Risks and opportunities
This section provides important additional information and explains recent changes in the risks and opportunities compared to those described in the 2023 combined management report (2023 Annual Report). Readers are also referred to the “Disclaimer” at the end of this report.
Corporate risks
Strategic implementation and integration. In Germany, the legislator adopted the Second Act to Increase the Security of Information Technology Systems, or the IT Security Act 2.0 (IT-Sicherheitsgesetz 2.0), in 2021. All 5G operators must notify the authorities of new critical components and the suppliers thereof in accordance with the catalog of security requirements pursuant to the Telecommunications Act and prior to first-time operation. If the Federal Government has security concerns, it can introduce a blanket ban on using certain manufacturers. Deutsche Telekom itself has long been scrutinizing security-critical components prior to installation and on an ongoing basis once in operation. In July 2024, the Federal Government and Germany’s three biggest network operators agreed to replace all Huawei and ZTE components in the 5G core networks by the end of 2026 and the critical management systems of both manufacturers in the 5G access and transport networks by the end of 2029. Deutsche Telekom does not use ZTE components and has already phased out Huawei from its 5G core network. Deutsche Telekom is now developing software for managing and configuring its antennas and transport network to replace the proprietary software from Huawei. This also has the benefit of further driving forward the ongoing implementation of the Open RAN strategy. In other countries, such as Austria, the Czech Republic, and Poland, it is still possible that components from critical infrastructure suppliers may have to be replaced within specific deadlines. On the basis of the agreement with the German Federal Government, we are reducing the risk significance of the risk category “Strategic implementation and integration” from very high to high.
Other operational risks. In the course of renegotiations and contract adjustments with IFM Global Infrastructure Fund on the continuation of the joint fiber-optic rollout at the GlasfaserPlus build-out entity, Deutsche Telekom agreed to forgo the contingent consideration receivable. Since this was a materialization of the risk, we are correspondingly reducing the risk significance of the risk category “Other operational risks” from high to medium.
Litigation and anti-trust proceedings
Claims relating to charges for the shared use of cable ducts. In the claims filed by Vodafone Deutschland GmbH and Vodafone West GmbH against Telekom Deutschland GmbH alleging excessive charges for the use of cable ducts, which were referred by the Federal Court of Justice back to the responsible Higher Regional Courts, the plaintiffs have since updated their demands for relief. Vodafone Deutschland GmbH now puts its claim at around EUR 903 million plus interest for the period from January 2012 to December 2023; Vodafone West now puts its claim at around EUR 538 million plus interest for the period from January 2016 to April 2024. It is currently not possible to estimate the financial impact with sufficient certainty.
Proceedings against T‑Mobile US in consequence of the cyberattack on T‑Mobile US in August 2021. The derivative action brought in these proceedings by a purported shareholder against the members of the Board of Directors of T‑Mobile US and against T‑Mobile US as nominal defendant in September 2022 was dismissed in its entirety in May 2024. The plaintiff has appealed against this decision. In connection with the consumer class action in the Federal Court, the appeal filed by a class member against the awarding of lawyers’ fees to the lawyer for the class was allowed in July 2024. Consequently, the court must rule again on the awarding. This has no impact on the agreement concluded in July 2022 to settle the consumer class action. T‑Mobile US expects that the USD 315 million still outstanding from the original settlement amount of USD 350 million will be paid out at the end of November 2024. In addition, an agreement was reached on the inquiries made by the Federal Communications Commission (FCC).
Claims for damages against Deutsche Telekom AG, including due to insolvency of Phones4U. After the High Court of Justice in London rejected all claims made by Phones4U against all defendants in 2023 as well as an application for leave to lodge an appeal, Phones4U continued to pursue this application with the Court of Appeal. On March 26, 2024, the Court of Appeal allowed the appeal by Phones4U.
Assessment of the aggregate risk position
The aggregate risk position has improved compared with the risks and opportunities as described in the 2023 combined management report (2023 Annual Report), primarily due to the agreement with the Federal Government on removing Chinese-made technology from the 5G network. Our challenges continue to include in particular the regulatory factors, economic uncertainties, and intense competition, and the associated pressure on profitability in the telecommunications business, as well as the pressure to change arising from new technologies and strategic transformation. At the time of preparing this report, neither our risk management system nor our management could identify any material risks to the continued existence of Deutsche Telekom AG or a significant Group company as a going concern.