Selected notes to the consolidated income statement

As a result of the sales agreement concluded on July 13, 2022, the GD tower companies had been recognized as a discontinued operation from the third quarter of 2022 until their sale on February 1, 2023. Thus, the contributions by the GD tower companies were no longer included in the individual items of the consolidated income statement in the prior-year period. Instead, profit or loss after taxes was disclosed in aggregate form in the item “Profit/loss after taxes from discontinued operation.”

Net revenue

Net revenue breaks down into the following revenue categories:

The service revenues essentially comprise predictable and/or recurring revenues from Deutsche Telekom’s core activities. These relate to revenues that are generated from services (i.e., revenues from fixed and mobile network voice services, incoming and outgoing calls, as well as data services) plus roaming revenues, monthly basic charges and visitor revenues, as well as revenues from the ICT business. Service revenues also include revenues earned in connection with premium services for customers, such as reinsurance for device insurance policies and extended warranties.

In the reporting period, revenue from insurance contracts in the scope of IFRS 17 of EUR 3.4 billion (Q1-Q3 2023: EUR 3.4 billion) and insurance service expenses of EUR 2.3 billion (Q1-Q3 2023: EUR 2.3 billion) were recognized in the Group.

Non-service revenues mainly comprise one-time and variable revenues, e.g., revenue from the sale or rental of fixed-network or mobile devices, from value-added services, from application and contract services, revenue with virtual network operators, one-time revenue from the build-out of technical infrastructure, and revenue from vehicle and property leasing.

Net revenue includes revenue from the use of entity assets by others in the scope of IFRS 16 in the amount of EUR 0.7 billion (Q1-Q3 2023: EUR 0.9 billion). Of the revenue from the use of entity assets by others reported in net revenue, EUR 0.5 billion (Q1-Q3 2023: EUR 0.6 billion) relates to service revenues and EUR 0.1 billion (Q1-Q3 2023: EUR 0.3 billion) to non-service revenues.

For 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

Miscellaneous other operating income included, among others, the non-refundable extension fee of EUR 0.1 billion recognized in the United States operating segment, which arose in connection with an agreement on the sale of spectrum licenses concluded between T‑Mobile US and DISH Network Corporation (DISH). In the prior year, income from insurance compensation mainly related to refunds from insurance companies for expenses incurred in connection with the cyberattack on T‑Mobile US in August 2021.

For further information on the agreement between T‑Mobile US and DISH, please refer to the section “Intangible assets.”

Other operating expenses

Miscellaneous other operating expenses include expenses of EUR 0.5 billion (Q1-Q3 2023: EUR 0.4 billion) for data storage in data centers, in cloud applications, or other IT services, and of EUR 0.3 billion (Q1-Q3 2023: EUR 0.3 billion) for regulatory duties in the United States operating segment. In addition, miscellaneous other operating expenses included the forgone contingent consideration receivable of EUR 0.4 billion from IFM Global Infrastructure Fund from the continuation of the joint fiber-optic rollout at GlasfaserPlus.

For further information on the renegotiations between IFM Global Infrastructure Fund and Deutsche Telekom, please refer to the section “Other financial assets.”

Depreciation, amortization and impairment losses

At EUR 17.9 billion, depreciation, amortization and impairment losses on intangible assets, property, plant and equipment, and right-of-use assets were EUR 0.1 billion higher in the first three quarters of 2024 than in the prior-year period, which was mainly attributable to depreciation and amortization. In the United States operating segment, higher depreciation expense in connection with accelerations of certain technology assets as part of T‑Mobile US modernizing its network, technology systems, and platforms was partly offset by lower depreciation of right-of-use assets. In the Germany operating segment, depreciation and amortization increased, partly as a result of the sale and leaseback of passive network infrastructure in connection with the sale of the GD tower companies. No significant impairment losses were recorded in the reporting period. In the prior-year period, impairment losses stood at EUR 0.1 billion.

Profit/loss from financial activities

Loss from financial activities decreased year-on-year from EUR 4.4 billion to EUR 3.1 billion, mainly due to the factors described below.

The share of profit of associates and joint ventures included in the consolidated financial statements accounted for using the equity method increased by EUR 1.3 billion compared with the prior-year period to EUR 1.3 billion. This was primarily attributable to reversals of impairment losses recognized in the reporting period of EUR 1.0 billion and EUR 0.3 billion, respectively, on the carrying amounts of the investments in the GD tower companies and in GlasfaserPlus. These reversals of impairment losses were, at the GD tower companies entirely, and at GlasfaserPlus almost entirely, due to lower discount rates as a result of macroeconomic developments in the reporting period and changes within the peer group. Level 3 input parameters were used to determine the pro rata recoverable amounts – as fair value less costs of disposal – of EUR 4.4 billion for the GD tower companies and of EUR 0.7 billion for GlasfaserPlus (after deduction of net debt). Discount rates of 6.59 % for the GD tower companies and 5.14 % for GlasfaserPlus were used.

Other financial income remained stable, due on the one hand to lower interest expense from the measurement of provisions and liabilities compared with the prior-year period. This was attributable to the subsequent measurement using actuarial principles of the present value of the provision recognized for the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK). On the other hand, gains/losses from financial instruments decreased other financial income.

Finance costs increased slightly from EUR 4.2 billion in the prior-year period to EUR 4.3 billion.

For further information, please refer to the section “Investments accounted for using the equity method.”

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

Income taxes

A tax expense of EUR 3.6 billion was recorded in the first three quarters of 2024. The tax amount essentially reflects the shares of the different countries in profit before income taxes and their respective national tax rates. However, the effective tax rate decreased in particular by the recognized reversal of an impairment loss on the carrying amounts of the stake in the GD tower companies that had no effect on tax.

Profit/loss after taxes from discontinued operation

The sale of the GD tower companies was consummated on February 1, 2023, and these companies have no longer been part of the Group since that date. The development presented in the prior-year period contains the contributions to earnings for the first month of 2023. The following table provides a breakdown of profit/loss after taxes from the discontinued operation:

In the prior-year period, other operating income of EUR 12.9 billion related to the deconsolidation gain realized from the loss of control over the GD tower companies. Income from income taxes resulted from deferred tax effects arising in connection with the concluded sale-and-leaseback transaction.