Deutsche Telekom : 2024 1st quarter Interim report

Contents

Deutsche Telekom at a glance

To our shareholders

• Development of selected financial data
  6 Highlights

Interim Group management report

• Group organization, strategy, and management
  9 The economic environment
  10 Development of business in the Group
  20 Development of business in the operating segments
  31 Events after the reporting period
  31 Forecast
  32 Risks and opportunities

Interim consolidated financial statements

1. Consolidated statement of financial position
2. Consolidated income statement
3. Consolidated statement of comprehensive income
4. Consolidated statement of changes in equity
5. Consolidated statement of cash flows
6. Significant events and transactions

47 Other disclosures

61 Events after the reporting period

Responsibility statement

Review report

Additional information

1. Reconciliation for the organic development of key figures for the prior-year period
2. Glossary

1. Disclaimer
2. Financial calendar

In the interest of clarity, we have tended to avoid using a combination of pronouns such as "he/she/they," etc. with regard to gender. All references to individuals refer equally to all genders.

Deutsche Telekom at a glance

• For further information on the presentation of the sold GD Towers business entity in the prior year, please refer to the section "Group organization, strategy, and management" in the interim Group management report.

• Including net debt reported under liabilities directly associated with non-current assets and disposal groups held for sale.
  millions

• Including T-Mobile US wholesale customers. During the fourth quarter of 2023, T-Mobile US recognized a base adjustment to reduce wholesale customers by 339 thousand to remove certain customers serviced through its wholesale partners associated with government assistance plans, which are excluded from its customer counts.

• Excluding wholesale.

The figures shown in this report were rounded in accordance with standard business rounding principles. As a result, the total indicated may not be equal to the precise sum of the individual figures. Changes were calculated on the basis of millions for greater precision.

For information on the development of business in the operating segments, please refer to the section "Development of business in the operating segments" in the interim Group management report and in the IR back-up on our Investor Relations website.

For information on our performance indicators and alternative performance measures, please refer to the section "Management of the Group" in the 2023 combined management report (2023 Annual Report) and to our Investor Relations website.

For a reconciliation for the organic development of key figures for the prior-year period, please refer to the section "Additional information."

• For further information on the presentation of the sold GD Towers business entity in the prior year, please refer to the section "Group organization, strategy, and management" in the interim Group management report.

For further information, please refer to the section "Development of business in the Group" in the interim Group management report.

For further information on the development of business in the operating segments, please refer to the section "Development of business in the operating segments" in the interim Group management report and to the IR back-up on our Investor Relations website.

For further information on our performance indicators and alternative performance measures, please refer to the section "Management of the Group" in the 2023 combined management report (2023 Annual Report) and to our Investor Relations website.

• Including net debt reported under liabilities directly associated with non-current assets and disposal groups held for sale.

Highlights

For further information on these and other events, please refer to our media information.

For comprehensive information on the T-Share, please visit our Investor Relations website.

Transactions

Deutsche Telekom AG's share buy-back program. Since January 3, 2024, Deutsche Telekom AG has been buying back shares as part of a buy-back program. The buy-back of up to a total volume of EUR 2 billion will be carried out in several tranches through December 31, 2024. As of March 31, 2024, Deutsche Telekom AG had bought back around 21 million shares with a total volume of around EUR 0.5 billion.

For detailed information on the 2024 share buy-back program, please refer to our Investor Relations website.

Sale of T-Mobile US shares by Deutsche Telekom. Since January 2, 2024, Deutsche Telekom has been selling a portion of its T-Mobile US share portfolio on the market, without jeopardizing its own majority ownership position in T-Mobile US. As of March 31, 2024, Deutsche Telekom had sold around 12 million T-Mobile US shares with a total volume of around EUR 1.8 billion.

T-Mobile US' shareholder return program from September 2023 continued. On September 6, 2023, T-Mobile US announced a USD 19 billion shareholder return program comprising share buy-backs and dividends to be paid out, due to run through December 31, 2024. In the first quarter of 2024, T-Mobile US' Board of Directors declared a second and third cash dividend of USD 0.65 per share each and additional shares were bought back.

For further information on these transactions, please refer to the section "Development of business in the Group" in the interim Group managment report and the section "Other transactions that had no effect on the composition of the Group" in the interim consolidated financial statements.

Network build-out

Germany. As of the end of the first quarter of 2024, our 5G network was available to 96.5 % of the German population, and a total of 8.2 million households and companies can subscribe to a fiber-optic line with us.

For further information on the network build-out in Germany, including WhatsApp channel, please refer to our media report(German only).

Europe. As of the end of the first quarter of 2024, our national companies covered on average 68.2 % of the population in our European footprint with 5G, and a total of 9.3 million households can access our fiber-optic network offering gigabit speeds.

Cooperations, partnerships, and major deals

Fiber-optic cooperations. In the first quarter of 2024, we entered into a partnership with ANTEC Servicepool to jointly provide around 70,000 households of housing companies and owners of buildings across Germany with a fiber-optic line. We also entered into a partnership agreement with communications provider Kabel + Sat Bergen concerning the fiber-optic network

• which was built with public funds - of the utilities association Zweckverband Wasserversorgung und Abwasserbehandlung Rügen. It's our first collaboration of this kind and is set to benefit some 11,000 households on the island of Rügen.

Products, rate plans, and services

Mobile World Congress (MWC) 2024. Under our brand claim "Connecting your world," the technologies and innovations we presented at the MWC in Barcelona from February 26 to 29, 2024 mainly related to artificial intelligence (AI). With Magenta AI, we offered a look into the future: on the basis of three design studies, Concept T showed how new technologies can be melded with a traditional router. Together with Qualcomm and Brain.ai, we presented an innovative phone concept: a smartphone without apps, which instead uses an AI-based assistant. For the showcase, real use cases were integrated into our already available T Phone.

For further information, please refer to our media report.

MagentaTV 2.0. Since February 15, 2024, our refined MagentaTV has combined all relevant TV content and streaming services on one platform. The new features include a clearer design, a customizable user interface, a significantly faster platform, and a search function that also supports voice commands.

IoT rate plans for satellite connectivity. Since the end of February 2024, we have been offering connectivity via satellite commercially for the first time, together with our partners Intelsat and Skylo. Customers can choose from two plan packages, each combining terrestrial and satellite-based connectivity. The interaction of all mobile services takes place on the T IoT Hub platform.

For further information, please refer to our media report.

Environment, Social, and Governance

Voluntary reports. Our CR Reportillustrates the progress we made in 2023 with our activities and efforts to become more sustainable. Our 2023 HR Factbookoffers an extensive insight into the diversity of employees, their skills and potential.

Awards

Brand. BrandZ again rated Deutsche Telekom the most valuable German brand with a brand value of USD 73.5 billion in its February 2024 study Top50 Most Valuable German Brands. Deutsche Telekom remains Europe's most valuable company brand according to the Brand Finance Global 500study published in January 2024 and made it into the top 10 most valuable brands worldwide.

Networks. Our national companies in Europe once again received accolades for their networks in the first quarter of 2024, including the Ookla® Speedtest Award™ for the fastest mobile network in the Czech Republic(Czech only) and Austria(German only), and the Best in Test Awardby Umlaut for the best mobile and fixed network in Croatia.

Service. In March 2024, we were once again the outright winner of industry magazine Connect'smobile hotline test (German only), scoring top marks for our availability, friendliness, and quality of information. We have also received another TÜV seal of quality(German only) for customer satisfaction, awarded on the basis of responses given by our customers to questions on the competence, reliability, and friendliness of our services in a survey conducted by the testing service provider TÜV Rheinland in February 2024.

Business Customers. We are overall winner of the Connect customer barometer mobile B2B Germany 2024(German only), convincing business customers in particular in the "brand/provider," "network," and "app" categories.

For information on awards for responsible corporate governance, please refer to our websiteand our 2023 CR Report.

Interim Group management report

Group organization, strategy, and management

With regard to our Group organization, strategy, and management, please refer to the explanations in the 2023 combined management report (2023 Annual Report). From the Group's point of view, there were no significant changes or additions in the first quarter of 2024.

Changes to the segment and organizational structure in 2023

Presentation of GD Towers in the prior year. The sale of the GD Towers business entity was consummated on February 1, 2023. Since that date, GD Towers has not been part of the Group. It had been recognized in the interim consolidated financial statements as a discontinued operation from the third quarter of 2022 until its sale. By contrast, the financial performance indicators for the prior year in the interim Group management report contain the value contributions of GD Towers up to the end of January 2023. Please refer to the following table for a breakdown of these performance indicators into the amounts recognized in the consolidated income statement in the first quarter of 2023:

(Expected) changes to the segment and organizational structure in 2024

Agreement on the acquisition of Ka'ena in the United States. On March 9, 2023, T-Mobile US entered into a Merger and Unit Purchase Agreement for the acquisition of 100 % of the outstanding equity of Ka'ena Corporation and its subsidiaries including, among others, Mint Mobile, for a maximum purchase price of USD 1.35 billion to be paid out 39 % in cash and 61 % in shares of T-Mobile US common stock. On March 13, 2024, T-Mobile US entered into an agreement amending the mechanics of payment, which will result in a nominal increase in the percentage of cash compared to shares of T-Mobile US common stock to be paid out as part of the total purchase price. The purchase price is variable dependent upon specified performance indicators of Ka'ena during certain periods before and after closing and consists of an upfront payment at deal close, subject to certain agreed-upon adjustments, and a variable earnout payable 24 months after the close of the transaction.

The transaction was consummated on May 1, 2024. All necessary regulatory approvals had been duly granted and all other closing conditions met. At deal close, T-Mobile US made an upfront payment of around USD 1.0 billion (EUR 0.9 billion) (taking into account working capital adjustments and other agreed purchase price adjustments), comprising a cash component of around USD 0.4 billion (EUR 0.4 billion) and around 3 million ordinary shares of T-Mobile US with a total value of around USD 0.5 billion (EUR 0.5 billion), determined on the basis of the closing share price as of April 30, 2024.

Agreement on the acquisition of Lumos in the United States. On April 24, 2024, T-Mobile US entered into an agreement with the investment fund EQT on the acquisition of the fiber-to-the-home platform Lumos. The transaction is subject to regulatory approvals as well as other customary closing conditions and is expected to close in late 2024/early 2025. At closing, T-Mobile US is expected to invest approximately USD 1.0 billion (EUR 0.9 billion) in the joint venture to acquire a 50 % equity stake and all existing fiber customers, with the funds invested by T-Mobile US being used by Lumos for future fiber builds.

Governance

By resolution of October 13, 2023, the Supervisory Board of Deutsche Telekom AG appointed Dr. Ferri Abolhassan as the Board member responsible for T-Systems for the period from January 1, 2024 to December 31, 2026. Mr. Abolhassan thereby succeeds Adel Al-Saleh, who had asked for his contract to be terminated and left the Group as of December 31, 2023.

In its meeting on December 12, 2023, the Supervisory Board adopted a new committee structure to take effect from January 1, 2024. The previous Technology and Innovation Committee has been subsumed under the new Strategy, ESG, and Innovation Committee. In addition, the Audit Committee and the Finance Committee have been merged.

In accordance with the published agenda, on April 10, 2024 the Shareholders' Meeting of Deutsche Telekom AG passed resolutions on, among other matters, the approval of the actions of the Board of Management and the Supervisory Board, the selection of the external auditor for the 2024 financial year, the amount of the dividend (EUR 0.77 per dividend-bearing no par value share; EUR 3.8 billion in total), and the change to § 13 of the Articles of Incorporation (remuneration of the Supervisory Board).

The economic environment

This section provides important additional information and explains recent changes in the economic environment compared to those described in the 2023 combined management report (2023 Annual Report), focusing on macroeconomic developments, the overall economic outlook including the currently prevailing economic risks, and the regulatory environment in the first quarter of 2024.

Macroeconomic development

The global economic outlook brightened somewhat in the first quarter of 2024. Global growth was surprisingly robust over the last year. Lower energy prices and declining pressure on supply chains contributed to inflation falling faster than expected. However, a strong global upswing is still not in sight.

In its April 2024 forecast, the International Monetary Fund (IMF) expects global economic output to grow by 3.2 % in the current year, after also growing by 3.2 % in the prior year. The IMF also forecasts growth this year in the economic output of the national economies in our core markets in North America and Europe: of 2.7 % in the United States, 0.8 % in the eurozone, and 0.2 % in Germany.

According to the Bitkom-ifo-Digitalindex, the digital sector was looking more optimistic at the end of the first quarter of 2024: both the assessment of the current business situation and the business expectations in March were up against the level in the prior month - this marked the first month-on-month rise since July 2023. The digital sector was much more optimistic than the economy as a whole.

Overall economic outlook

The declining rate of inflation and anticipated benchmark interest rate reductions should lead to a moderate economic recovery in the current year. Nevertheless, significant downside risks continue to weigh on the economic outlook - in particular, the current geopolitical crises carry with them high risks for economic growth and inflation.

Regulation

European Commission published white paper. On February 21, 2024, the European Commission published a white paper entitled "How to master Europeʼs digital infrastructure needs?" This white paper compiles proposals for measures by the European Union in preparation for a planned Digital Networks Act. To this end, the general public is invited to express views in an open consultation process that will run until June 30, 2024. Legislative initiatives based on the white paper and the responses to the public consultation are expected from 2025.

The white paper identifies future action areas as the build-out of digital networks of the future, managing the transition to new technologies and business models, covering the future need for connectivity, and the safeguarding of economic competitiveness and of secure, resilient infrastructure in the EU. As a result, a far-reaching revision of the current regulatory framework is expected.

Bundesnetzagentur's regulatory procedures based on the decision on access regulation including FTTB/H network access. On April 10, 2024, the Bundesnetzagentur published a draft consultation for the charges for access to civil engineering infrastructure regulated under the access regulation. The Bundesnetzagentur is expected to make a final decision on charges in summer 2024. The parallel Bundesnetzagentur regulatory procedure concerning the related reference offer has not yet been decided.

Awarding of spectrum

In the first quarter of 2024, spectrum in the 26 GHz band and residual spectrum in the 3.4 to 3.8 GHz band were auctioned off in Austria. In the 26 GHz band, T-Mobile Austria secured 400 MHz of nationwide spectrum for itself, and in the 3.4 to 3.8 GHz band, 40 MHz in Vienna and 60 MHz in Carinthia, for EUR 10.5 million in total. In the United States, the spectrum in the 2.5 GHz band acquired in Auction 108 in September 2022 for around USD 0.3 billion (EUR 0.3 billion) was allocated in the first quarter of 2024. The majority of this spectrum was connected immediately.

In Poland, the award procedure for the 700 MHz band and, if applicable, for spectrum in the 26 GHz band could also potentially begin in 2024. In Slovakia meanwhile, the procedure (auction) to re-award spectrum in the 900 MHz and 2,100 MHz bands originally announced for the end of 2023 is at stake following calls by several parties to re-examine the auction conditions. In the Czech Republic, the procedure to extend the 900/1,800 MHz GSM license, which expires in 2024, got underway. In Germany, the regulatory authority Bundesnetzagentur is consulting on a draft decision concerning the extension of usage rights for the 800 MHz, 1,800 MHz, and 2,600 MHz mobile frequencies, which expire at the end of 2025, by five years. The extension is to replace the originally planned auction to award these frequencies. In return, the draft stipulates further coverage obligations for the existing frequency owners as well as the obligation to allow network provider 1&1 to co-use frequencies below the 1 GHz band. The consultation on the draft will continue until July 8, 2024; the regulatory authority's final decision is expected in the second half of 2024.

The following table provides an overview of the main ongoing and planned spectrum awards and auctions as well as license extensions. It also indicates spectrum to be awarded in the near future in various countries.

Main spectrum awards

• Tender procedure (beauty contest auction) offering a competitive selection process for assigning scarce frequencies.

• Currently, the terms and conditions of the auction are being reviewed and as a result postponement is under discussion.

Agreements on spectrum licenses

On August 8, 2022, T-Mobile US entered into agreements with Channel 51 License and LB License for the acquisition of spectrum licenses in the 600 MHz band in exchange for a total cash consideration of USD 3.5 billion (EUR 3.2 billion). On March 30, 2023, the contractual parties further agreed that the transaction be divided into two separate tranches. The transfer of the licenses in accordance with the agreements is subject to regulatory approvals and certain other customary closing conditions. The Federal Communications Commission (FCC) approved the first tranche of the license transfer on December 29, 2023. T-Mobile US expects the first tranche to be concluded in the second quarter of 2024 with payment of the corresponding purchase price in the third quarter of 2024, and the second tranche to be concluded in late 2024/early 2025.

On July 1, 2020, T-Mobile US and DISH Network Corporation (DISH) reached an agreement on the sale of spectrum licenses, under which DISH agreed to purchase certain 800 MHz spectrum licenses from T-Mobile US for USD 3.6 billion (EUR 3.3 billion). On October 15, 2023, T-Mobile US and DISH modified the agreement to include, among other changes, a non- refundable extension fee of USD 0.1 billion (EUR 0.1 billion) which DISH will pay to T-Mobile US, as well as the requirement that the purchase of the spectrum licenses must be finalized by April 1, 2024. DISH did not exercise its purchase option by April 1, 2024. The extension fee already paid on October 25, 2023 will be retained in accordance with the agreement. T-Mobile US is now obligated to put the licenses up for sale at auction and has initiated the corresponding auction process. Should bidding not reach the defined minimum purchase price of USD 3.6 billion, T-Mobile US would be released from its obligation to sell the licenses.

Development of business in the Group

This section provides important additional information and explains recent changes in the significant events and their effects on the development of business in the Group compared to those described in the 2023 combined management report (2023 Annual Report).

For further information on significant events in the 2023 financial year, please refer to the sections "Group organization," "Management of the Group," and "Development of business in the Group" in the 2023 combined management report (2023 Annual Report).