which: publicly funded projects

AC

1,863

1,863

 

 

 

 

At fair value through profit or loss

FVTPL

652

 

 

 

652

652

Equity instruments

 

426

 

 

 

 

 

At fair value through other comprehensive income

FVOCI

422

 

422

 

 

422

At fair value through profit or loss

FVTPL

4

 

 

 

4

4

Derivative financial assets

 

1,780

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

1,122

 

 

 

1,122

1,122

Of which: termination rights embedded in bonds issued

FVTPL

200

 

 

 

200

200

Of which: energy forward agreements

FVTPL

168

 

 

 

168

168

Derivatives with a hedging relationship

n.a.

658

 

 

643

15

658

Lease assets

n.a.

197

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Trade payables

AC

10,916

10,916

 

 

 

 

Financial liabilities

 

104,522

 

 

 

 

 

Bonds and other securitized liabilities

AC

87,773

87,773

 

 

 

84,266

Of which: asset-backed securities collateralized by trade receivables

AC

677

677

 

 

 

677

Liabilities to banks

AC

3,560

3,560

 

 

 

3,466

Liabilities with the right of creditors to priority repayment in the event of default

AC

2,067

2,067

 

 

 

2,001

Other interest-bearing liabilities c

AC

6,628

6,628

 

 

 

6,499

Of which: collateral received

AC

39

39

 

 

 

 

Liabilities from deferred interest

AC

1,009

1,009

 

 

 

 

Other non-interest-bearing liabilities

AC

921

921

 

 

 

 

Derivative financial liabilities

 

2,564

 

 

 

 

 

Derivatives without a hedging relationship

FVTPL

296

 

 

 

296

296

Of which: energy forward agreements

FVTPL

32

 

 

 

32

32

Derivatives with a hedging relationship

n.a.

2,268

 

 

435

1,833

2,268

Lease liabilities

n.a.

40,792

 

 

 

 

 

Aggregated by measurement category (IFRS 9)

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Financial assets at amortized cost

AC

21,522

21,522

 

 

 

6,550

Financial assets at fair value through other comprehensive income with recycling to profit or loss

FVOCI

8,446

 

 

8,446

 

8,446

Financial assets at fair value through other comprehensive income without recycling to profit or loss

FVOCI

422

 

422

 

 

422

Financial assets at fair value through profit or loss

FVTPL

1,778

 

 

 

1,778

1,778

Liabilities

 

 

 

 

 

 

 

Financial liabilities at amortized cost

AC

112,874

112,874

 

 

 

96,233

Financial liabilities at fair value through profit or loss

FVTPL

296

 

 

 

296

296

a

For energy forward agreements please refer to the detailed comments in the following section.

b

The practical expedient under IFRS 7.29 was applied for disclosures on specific fair values.

c

For information on the contingent consideration payable in connection with the acquisition of Ka’ena measured at fair value through profit or loss, please refer to the section “Changes in the composition of the Group and other transactions.”

Trade receivables include receivables amounting to EUR 1.9 billion (December 31, 2023: EUR 2.2 billion) due in more than one year. The fair value generally equals the carrying amount.

Disclosures on fair value

Financial instruments measured at fair value

millions of €

 

 

 

 

 

 

 

 

 

Sept. 30, 2024

Dec. 31, 2023

 

 

 

 

 

 

 

 

 

 

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Assets

 

 

 

 

 

 

 

 

Trade receivables

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

 

 

7,460

7,460

 

 

8,446

8,446

Other financial assets – Originated loans and other receivables

 

 

 

 

 

 

 

 

At fair value through profit or loss

233

 

25

258

221

 

431

652

Equity instruments

 

 

 

 

 

 

 

 

At fair value through other comprehensive income

13

 

513

526

11

 

411

422

At fair value through profit or loss

 

 

4

4

 

 

4

4

Derivative financial assets

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

 

225

254

479

 

737

385

1,122

Derivatives with a hedging relationship

 

673

21

694

 

658

 

658

Liabilities

 

 

 

 

 

 

 

 

Derivative financial liabilities

 

 

 

 

 

 

 

 

Derivatives without a hedging relationship

 

262

101

363

 

263

33

296

Derivatives with a hedging relationship

 

1,932

91

2,023

 

2,215

53

2,268

Of the equity instruments measured at fair value through other comprehensive income and recognized under other financial assets, the instruments presented in the different levels constitute separate classes of financial instruments. In each case, the fair values of the total volume of equity instruments recognized as Level 1 are the price quotations at the reporting date.

The listed bonds and other securitized liabilities are assigned to Level 1 or Level 2 depending on the market liquidity of the relevant instrument. Consequently, issues denominated in euros or U.S. dollars with relatively large nominal amounts are to be classified as Level 1, the rest as Level 2. The fair values of the instruments assigned to Level 1 equal the nominal amounts multiplied by the price quotations at the reporting date. The fair values of the instruments assigned to Level 2 are calculated as the present values of the payments associated with the debts, based on the applicable yield curve and Deutsche Telekom’s credit spread curve for specific currencies.

The fair values of liabilities to banks and other interest-bearing liabilities are calculated as the present values of the payments associated with the debts, based on the applicable yield curve and Deutsche Telekom’s credit spread curve for specific currencies. The fair values of trade receivables and of originated loans and other receivables are calculated as the present values of the payments associated with the receivables, based on the applicable yield curve and the credit risk of the debtors.

Since there are no market prices available for the derivative financial instruments in the portfolio assigned to Level 2 due to the fact that they are not listed on the market, the fair values are calculated using standard financial valuation models, based entirely on observable inputs. The fair value of derivatives is the price that Deutsche Telekom would receive or have to pay if the financial instrument were transferred at the reporting date. Interest rates of contractual partners relevant as of the reporting date are used in this respect. The middle rates applicable as of the reporting date are used as exchange rates. In the case of interest-bearing derivatives, a distinction is made between the clean price and the dirty price. In contrast to the clean price, the dirty price also includes the interest accrued. The fair values carried correspond to the full fair value or the dirty price.

The equity instruments measured at fair value through other comprehensive income comprise a large number of investments in strategic, unlisted individual positions. Deutsche Telekom considers the chosen measurement through other comprehensive income without recycling to profit or loss to be appropriate because there are no plans to use the investments for short-term profit-taking. At the date of disposal of an investment, the total cumulative gain or loss is reclassified to retained earnings. Acquisitions and disposals are based on business policy investment decisions.

Development of the carrying amounts of the financial assets and financial liabilities assigned to Level 3

millions of €

 

 

 

 

 

 

Equity instruments at fair value through other comprehensive income

Derivative financial assets at fair value through profit or loss: termination rights embedded in bonds issued

Derivative financial assets at fair value through profit or loss: energy forward agreements

Derivative financial liabilities at fair value through profit or loss:
energy forward agreements

Originated loans and other receivables at fair value through profit or loss: contingent consideration receivable

Carrying amount as of January 1, 2024

411

200

169

(32)

420

Additions (including first-time classification as Level 3)

48

13

0

0

0

Decreases in fair value recognized in profit/loss (including losses on disposal)

 

(139)

(77)

(4)

(420)

Increases in fair value recognized in profit/loss (including gains on disposal)

 

27

54

7

0

Decreases in fair value recognized directly in equity

(31)

 

 

 

 

Increases in fair value recognized directly in equity

86

 

 

 

 

Disposals (including last classification as Level 3) a

0

0

(3)

4

0

Currency translation effects recognized directly in equity

(1)

0

(2)

0

0

Carrying amount as of September 30, 2024

513

101

141

(25)

0

a

 The disposals under energy forward agreements include billing amounts paid.

The equity instruments assigned to Level 3 that are measured at fair value through other comprehensive income and carried under other financial assets are equity investments with a carrying amount of EUR 462 million measured using the best information available at the reporting date. As a rule, Deutsche Telekom considers transactions involving shares in those companies to have the greatest relevance. Transactions involving shares in comparable companies are also considered. The proximity of the relevant transaction to the reporting date, and the question of whether it was conducted at arm’s length, are relevant for deciding which information is used for the measurement. Furthermore, the degree of similarity between the object being measured and comparable companies must be taken into consideration. For the development of the carrying amounts in the reporting period, please refer to the table above. In the case of investments with a carrying amount of EUR 184 million, transactions involving shares in these companies took place at arm’s length sufficiently close to the reporting date, which is why the share prices agreed in the transactions were to be used without adjustment for the measurement as of the current reporting date. In the case of investments with a carrying amount of EUR 37 million, an analysis of operational indicators (especially revenue, EBIT, and liquidity) revealed that the carrying amounts were equivalent to current fair values. Due to better comparability, previous arm’s length transactions involving shares in these companies are preferable to more recent transactions involving shares in similar companies. In the case of investments with a carrying amount of EUR 241 million, for which the last arm’s length transactions relating to shares in these companies took place further in the past, a measurement performed more recently relating to shares in similar companies provides the most reliable representation of the fair values. Here, multiples to the reference variable of expected revenue (ranging between 3.1 and 38.2) were applied and a range of equally distributed percentiles in intervals of 16.7 % around the median were taken as a basis. For each investment, the appropriate percentile was used depending on the specific circumstances. If other values had been used for the multiples and for the expected revenue amounts, the calculated fair values would have been different. However, these hypothetical deviations (sensitivities) were immaterial as of the current reporting date. In addition, non-material individual items with a carrying amount of EUR 51 million when translated into euros are included with differences in value of minor relevance.

The derivatives without a hedging relationship assigned to Level 3 and carried under derivative financial assets relate to options embedded in bonds issued by T‑Mobile US with a carrying amount of EUR 101 million when translated into euros. The options, which can be exercised by T‑Mobile US at any time, allow early redemption of the bonds at fixed exercise prices. Observable market prices are available regularly and also at the reporting date for the bonds as entire instruments, but not for the options embedded therein. The termination rights are measured using an option pricing model. Historical interest rate volatilities of bonds issued by T‑Mobile US and comparable issuers are used for the measurement because these provide a more reliable estimate at the reporting date than current market interest rate volatilities. The spread curve, which is also unobservable, was derived on the basis of current market prices of bonds issued by T‑Mobile US and debt instruments of comparable issuers. Risk-free interest rates and spreads were simulated separately from each other. At the current reporting date, the following interest rate volatility and spreads were used for the various rating levels of the USD bonds:

Interest rate volatilities and spreads used by rating levels

%

 

 

 

Interest volatility
(absolute figure)

Spread

BBB+

0.1 – 0.2

0.8 – 1.4

BBB-

0.1 – 0.3

1.3 – 2.0

BB+

0.1 – 0.3

1.6 – 2.5

If other values had been used for the interest rate volatility and for the spread curve , the calculated fair values would have been different. However, these hypothetical deviations (sensitivities) were immaterial as of the current reporting date. In the reporting period, a net expense of EUR 112 million when translated into euros was recognized under the Level 3 measurement in other financial income/expense for unrealized losses for the options in the portfolio at the reporting date. In the reporting period, no option was exercised. Please refer to the table above for the development of the carrying amounts in the reporting period. Due to their distinctiveness, these instruments constitute a separate class of financial instruments.

With a carrying amount of EUR 141 million when translated into euros, the derivatives without a hedging relationship assigned to Level 3 and carried under derivative financial assets relate to energy forward agreements embedded in contracts entered into by T‑Mobile US. The same applies to derivative financial liabilities with a carrying amount of EUR 25 million when translated into euros. These agreements consist of two components: the energy forward agreement and the acquisition of renewable energy credits by T‑Mobile US. In the case of one energy forward agreement, commercial operation is set to begin in 2025; with the others, it has already begun. Under the energy forward agreements, which are accounted for separately as derivatives, T‑Mobile US receives variable amounts based on the actual energy output and the then current energy prices, and pays fixed amounts per unit of energy generated from the start of commercial operations throughout the term of the contract. The energy forward agreements are measured using valuation models because no observable market prices are available. The value of the derivatives is influenced primarily by the future energy output and the future energy prices on the relevant markets. The main contract parameters and assumptions made are set out in the table below. In the view of T‑Mobile US, the contracts were entered into at current market conditions, and the most appropriate parameters for the unobservable inputs were used for measurement purposes. The transaction price at inception was zero in each case. Since the unobservable inputs have a significant influence on the measurement of the derivatives, the respective amount resulting from initial measurement (day 1 gain) for some of the agreements was not recognized in profit or loss on initial recognition. Instead, these day 1 gains are amortized in profit or loss on a straight-line basis over the period of commercial energy production. This amortization adjusts the effects from measuring the derivatives in each accounting period using the respective valuation models and updated parameters. All amounts from the measurement of the derivatives are presented in net terms per contract in the statement of financial position (derivative financial assets/liabilities) and in the income statement (other operating income/expenses). The remaining agreements were acquired by T‑Mobile US in a business combination and, for these agreements too, unobservable inputs have a material influence on the measurement of the derivatives. However, under the requirements for business combinations, the respective amounts resulting from the measurement are recognized as derivative financial assets, as a result of which there are no amounts yet to be amortized for these agreements. On the following reporting dates, the effects from the periodic measurement of the derivatives will be recorded in full in the income statement (other operating expenses or other operating income). At the reporting date, the calculated fair value from Deutsche Telekom’s perspective for one of the energy forward agreements described above is negative and amounts to EUR -6 million when translated into euros. All the rest are positive and amount to EUR 231 million when translated into euros. If other values had been used for the future energy prices and for the future energy output, the calculated fair values would have been different. However, these hypothetical deviations (sensitivities) were immaterial as of the current reporting date. In the reporting period, a net expense of EUR -7 million when translated into euros was recognized under the Level 3 measurement in other operating income/expense for unrealized losses for the derivatives for all the above energy forward agreements. Please refer to the corresponding table for the development of the carrying amounts in the reporting period. The development of the day 1 gain yet to be amortized in the income statement in the reporting period is shown in the following table. The straight-line amortization of the day 1 gains through profit or loss over the period of commercial energy production amounts to a total of EUR 11 million per year when translated into euros.

Main contract parameters of energy forward agreements

 

 

 

United States

Term of the contract from the start of commercial operation in years

12 to 15

End of the term of contracts for which commercial operation has already begun

2029 to 2035

Expected energy output in GWh per year

4,057

Expected energy prices per MWh for the unobservable portion of the term in €

20 to 80

Length of time in years, for which energy prices are regularly observable

up to 10

Development of the not yet amortized amounts

millions of €

 

 

Energy forward agreements in the United States a

Measurement amounts on initial recognition

245

Measurement amounts on initial recognition (additions during the reporting period)

0

Measurement amounts amortized in profit or loss in prior periods

(49)

Measurement amounts amortized in profit or loss in the current reporting period

(7)

Currency translation adjustments

5

Disposals in prior periods

(85)

Disposals in the current reporting period

0

Measurement amounts not amortized as of September 30, 2024

109

a

For more details, please refer to the explanations above.

The contingent consideration receivable from the sale of a 50 % stake in GlasfaserPlus was forgone in the reporting period under a contractual adjustment.

For the trade receivables measured at fair value through other comprehensive income assigned to Level 3 and for the originated loans and other receivables measured at fair value through profit or loss, the main factor in determining fair value is the credit risk of the relevant counterparties. If the default rates applied as of the reporting date had been 1 % higher (lower) with no change in the reference variables, the fair values of the instruments would have been 1 % lower (higher). The financial assets assigned to Level 3 include trade receivables measured at fair value through other comprehensive income, for which the credit risk of customers constitutes an unobservable input for the measurement, with a carrying amount of EUR 7,460 million (December 31, 2023: EUR 8,446 million) when translated into euros. As a rule, a credit scoring model is used for receivables paid in installments. The cash flows are discounted on the basis of the weighted average of the original effective interest rates of the financial assets in the relevant portfolio. A weighted average credit-risk spread of 7.57 % (December 31, 2023: 6.49 %) was applied to the respective receivables portfolios at the reporting date. The credit-risk spreads applied are derived from the expected future credit loss of the relevant portfolio and are updated on an ongoing basis. Changes in the fair value of these trade receivables are also caused by changes in observable market interest rates.

No notable fluctuations in value are expected from the other financial assets and financial liabilities assigned to Level 3.

Disclosures on credit risk

In line with the contractual provisions, in the event of insolvency, all derivatives with a positive or negative fair value that exist with the respective counterparty are offset against each other, leaving a net receivable or liability. The net amounts are normally recalculated every bank working day and offset against each other. When the netting of the positive and negative fair values of all derivatives was positive from Deutsche Telekom’s perspective, Deutsche Telekom received unrestricted cash collateral from counterparties pursuant to collateral agreements in the amount of EUR 33 million (December 31, 2023: EUR 39 million). The credit risk was thus reduced by EUR 33 million (December 31, 2023: EUR 37 million) because, on the reporting date, the cash collateral received was offset by corresponding net derivative positions in the same amount. On the basis of these contracts, derivatives with a positive fair value and a total carrying amount of EUR 898 million as of the reporting date (December 31, 2023: EUR 981 million) had a residual credit risk of EUR 7 million as of September 30, 2024 (December 31, 2023: EUR 2 million).

When the netting of the positive and negative fair values of all derivatives was negative from Deutsche Telekom’s perspective, Deutsche Telekom provided cash collateral in the amount of EUR 1,272 million as of the reporting date (December 31, 2023: EUR 1,642 million) to counterparties pursuant to collateral agreements. The cash collateral paid is offset by corresponding net derivative positions of EUR 1,252 million at the reporting date (December 31, 2023: EUR 1,513 million), which is why it was not exposed to any credit risks in this amount.

On account of its close connection to the corresponding derivatives, the collateral received (paid) constitutes a separate class of financial liabilities (assets). There were no other significant agreements reducing the maximum exposure to the credit risk of financial assets. The maximum exposure to credit risk of the other financial assets thus corresponds to their carrying amounts.

In accordance with the terms of the bonds issued by T‑Mobile US, T‑Mobile US has the right to terminate the majority of bonds prematurely under specific conditions. The rights of early termination constitute embedded derivatives and are presented separately as derivative financial assets in the consolidated statement of financial position. Since they are not exposed to any credit risk, they constitute a separate class of financial instruments. Please refer to the explanations above for more information on the energy forward agreements for which no material collateral is provided. There is also no credit risk on embedded derivatives held.

In connection mainly with the procurement of energy, subsidiaries of Deutsche Telekom have deposited additional cash collateral of EUR 5 million when translated into euros as of the reporting date (December 31, 2023: EUR 2 million). At the reporting date, cash and cash equivalents of EUR 71 million (December 31, 2023: EUR 64 million) when translated into euros were pledged as cash collateral for liabilities issued by Sprint with the right of creditors to priority repayment in the event of default. This cash collateral is not exposed to any significant credit risk.