Notes to the consolidated statement of cash flows
Sprint has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since April 1, 2020. As such, the development of cash flows in the reporting period can only be compared with the prior-year period to a limited extent.
For further information on the business combination of T‑Mobile US and Sprint, please refer to the section “Changes in the composition of the Group and other transactions.”
Net cash from operating activities
Net cash from operating activities increased by EUR 9.2 billion year-on-year to EUR 25.6 billion. The strong performance both in the United States and outside of the United States had a positive effect on net cash from operating activities. In addition, the increase is attributable to the business combination of T‑Mobile US and Sprint effective April 1, 2020. Net cash from operating activities had been negatively affected in the prior-year period by interest payments totaling EUR 1.6 billion for zero-coupon bonds. Net cash from operating activities had also been negatively impacted in the amount of EUR 2.2 billion in the prior-year period as a result of the premature termination of forward-payer swaps for borrowings raised at T‑Mobile US as well as by a net increase of EUR 0.5 billion in interest payments, mainly as a result of the financial liabilities recognized and the restructuring carried out in connection with the acquisition of Sprint, and the related increase in financing. Income tax payments increased by EUR 0.2 billion compared with the prior-year period. Factoring agreements of EUR 0.2 billion had a positive impact on net cash used in operating activities in the reporting period. In the prior-year period, factoring agreements had had negative effects of EUR 0.6 billion, mainly as a result of the contractual termination of a revolving factoring agreement in the Germany operating segment.
Net cash used in investing activities
millions of € |
|
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Q1-Q3 2021 |
Q1-Q3 2020 |
||||||||
Cash capex |
|
|
||||||||
Germany operating segment |
(2,692) |
(2,928) |
||||||||
United States operating segment |
(16,041) |
(7,131) |
||||||||
Europe operating segment |
(1,324) |
(1,431) |
||||||||
Systems Solutions operating segment |
(146) |
(149) |
||||||||
Group Development operating segment |
(393) |
(566) |
||||||||
Group Headquarters & Group Services |
(702) |
(693) |
||||||||
Reconciliation |
40 |
18 |
||||||||
|
(21,260) |
(12,880) |
||||||||
Payments for publicly funded investments in the broadband build-out |
(294) |
(337) |
||||||||
Proceeds from public funds for investments in the broadband build-out |
202 |
152 |
||||||||
Net cash flows for collateral deposited and hedging transactions |
(138) |
1,564 |
||||||||
Changes in cash and cash equivalents in connection with the consummated business combination of T‑Mobile US and Sprint |
0 |
(4,647) |
||||||||
Of which: cash and cash equivalents acquired from Sprinta |
0 |
2,117 |
||||||||
Of which: repayment of Sprint loans pursuant to change-in-control clause |
0 |
(6,764) |
||||||||
Changes in cash and cash equivalents in connection with the acquisition of Shentel at T‑Mobile US |
(1,588) |
0 |
||||||||
Changes in cash and cash equivalents in connection with the sale of Sprint’s prepaid business to DISHb |
0 |
1,085 |
||||||||
Other changes in cash and cash equivalents in connection with the acquisition of control of subsidiaries and associates |
(25) |
0 |
||||||||
Changes in cash and cash equivalents in connection with the contribution of the stake in T‑Mobile Infra into Cellnex Netherlandsc |
135 |
0 |
||||||||
Changes in cash and cash equivalents in connection with the sale of the stake in Telekom Romania Communicationsd |
202 |
0 |
||||||||
Other changes in cash and cash equivalents in connection with the loss of control of subsidiaries and associates |
33 |
21 |
||||||||
Proceeds from the disposal of property, plant and equipment, and intangible assets |
107 |
176 |
||||||||
Other |
(62) |
(436) |
||||||||
|
(22,687) |
(15,302) |
||||||||
|
||||||||||
At EUR 21.3 billion, cash capex was EUR 8.4 billion higher than in the prior-year period. In the United States operating segment, FCC mobile licenses were acquired mainly as part of the concluded C-band auction for a total of EUR 8.2 billion and, in the Europe operating segment, mobile spectrum licenses were acquired for a total of EUR 0.1 billion in the reporting period. The figure for the prior-year period included EUR 1.4 billion for the acquisition of mobile spectrum licenses, EUR 1.0 billion of which related to the United States operating segment and EUR 0.2 billion to each of the Europe and Group Development operating segments. Excluding investments in mobile spectrum licenses, cash capex was up EUR 1.4 billion year-on-year. This change was primarily attributable to an increase of EUR 1.7 billion in the United States operating segment on account of the inclusion of Sprint and as a result of the further build-out of the 5G network. A decline of EUR 0.2 billion in the Germany operating segment had an offsetting effect. Investments in optical fiber were down in the first and second quarters of 2021 due to bad weather. In the third quarter of 2021, it was possible to step up investments again, thus partially making up for the decline. Also, construction work planned for 2021 had been brought forward to the fourth quarter of 2020.
Net cash used in/from financing activities
millions of € |
|
|
|---|---|---|
|
Q1-Q3 2021 |
Q1-Q3 2020 |
Repayment of bonds |
(9,448) |
(8,783) |
Dividend payments (including to other shareholders of subsidiaries) |
(3,087) |
(3,067) |
Repayment of financial liabilities from financed capex and opex |
(97) |
(324) |
Repayment of EIB loans |
(1,093) |
(193) |
Net cash flows for collateral deposited and hedging transactions |
0 |
(4) |
Principal portion of repayment of lease liabilities |
(5,215) |
(4,206) |
Repayment of financial liabilities for media broadcasting rights |
(253) |
(270) |
Cash flows from continuing involvement factoring, net |
(71) |
(77) |
Promissory notes, net |
(58) |
(202) |
Issuance of bonds |
10,035 |
1,609 |
Commercial paper, net |
0 |
0 |
Overnight borrowings from banks, net |
0 |
0 |
Repayment of liabilities from 5G spectrum acquired in Germany |
(195) |
(110) |
Repayment of liabilities from 5G spectrum acquired in the Netherlands |
(204) |
0 |
Changes in cash and cash equivalents in connection with the sale and leaseback of the passive mobile infrastructure of T‑Mobile Infra |
242 |
0 |
Issue of senior secured notes in connection with the acquisition of Sprint |
0 |
20,942 |
Raising of secured term loan in connection with the acquisition of Sprint |
0 |
3,562 |
Raising of bridge loan facility in connection with the acquisition of Sprint |
0 |
17,405 |
Repayment of bridge loan facility in connection with the acquisition of Sprint |
0 |
(17,493) |
Repayment of Sprint loans (raised prior to acquisition by T‑Mobile US) |
0 |
(3,572) |
Cash inflows from transactions with non-controlling entities |
|
|
T‑Mobile US stock options |
8 |
36 |
Cellnex Netherlands capital contributions |
3 |
0 |
Toll4Europe capital contributions |
0 |
11 |
|
12 |
47 |
Cash outflows from transactions with non-controlling entities |
|
|
T‑Mobile US share buy-backs |
(254) |
(316) |
OTE share buy-backs |
(112) |
(102) |
Other payments |
(43) |
(30) |
|
(409) |
(448) |
Other |
(254) |
(154) |
|
(10,094) |
4,661 |
Non-cash transactions
In the deal signed between Deutsche Telekom and SoftBank on September 6, 2021, Deutsche Telekom acquired a total of around 45.4 million T‑Mobile US shares from SoftBank on September 28, 2021. SoftBank received in return 225 million new shares in Deutsche Telekom AG by way of a capital increase against a non-cash contribution.
For further information on the increase of the stake in T‑Mobile US by way of the agreement concluded with SoftBank, please refer to the section “Other transactions that had no effect on the composition of the Group.”
In the reporting period, Deutsche Telekom did not make use of financing options under which the payments for trade payables from operating and investing activities primarily become due at a later point in time by involving banks in the process (prior-year period: EUR 0.2 billion).
In the reporting period, Deutsche Telekom leased assets totaling EUR 4.5 billion, mainly network equipment, and land and buildings. As a result, these assets are recognized in the statement of financial position under right-of-use assets and the related liabilities under lease liabilities. Future repayments of the liabilities will be recognized in net cash used in/from financing activities. In the prior-year period, this figure stood at EUR 12.8 billion, EUR 9.4 billion of which related to a modified agreement with American Tower for the lease of around 20,729 cell towers, resulting in an increase in the same amount in the carrying amount of the right-of-use assets and the lease liabilities. Excluding this effect, there was a year-on-year increase of EUR 1.0 billion, which was mainly attributable to the further build-out of the 5G network and the inclusion of Sprint in the United States operating segment, and to the sale-and-leaseback agreements in connection with the combination of the cell tower business in the Netherlands.
Consideration for the acquisition of broadcasting rights is paid by Deutsche Telekom in accordance with the terms of the contract on the date of its conclusion or spread over the term of the contract. Financial liabilities of EUR 0.4 billion were recognized in the reporting period for future consideration for acquired broadcasting rights (prior-year period: EUR 0.2 billion). The payment of the consideration will be recognized in net cash used in/from financing activities.
In the United States operating segment, mobile handsets amounting to EUR 0.9 billion were recognized under property, plant and equipment in the first three quarters of 2021 (prior-year period: EUR 2.1 billion). These relate to the terminal equipment lease model at T‑Mobile US, under which customers do not purchase the devices but lease them. The cash outflows are presented under net cash from operating activities. The decline was primarily due to the withdrawal from the terminal equipment lease model.
The combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund in the Group Development operating segment resulted in the following non-cash transactions: First, the stake in T‑Mobile Infra was contributed into Cellnex Netherlands in exchange for the granting of a stake of 37.65 % in the “new” company, Cellnex Netherlands. Second, in order to ensure T‑Mobile Netherlands’ continued access to the contributed passive mobile infrastructure, a long-term agreement, primarily on the lease of corresponding infrastructure components, was concluded in the form of a sale-and-leaseback transaction.
For further information on the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund, please refer to the section “Changes in the composition of the Group and other transactions.”