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43 Capital management

The overriding aim of Deutsche Telekom’s capital management is to strike a balance between the contrasting expectations of the following stakeholders, so that sufficient funding is available for an attractive dividend, debt repayment, responsible staff restructuring, and new investment in a sustainable and positive customer experience:

  • Shareholders expect an appropriate, reliable return on their capital employed.
  • Providers of debt capital expect an appropriate return and that Deutsche Telekom is able to repay its debts.
  • Employees expect jobs that are secure, prospects for the future, and that any necessary staff restructuring will be done in a responsible manner.
  • “Entrepreneurs within the enterprise” expect sufficient investment funding to be able to shape Deutsche Telekom’s future business and develop products, innovations, and services for the customer.
  • Society expects Deutsche Telekom to do everything within its power to protect the environment, encourage fair and democratic co-existence, and shape the digital transformation in a responsible manner.

An important key performance indicator for the capital market communication with investors, analysts, and rating agencies is financial flexibility, which Deutsche Telekom determines based on relative debt, i.e., net debt to adjusted EBITDA. This ratio stood at 3.07x at December 31, 2022 (December 31, 2021: 3.06x). Deutsche Telekom is expected to leave the target range for relative debt of 2.25x to 2.75x on account of the business combination of T‑Mobile US and Sprint until the end of 2024. Adjusted EBITDA and net debt are non-GAAP figures not governed by International Financial Reporting Standards, and their definition and calculation may vary from one company to another.

 

 

 

 

 

 

 

 

2022

2021

2020

Relative debta

 

 

 

Net debt

3.07x

3.06x

2.78x

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (adjusted for special factors)

 

 

 

Equity ratio

%

29.2

28.9

27.4

a

Relative debt is calculated on a quarterly basis and the calculation of the figure for 2020 includes as an input for the first quarter of 2020 historic pro forma figures for Sprint, which was included in the United States operating segment.

A further essential key performance indicator is the equity ratio, i.e., the ratio of shareholders’ equity to total assets as shown in the consolidated statement of financial position. The equity ratio was 29.2 % as of December 31, 2022 (December 31, 2021: 28.9 %). The target range remains unchanged between 25 and 35 %. In addition, Deutsche Telekom maintains a liquidity reserve covering all maturities of the next 24 months.

For further information, please refer to the sections “Management of the Group” and “Development of business in the Group” in the combined management report.

The following table shows the calculation of net debt from the statement of financial position values.

millions of €

 

 

 

 

 

Dec. 31, 2022a

Dec. 31, 2021b

Change

Change %

Bonds and other securitized liabilities

93,802

93,857

(55)

(0.1)

Liabilities to banks

4,122

4,003

119

3.0

Other financial liabilities

15,107

13,730

1,377

10.0

Lease liabilities

41,063

33,767

7,296

21.6

Financial liabilities and lease liabilities

154,093

145,357

8,736

6.0

Accrued interest

(999)

(1,012)

13

1.3

Other

(805)

(855)

50

5.8

Gross debt

152,289

143,490

8,799

6.1

Cash and cash equivalents

5,767

7,617

(1,850)

(24.3)

Derivative financial assets

2,273

2,762

(489)

(17.7)

Other financial assets

1,824

969

855

88.2

Net debt

142,425

132,142

10,283

7.8

a

Including the net debt of the discontinued operation GD Towers and of the wireline business at T-Mobile US included under liabilities directly associated with non-current assets and disposal groups held for sale as of December 31, 2022.

b

Including the net debt of T-Mobile Netherlands included under liabilities directly associated with non-current assets and disposal groups held for sale as of December 31, 2021.