Quarterly Report • Aug 6, 2018
Quarterly Report
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for the period 1 January to 30 June 2018
pp. 4–15
| 1 January to 30 June | |||
|---|---|---|---|
| (Euros in millions) | 2018 | 2017 | % Change |
| Revenues | 3,525 | 3,542 | (0.5) |
| Revenues (excl. regulatory effects 2018) | 3,551 | 3,542 | 0.3 |
| Mobile service revenues | 2,598 | 2,610 | (0.5) |
| Mobile service revenues (excl. regulatory effects 2018) | 2,624 | 2,610 | 0.5 |
| Operating income before depreciation and amortisation (OIBDA) adjusted for exceptional effects 1(excl. regulatory effects 2018) |
927 | 873 | 6.1 |
| OIBDA adjusted for exceptional effects (excl. regulatory effects 2018) | 26.1% | 24.6% | 1.4%-p. |
| Operating income before depreciation and amortisation (OIBDA), adjusted for exceptional effects1 | 895 | 873 | 2.6 |
| OIBDA margin adjusted for exceptional effects | 25.4% | 24.6% | 0.8%-p. |
| Operating Income before depreciation and amortisation (OIBDA) | 863 | 841 | 2.6 |
| OIBDA margin | 24.5% | 23.8% | 0.7%-p. |
| Operating income | (74) | (123) | (39.5) |
| Profit/(loss) for the period | (93) | (139) | (33.0) |
| Basic earnings per share (in EUR)2 | (0.03) | (0.05) | (33.0) |
| CapEx | (424) | (434) | (2.3) |
| Investment ratio (CapEx/Sales ratio) | 12.0% | 12.3% | (0.2% p.) |
| Operating cash flow (OIBDA-CapEx) | 439 | 407 | 7.8 |
| Free cash flow pre dividends and payments for spectrum3 | 84 | 68 | 23.4 |
| Total accesses as of 30 June (in thousands) | 47,180 | 49,907 | (5.5) |
| Mobile accesses (in thousands) | 42,962 | 45,194 | (4.9) |
| thereof M2M accesses (in thousands) | 1,103 | 897 | 23.0 |
| Mobile accesses (in thousands) according to calculation customary to the market4 | 45,201 | 48,388 | (6.6) |
| Net adds in mobile prepaid business (in thousands) | (683) | 505 | (235.4) |
| Net adds in mobile postpaid business (in thousands) | 490 | 368 | 33.1 |
| Postpaid share (%) | 50.7% | 46.3% | 4.4%-p. |
| Total ARPU (in EUR) | 9.90 | 9.65 | 2.55 |
| Postpaid churn excl. M2M (%) | 1.6% | 1.6% | 0.0%-p. |
| Non-SMS data over total data revenues (%) | 84.6% | 80.6% | 3.9%-p. |
| As of 30 June 2018 |
As of 31 December 2017 |
% Change | |
|---|---|---|---|
| Net financial debt5 | 1,797 | 1,064 | 68.9 |
| Debt ratio6 | 1.0x | 0.6x | 66.7 |
| Number of employees | 9,033 | 9,281 | (2.7) |
(1) Exceptional effects as of 30 June 2018 include restructuring expenses of EUR 32 million. Exceptional effects as of 30 June 2017 include restructuring expenses of EUR 30 million as well as acquisition-related consultancy costs amounting to EUR 2 million.
(2) Basic earnings per share are calculated by dividing profit / (loss) after taxes for the period by the weighted average number of ordinary shares of 2,975 million for the years 2018 and 2017.
(3) Free cash flow pre dividends and payments for spectrum is defined as the sum of cash flows from operating activities and cash flows from investing activities and does not contain payments made for investments in spectrum and also excludes related interest payments.
(4) Starting in the 2017 financial year, Telefónica Deutschland Group introduced an additional method of counting the number of mobile accesses. This method takes market practices into account, among other things, when determining the time frame for inactive customers.
(5) Net financial debt includes current and non-current interest-bearing financial assets and interest-bearing financial liabilities as well as cash and cash equivalents.
(6) The debt ratio is defined as net financial debt divided by the OIBDA for the last twelve months adjusted for exceptional effects.
Below is a presentation of the most important additions and new decisions to the disclosures made in the section "Regulatory Influences on the Telefónica Deutschland Group" in the combined Management Report for the financial year ending 31 December 2017.
BNetzA is continuing the process to provide new frequencies for the further development of digital infrastructures
BNetzA published the decisions I and II of the Presidents' Chamber on 14 May 2018. They stipulate that the frequencies identified for nationwide provision are to be allocated by auction.
The frequencies at 2.0 GHz expiring at the end of 2020 and the end of 2025 will be allocated jointly. The same applies to the frequencies at 3.4—3.7 GHz. Telefónica brought an action against the decision in due time. The terms of use and the auction design are subject to the so-called Presidents' Chamber decisions III and IV, which are expected in autumn 2018.
A total of 100 MHz at 3.8 GHz is excluded from the auction and is to be allocated in a application procedure for regional use.
| 1 January to 30 June | |||
|---|---|---|---|
| 2018 | 2017 | Change | % Change |
| 3,525 | 3,542 | (17) | (0.5) |
| 68 | 59 | 9 | 15.1 |
| (2,730) | (2,760) | 30 | (1.1) |
| (1,125) | (1,132) | 7 | (0.6) |
| (303) | (313) | 9 | (3.0) |
| (39) | (37) | (3) | 7.1 |
| (1,262) | (1,278) | 16 | (1.3) |
| 863 | 841 | 22 | 2.6 |
| 24.5% | 23.8% | 0.7%-p. | |
| (937) | (964) | 27 | (2.8) |
| (74) | (123) | 48 | (39.5) |
| (19) | (16) | (2) | 14.7 |
| (93) | (139) | 46 | (33.1) |
| (0) | 0 | (0) | (456.9) |
| (93) | (139) | 46 | (33.0) |
(1)The rules of IAS 39 were applicable to the comparison period.
| 1 January to 30 June | |||||
|---|---|---|---|---|---|
| (Euros in millions) | 2018 | 2017 | Change | % Change | |
| Mobile business | 3,127 | 3,092 | 34 | 1.1 | |
| Mobile service revenues | 2,598 | 2,610 | (12) | (0.5) | |
| Handset revenues | 529 | 482 | 47 | 9.7 | |
| Fixed business | 391 | 440 | (49) | (11.2) | |
| Other revenues | 7 | 9 | (2) | (20.3) | |
| Revenues | 3,525 | 3,542 | (17) | (0.5) | |
The revenue decrease in the first half of 2018 reflects lower revenues from fixed line/DSL, which was caused by the decline in the DSL customer base and the planned complete decommissioning of the ULL infrastructure in wholesale business. In addition, compared to the same period in the previous
year, mobile service revenues declined caused by the impact of changes mainly related to the EU roaming legislation (>ANNUAL REPORT 2017, REGULATORY INFLUENCES ON THE TELEFO´NICA DEUTSCHLAND GROUP). In contrast, revenues from handsets increased due to the continuing demand for handsets. Excluding the regulatory effects of EUR 26 million, revenues were slightly above the level of the previous year.
G 01 / Revenues (in % and Euros in billions)
The decline in a still challenging German market characterised by intense competition was influenced by regulatory effects, counteracting effects from the continuing OTT trends, and the ongoing legacy base rotation. Excluding the regulatory effects mainly from changes in the EU roaming legislation, mobile service revenues were even above the level of the previous year. The Telefónica Deutschland Group operates still in a dynamic competitive environment, where the abovementioned revenue effects continued to dampen the benefits from the successful marketing of the O2 Free portfolio to new and existing customers. Customer growth continued particularly in our partner brands where the availability of 4G offers in this market segment were essential. Accordingly our postpaid mobile customer base increased in the first half of 2018 by 490 thousand net additions to 21.8 million (increase in the first half of 2017: 368 thousand), which led to an increase of the postpaid share of total mobile customers by 4.4 percentage points to 50.7% year-on-year. Despite a low price level in our partner business and the influence of regulatory effects, the average revenue per user (ARPU) could be increased to EUR 9.90 in comparison to the previous year (first half of 2017: EUR 9.65). Moreover, the increase in LTE network coverage is progressing continuously. Demand for data services (e.g. mobile internet, service applications and other data content) remained on the rise, boosted by the growing number of LTE-enabled mobile phones combined with the increased usage of mobile audio and video applications. We achieved a monetisation of the mobile data business with our O2 Free portfolio and our focus on larger data packages in the market. The percentage share of non-SMS data revenues in data revenues rose by 4.0 percentage points year-on-year to 84.6%.
Increased revenues from handsets are subject to general fluctuation, as they depend on the launch of new mobile devices. Due to improved demand for handsets in the first half of 2018, sales figures for devices – also to mobile service partners – increased year-on-year.
The overall decline in the customer base and fixed network revenues from wholesale business accelerated further mainly due to the planned complete decommissioning of the ULL infrastructure in wholesale business. Compared with the previous year, fixed retail revenues again benefited from the rising demand for VDSL despite a slight decline in net additions and contributed to a slowdown in the decline in revenues.
Operating expenses decreased year-on-year due to integrationrelated savings and a market strategy focusing on value over volume. Operating expenses in the first half of 2018 include restructuring costs of EUR 32 million, mainly related to network consolidation.
Personnel expenses
The supplies in the first half of 2018 were lower than in the same period last year. Hardware cost of sales was higher year-on-year in line with the demand for handsets, while connectivity-related cost of sales were lower as higher wholesale costs for outbound roaming were more than offset by lower voice termination costs.
Personnel expenses were mainly influenced by the completion of the employee restructuring programme in the reporting period. Restructuring expenses amounted to EUR 1 million in the first half of 2018 compared to EUR 13 million in the first half of 2017.
The savings from integration initiatives were partially reduced by higher commercial investments into positioning and marketing of the O2 Free portfolio in a competitive market environment. In the first half of 2018, other expenses included restructuring costs of EUR 31 million (first half of 2017: EUR 17 million).
synergies, investments in the market and regulatory effects Operating income before depreciation and amortisation (OIBDA) and OIBDA adjusted for exceptional effects increased year-on-year. Additional cost and revenue-related synergy effects contributed approximately EUR 65 million. The exceptional effects amounted to EUR 32 million and were mainly related to the network consolidation. Negative regulatory effects amounted to EUR 31 million and were mainly due to higher wholesale costs in connection with European roaming legislation.
The decline is mainly due to an extension of the useful life of certain antenna locations in the year under review.
Despite the decline in revenue, operating income was positively influenced by savings linked to integration and by depreciation and amortisation reduced by 27 Mio. EUR compared to the previous year.
Table 5 shows the composition of net financial debt – i.e. the net amount of interest-bearing financial liabilities less any cash and cash equivalents and interest-bearing financial assets and receivables.
Financial debt as of 30 June 2018 increased compared with 31 December 2017 by EUR 733 million to EUR 1,797 million, resulting in a net debt ratio1 of 1.0x, which continues to be in line with the target debt.
The increase in net financial debt in the first half of 2018 was primarily influenced by the dividend pay-out for the financial year 2017 (EUR 773 million). This was offset by the free cash flow before dividend and spectrum payments of EUR 84 million.
The graphic below illustrates the performance of net financial debt in the first half of 2018.
1 The debt ratio is defined as net financial debt divided by the OIBDA for the last twelve months adjusted for exceptional effects (30 June 2018: EUR 1,863 million; 31 December 2017: EUR 1,840 million).
* Free cash flow before dividend and spectrum payments ** Excluding additions from captalised finance leases
| As of | |||
|---|---|---|---|
| As of 30 June | 31 December | ||
| 2018 | 2017 | Change | % Change |
| 321 | 587 | (266) | (45.4) |
| 164 | 177 | (13) | (7.1) |
| 896 | 635 | 261 | 41.1 |
| 411 | (129) | 539 | (419.4) |
| 65 | 75 | (10) | (13.8) |
| 1,451 | 1,268 | 183 | 14.4 |
| 1,386 | 1,193 | 193 | 16.2 |
| 1,797 | 1,064 | 733 | 68.9 |
(1)Current and non-current financial assets include handset receivables not yet due, the positive performance of the fair value hedge for fixed interest financial debt and loans issued to third parties.
(2)Current and non-current financial debt includes issued bonds, promissory notes and registered bonds, other loans and lease liabilities.
(3)Net financial debt includes current and non-current interest-bearing financial assets and interest-bearing financial liabilities as well as cash and cash equivalents.
Handset receivables are shown under trade receivables in the Consolidated Statement of Financial Position.
| 1 January to 30 June | |
|---|---|
| 2018 | 2017 |
| 587 | 613 |
| 588 | 718 |
| (504) | (650) |
| (350) | (8) |
| (266) | 60 |
| 321 | 673 |
The following is an analysis of the cash flow development of the Telefónica Deutschland Group in the first six months of the financial years 2018 and 2017.
The cash flow from operating activities in the first half of 2018 amounted to EUR 588 million and was EUR 130 million or 18.1 % below the previous year's value (first half of 2017: EUR 718 million). This development is primarily due to the change in working capital, which amounted to EUR -256 million in the reporting period and to EUR -107 million in the first half of 2017.
The cash flow from investing activities in the first half of 2018 amounted to EUR -504 million (first half of 2017: EUR -650 million).
Cash outflows of EUR 510 million were EUR 154 million below those of the previous year. This was mainly due to the reduction in payments for investments in property, plant and equipment and intangible assets.
Cash inflows remained almost at the previous year's level.
The cash flow from financing activities in the first half of 2018 amounted to -EUR 350 million (first half of 2017: EUR -8 million). Cash outflows increased by EUR 1,072 million to EUR 1,930 million and include essentially repayments for the loan from Telfisa Global B.V of EUR 1,130 million, finance lease payments of EUR 19 million, as well as dividend payments of EUR 773 million. In comparison, EUR 100 million of the syndicated loan facility was repaid and a dividend payment of EUR 744 million was made in the first half of 2017. Furthermore, EUR 15 million in finance leases were repaid in the first half of 2017.
Cash inflows from the assumption of interest-bearing debt increased by EUR 730 million to 1.580 Mio. EUR compared with the previous year and were due to the short-term utilisation of the loan facility with Telfisa Global B.V. in the amount
of EUR 1,330 million and the promissory notes in the amount of EUR 250 million. In comparison, in the first half of 2017, EUR 650 million of the syndicated loan facility were used and EUR 200 million from the financing agreement with the EIB.
Based on the above-mentioned cash inflows/(outflows), cash and cash equivalents decreased by EUR 266 million compared to the previous year's reporting date and on 30 June 2018 amounted to EUR 321 million (31 December 2017: EUR 587 million).
| 1 January to 30 June | |||
|---|---|---|---|
| 2018 | 2017 | Change | % Change |
| 863 | 841 | 22 | 2.6 |
| (420) | (433) | 13 | (3.0) |
| 443 | 409 | 36 | 8.9 |
| (343) | (326) | (17) | 5.2 |
| (0) | (1) | 1 | (63.5) |
| – | 1 | (1) | (100.0) |
| (19) | (15) | (4) | 26.9 |
| 3 | 9 | (6) | (65.9) |
| (0) | (9) | 9 | (95.3) |
| 84 | 68 | 16 | 23.4 |
| (773) | (744) | (30) | 4.0 |
| (689) | (675) | (14) | 2.0 |
(1) Excluding capitalised finance leases. As of the second quarter of 2018, the definition of additions from finance leases was adjusted, which led to a cumulative reduction by EUR 11 million. (2) Free cash flow pre dividends and payments for spectrum is defined as the sum of cash flow from operating activities and cash flow from investing activities and does not contain payments made for investments in spectrum and excluding related interest payments.
In the following analysis of the asset and capital structure, the assets and liabilities existing as of 30 June 2018 are compared with the values as of 31 December 2017.
| As of 30 June | As of 31 December | |||
|---|---|---|---|---|
| (Euros in millions) | 2018 | 2017 | Change | % Change |
| Goodwill and other intangible assets | 7,072 | 7,445 | (373) | (5.0) |
| Property, plant and equipment | 3,904 | 4,041 | (137) | (3.4) |
| Trade and other receivables | 1,219 | 1,334 | (115) | (8.6) |
| Deferred tax assets | 129 | 162 | (33) | (20.3) |
| Other financial assets | 114 | 111 | 3 | 2.6 |
| Other non-financial assets | 794 | 315 | 479 | 152.0 |
| Inventories | 123 | 105 | 18 | 17.5 |
| Cash and cash equivalents | 321 | 587 | (266) | (45.4) |
| Total assets = Total equity and liabilities | 13,676 | 14,100 | (424) | (3.0) |
| Interest-bearing debt | 2,349 | 1,905 | 444 | 23.3 |
| Provisions | 705 | 741 | (36) | (4.9) |
| Trade and other payables | 2,037 | 2,242 | (205) | (9.2) |
| Other non-financial liabilities | 56 | 132 | (76) | (57.4) |
| Deferred income | 720 | 782 | (62) | (7.9) |
| Deferred tax liabilities | 102 | 1 | 101 | 13,153.0 |
| Equity | 7,707 | 8,297 | (590) | (7.1) |
The year-on-year decline was mainly due to the scheduled amortisation of intangible assets with a limited useful life amounting to EUR 505 million in the first six months of the financial year 2018. This was partially offset by the additions to intangible assets of EUR 132 million. These were related primarily to investments in software.
The decrease in property, plant and equipment is mainly due to the scheduled depreciation of EUR 433 million.
This decrease was offset by additions of EUR 292 million in the first six months of the financial year 2018, which primarily related to investments in network integration, an accelerated network expansion, including an increased LTE coverage, more IP technology, as well as an increase of mobile data services with even faster download speeds.
Investment ratio (CapEx/sales ratio) almost unchanged The investments (CapEx) amounted to EUR 424 million in the first half of 2018 compared to EUR 434 million in the
comparative period 2017.
In view of this development, the investment ratio also remained almost stable in the reporting period at 12.0 % (first half of 2017: 12.3 %).
Telefo´nica Deutschland Group primarily continued to invest in network integration as well as in the expansion of the LTE network.
The decrease was essentially a result of the settlement of higher receivables from voucher sales at year-end and from the firsttime application of IFRS 15 at the beginning of the financial year.
The development results from the first-time application of IFRS 15 as of 1 January 2018.
The increase of EUR 447 million was the result of the first-time application of IFRS 15 and of prepayments primarily made for rental of antenna locations and lines amounting to EUR 112 million. This was offset by the decline in tax receivables amounting to EUR 78 million.
The reason for this rise was the increase in inventories for sales activities for new devices on the market.
The decline of EUR -266 million and -45.4 % is due to multiple effects, which are described in the chapter >FINANCIAL POSITION.
This increase resulted in particular from the issue of promissory notes and registered bonds in the amount of EUR 250 million and the net increase in the loan with Telfisa Global B.V. in the amount of EUR 200 million.
The change is mainly due to the decrease of EUR 24 million in restructuring obligations due to consumption. Furthermore, asset retirement obligations decreased by EUR 29 million, mainly due to utilisation. The development of pension and other provisions had the opposite effect.
This development is mainly due to a EUR 183 million decrease in operating liabilities and the decrease in liabilities for investments of EUR 98 million.
This development is mainly due to the decrease in tax liabilities in the amount of EUR 78 million.
The decrease resulted from the utilisation of voucher sales of EUR 24 million made at the end of the year and once again from lower deferred income for activation fees compared to year's end.
The development results from the first-time application of IFRS 15 as of 1 January 2018.
The change in equity is due primarily to the dividend payment of EUR 773 million on 23 May 2018, the effects recognised in equity in connection with the first-time application of IFRS 15 and IFRS 9 in the amount of EUR 274 million as well as the result of the period in the amount of EUR -93 million.
In the combined Management Report for the 2017 financial year, we have presented certain risks that could have significant adverse effects on our business, net assets, financial position, results of operations and reputation. In addition, we describe our most important opportunities and the structure of our risk management system.
In the period under review, we identified potential damages from cyber attacks as a new risk, which we describe in more detail below. Otherwise, we have not identified any other significant risks and opportunities beyond those described in the combined Management Report for the 2017 financial year. There have also been no further changes in the valuation or probability of occurrence since the 2017 financial year.
Cyber attacks on our network or our IT systems that are not detected or averted in good time could lead to disruptions or damage that could also affect our services and thus result in lost revenue and customer dissatisfaction. The availability and confidentiality of data that we process may be impacted by these attacks. In addition to reputational losses, legal consequences would also be possible and we could be fined. We counter this risk on the one hand by analysing and reducing weaknesses and focusing on an early warning system, and on the other hand we are constantly improving our systems for rectifying faults and establishing increased risk awareness among our employees with regard to cyber attacks.
So far, we have reported damage from cyber attacks as part of the risk of technical disruption. However, due to the increasing danger, we now see a risk here that has to be reported independently. Due to a very high potential economic impact of the damage and the very possible likelihood of occurrence, we classify this risk as significant.
No information is currently available that the forecasts published in the combined Management Report 2017 (>Annual Report 2017, Report on Expected Developments) have changed significantly. The financial
outlook for 2018 is confirmed, including Opex and sales synergies of approximately EUR 80 million and a further EUR 50 million in Capex synergies.
The following table summarises the financial outlook for 2018:
| Actual 2017 (EUR in million) |
Outlook 2018 (Developments y-o-y) |
H1 / 2018 (Developments y-o-y) |
|
|---|---|---|---|
| Revenue | Broadly stable y-o-y (excl. negative regulatory effects of |
||
| 7,296 | EUR 30-50 million) | -0.0% | |
| Operating income before depreciation and amortisation (OIBDA), adjusted for exceptional effects | 1,840 | Flat to slightly positive y-o-y (excl. negative regulatory effects of EUR 40-60 million) |
+4.1% |
| Investment ratio | 13% | Approx. 12-13% | 12.0% |
Munich, 6 August 2018
Telefónica Deutschland Holding AG
Management Board
Valentina Daiber Guido Eidmann
Nicole Gerhardt Alfons Lösing
Cayetano Carbajo Martín Wolfgang Metze
Markus Haas Markus Rolle
for the period 1 January to 30 June 2018
| Assets (Euros in millions) | Notes | As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|---|---|
| A) Non-current assets | 11,490 | 11,940 | ||
| Goodwill | 1,960 | 1,960 | ||
| Other intangible assets | [5a] | 5,113 | 5,485 | |
| Property, plant and equipment | [5b] | 3,904 | 4,041 | |
| Trade and other receivables | [5c] | 59 | 69 | |
| Other financial assets | 102 | 94 | ||
| Other non-financial assets | [5d] | 223 | 129 | |
| Deferred tax assets | 129 | 162 | ||
| B) Current assets | 2,186 | 2,160 | ||
| Inventories | 123 | 105 | ||
| Trade and other receivables | [5c] | 1,159 | 1,265 | |
| Other financial assets | 12 | 17 | ||
| Other non-financial assets | [5d] | 571 | 186 | |
| Cash and cash equivalents | 321 | 587 | ||
| Total assets (A+B) | 13,676 | 14,100 |
| Equity and Liabilities (Euros in millions) | Notes | As of 30 June 2018 |
As of 31 December 2017 |
|---|---|---|---|
| A) Equity | 7,707 | 8,297 | |
| Subscribed capital | 2,975 | 2,975 | |
| Additional paid-in capital | 4,800 | 4,800 | |
| Retained earnings | (67) | 523 | |
| Total equity attributable to owners of the parent | 7,707 | 8,297 | |
| B) Non-current liabilities | 2,361 | 2,141 | |
| Interest-bearing debt | [5e] | 1,451 | 1,268 |
| Trade and other payables | [5f] | 20 | 19 |
| Provisions | [5g] | 563 | 599 |
| Deferred income | [5f] | 225 | 255 |
| Deferred tax liabilities | 102 | 1 | |
| C) Current liabilities | 3,608 | 3,662 | |
| Interest-bearing debt | [5e] | 898 | 637 |
| Trade and other payables | [5f] | 2,017 | 2,224 |
| Provisions | [5g] | 142 | 142 |
| Other non-financial liabilities | 56 | 132 | |
| Deferred income | [5f] | 495 | 527 |
| Total equity and liabilities (A+B+C) | 13,676 | 14,100 |
| 1 April to 30 June | 1 January to 30 June | ||||
|---|---|---|---|---|---|
| (Euros in millions) | Notes | 2018 | 2017 | 2018 | 2017 |
| Revenues | [6a] | 1,758 | 1,771 | 3,525 | 3,542 |
| Other income | 34 | 32 | 68 | 59 | |
| Supplies | (538) | (547) | (1,125) | (1,132) | |
| Personnel expenses | (151) | (157) | (303) | (313) | |
| Impairment losses in accordance with IFRS 91 | (18) | (18) | (39) | (37) | |
| Other expenses | [6b] | (614) | (629) | (1,262) | (1,278) |
| Operating income before depreciation and amortisation (OIBDA) | 469 | 452 | 863 | 841 | |
| Depreciation and amortisation | [6c] | (471) | (483) | (937) | (964) |
| Operating income | (1) | (31) | (74) | (123) | |
| Finance income | 1 | 1 | 1 | 2 | |
| Exchange gains | 0 | 0 | 0 | 1 | |
| Finance costs | (10) | (10) | (20) | (19) | |
| Exchange losses | (1) | 0 | (1) | (0) | |
| Financial result | (10) | (9) | (19) | (16) | |
| Profit/(loss) before tax | (12) | (40) | (93) | (139) | |
| Income tax | (0) | 0 | (0) | 0 | |
| Profit/(loss) for the period | (12) | (40) | (93) | (139) | |
| Profit/(loss) for the period attributable to owners of the parent | (12) | (40) | (93) | (139) | |
| Profit/(loss) for the period | (12) | (40) | (93) | (139) | |
| Earnings per share | |||||
| Basic earnings per share in EUR | (0.00) | (0.01) | (0.03) | (0.05) | |
| Diluted earnings per share in EUR | (0.00) | (0.01) | (0.03) | (0.05) |
1 The rules of IAS 39 were applicable to the comparison period.
| 1 April to 30 June | 1 January to 30 June | |||
|---|---|---|---|---|
| (Euros in millions) | 2018 | 2017 | 2018 | 2017 |
| Profit/(loss) for the period | (12) | (40) | (93) | (139) |
| Items that will not be reclassified to profit/(loss) | ||||
| Remeasurement of defined benefit plans | 2 | 5 | 2 | 15 |
| Other comprehensive income/(loss) | 2 | 5 | 2 | 15 |
| Total comprehensive income/(loss) | (10) | (35) | (91) | (124) |
| Total comprehensive income/(loss) attributable to owners of the parent | (10) | (35) | (91) | (124) |
| Total comprehensive income/(loss) | (10) | (35) | (91) | (124) |
| (Euros in millions) | Subscribed capital |
Additional paid-in capital |
Retained earnings |
Equity attributable to owners of the parent |
Equity |
|---|---|---|---|---|---|
| Financial position as of 1 January 2017 | 2,975 | 4,800 | 1,634 | 9,408 | 9,408 |
| Profit/(loss) for the period | – | – | (139) | (139) | (139) |
| Other comprehensive income/(loss) | – | – | 15 | 15 | 15 |
| Total comprehensive income/(loss) | – | – | (124) | (124) | (124) |
| Dividends | – | – | (744) | (744) | (744) |
| Other movements | – | – | 1 | 1 | 1 |
| Financial position as of 30 June 2017 | 2,975 | 4,800 | 768 | 8,542 | 8,542 |
| Financial position as of 1 January 2018 | 2,975 | 4,800 | 523 | 8,297 | 8,297 |
| Adjustment due to first-time application of IFRS 9 and IFRS 15 (after taxes) | – | – | 274 | 274 | 274 |
| Financial position as of 1 January 2018, adjusted | 2,975 | 4,800 | 797 | 8,571 | 8,571 |
| Profit/(loss) for the period | – | – | (93) | (93) | (93) |
| Other comprehensive income/(loss) | – | – | 2 | 2 | 2 |
| Total comprehensive income/(loss) | – | – | (91) | (91) | (91) |
| Dividends | – | – | (773) | (773) | (773) |
| Other movements | – | – | 0 | 0 | 0 |
| Financial position as of 30 June 2018 | 2,975 | 4,800 | (67) | 7,707 | 7,707 |
| 1 January to 30 June | |||
|---|---|---|---|
| (Euros in millions) | Notes | 2018 | 2017 |
| Cash flow from operating activities | |||
| Profit/(loss) for the period | (93) | (139) | |
| Adjustments to profit/(loss) | |||
| Financial result | 19 | 16 | |
| Gains/(losses) from the disposal of assets | (0) | (1) | |
| Income taxes | 0 | (0) | |
| Depreciation and amortisation | [6c] | 937 | 964 |
| Change in working capital and others | |||
| Other non-current assets | [5a], [5b], [5c], [5d] | 16 | 2 |
| Other current assets | [5a], [5b], [5c], [5d] | 29 | 71 |
| Other non-current liabilities and provisions | [5e], [5f], [5g] | (71) | (25) |
| Other current liabilities and provisions | [5e], [5f], [5g] | (230) | (155) |
| Others | |||
| Interest received | 3 | 5 | |
| Interest paid | (22) | (20) | |
| Cash flow from operating activities | 588 | 718 | |
| Cash flow from investing activities | |||
| Proceeds from disposals of property, plant and equipment and intangible assets | 0 | 1 | |
| Payments on investments in property, plant and equipment and intangible assets | [5a], [5b] | (507) | (652) |
| Acquisition of companies, net of cash acquired | (0) | (9) | |
| Proceeds from financial assets | 5 | 12 | |
| Payments for financial assets | (2) | (3) | |
| Cash flow from investing activities | (504) | (650) | |
| Cash flow from financing activities | |||
| Proceeds from interest-bearing debt | [5e] | 1,580 | 850 |
| Payments made for the repayment of interest-bearing debt | [5e] | (1,149) | (115) |
| Dividends paid | (773) | (744) | |
| Other payments made relating to financing activities | (8) | – | |
| Cash flow from financing activities | (350) | (8) | |
| Net increase/(decrease) in cash and cash equivalents | (266) | 60 | |
| Cash and cash equivalents at the beginning of the period | 587 | 613 | |
| Cash and cash equivalents at the end of the period | 321 | 673 |
The Interim Condensed Consolidated Financial Statements (hereinafter "Interim Consolidated Financial Statements") of Telefónica Deutschland Holding AG have been prepared for the period from 1 January to 30 June 2018 and comprise Telefónica Deutschland Holding AG (also referred to as "Telefónica Deutschland") and its subsidiaries as well as joint operations (together referred to as "Telefónica Deutschland Group" or "Group").
Telefónica Deutschland Holding AG is a stock corporation (AG) under German law.
The company is listed on the regulated market of the Frankfurt Stock Exchange. The German Securities Identification Number (WKN) is A1J5RX, the International Securities Identification Number (ISIN) is DE000A1J5RX9.
As of 30 June 2018 24.5% of the shares were in free float. 69.2% were held by Telefónica Germany Holdings Limited, Slough, United Kingdom (Telefónica Germany Holdings Limited), an indirect wholly owned subsidiary of Telefónica, S.A., Madrid, Spain (Telefónica, S.A.). According to a press release for Koninklijke KPN N.V. dated 26 July 2018, the remaining 6.3% were held by Koninklijke KPN N.V., The Hague, Netherlands (KPN).
As of 30 June 2018, the companies included in the Interim Consolidated Financial Statements of the Telefónica Deutschland Group were organised as shown in the following organisation chart:
Unless stated otherwise, the ownership interests amount to 100%.
On 21 February Telefónica Germany GmbH & Co. OHG placed promissory notes and a registered bond totalling over EUR 250 million. For further information, see Note 5 e) Interestbearing debt.
The Annual General Meeting for the 2017 financial year was held on 17 May 2018. In addition to the presentation of the Annual Financial Statements and Consolidated Financial Statements of Telefónica Deutschland, a dividend payment of EUR 0.26 per entitled share, totalling EUR 773,384,298.18, was approved. The dividend for the financial year 2017 was paid to shareholders on 23 May 2018. Furthermore, the election of Julio Estebán Linares López as shareholder representative on the company's Supervisory Board and the capital increase from company funds, an equivalent subsequent ordinary capital decrease, the reduction of the Conditional Capital 2014/I and associated amendments to the Articles of Association were resolved. The capital measure was implemented in order to enable efficient equity capital management in line with capital market requirements and to provide the conditions for a flexible dividend policy. As a result, the tied capital reserve of EUR 4,535,097,828.00 was converted into a free capital reserve (section 272 (2) no. 4 of the HGB (German Commercial Code)). The capital measure was entered in the commercial register on 4 June 2018.
Eva Castillo Sanz resigned from her position as chairperson of the Supervisory Board with effect from 25 April 2018 and as a member of the Supervisory Board of Telefónica Deutschland with effect from 25 May 2018.
With effect from 3 May 2018, the Supervisory Board of Telefónica Deutschland elected Laura Abasolo García de Baquedano as the new chairperson of the Supervisory Board.
The election of the employee representatives to the company's Supervisory Board took place on 26 April 2018. With effect from the end of the Annual General Meeting on 17 May 2018, Sandra Hofmann replaced Christoph Heil on the Supervisory Board as representative of the trade unions, Martin Butz succeeded Marcus Thurand as representative of the senior executives. The other members were re-elected for a further term of office.
By court order of 7 June 2018, María García-Legaz Ponce was appointed to the Supervisory Board as shareholder representative.
The Interim Consolidated Financial Statements of Telefónica Deutschland Holding AG were prepared in accordance with the IFRS applicable to interim financial reporting as issued by the IASB and as adopted by the EU. Accordingly, the Interim Consolidated Financial Statements do not include all the information and disclosures required in complete consolidated financial statements and should therefore be read in conjunction with the Consolidated Financial Statements for the year ended 31 December 2017 (see Note 2, Basis of preparation).
These Interim Consolidated Financial Statements as of 30 June 2018 have not been audited.
These Interim Consolidated Financial Statements are presented in euros, which is the functional currency of Telefónica Deutschland Holding AG and its subsidiaries.
Unless stated otherwise, the figures in these Interim Consolidated Financial Statements are presented in millions of euros (EUR million) and rounded according to established commercial principles. Therefore, recalculations may slightly differ from the totals shown in the tables.
The preparation of the Interim Consolidated Financial Statements requires the Management Board to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. A significant change in the facts and circumstances on which these evaluations, estimates and assumptions are based could have a material impact on the Telefónica Deutschland Group's net assets, financial position and results of operations.
For further information, please refer to the Consolidated Financial Statements of the financial year ended 31 December 2017 (see Note 3, Accounting Policies).
The Consolidated Statement of Financial Position presented in these Interim Consolidated Financial Statements relates to information as of 30 June 2018, which is compared with information as of 31 December 2017.
The Consolidated Income Statement and the Consolidated Statement of Comprehensive Income compare the completed six-month and three-month periods as of 30 June 2018 and 30 June 2017. The Consolidated Statement of Cash Flows and the Consolidated Statement of Changes in Equity compare the completed six-month periods 2018 and2017.
The earnings performance to date shows no indication that business activity is subject to significant fluctuations due to seasonal influences.
The significant estimates, assumptions and judgements made by the management in preparing the Interim Consolidated
Financial Statements of the Telefónica Deutschland Group do not in principle differ in terms of potential estimation uncertainty from the assumptions included in the Consolidated Financial Statements for the financial year ended 31 December 2017 (see Note 3, Accounting Policies).
At the time of publication of the Interim Consolidated Financial Statements, the following standards and interpretations were published, but their application was not yet mandatory.
| Standards, interpretations and amendments | Mandatory application for financial years beginning on or after |
|
|---|---|---|
| IFRS 16 | Leases | 1 January 2019 |
| IFRIC 23 | Uncertainty over Income Tax Treatment | 1 January 20191 |
| Amendments to IFRS 9 | Assessment Criteria for the Classification of Financial Assets | 1 January 2019 |
| Amendments to IAS 28 | Application of IFRS 9 in the Context of IAS 28 | 1 January 20191 |
| Amendments to IAS 19 | Plan Amendment, Curtailment or Settlement | 1 January 20191 |
| Annual Improvements to the IFRS 2015 – 2017 Cycle | Amendments to IFRS 3 and 11 as well as IAS 12 and 23 | 1 January 20191 |
| Framework | Amendments to References to the Conceptual Framework in IFRS Standards | 1 January 20201 |
| IFRS 17 | Insurance Contracts | 1 January 20211 |
| Amendments to IFRS 10 and IAS 28 | Sale or Contribution of Assets between an Investor and its Associate | undetermined1,2 |
1 Endorsement by EU still outstanding, information for first-time adoption under IASB.
2First-time adoption postponed indefinitely in accordance with IASB resolution of 17 December 2015.
For a comprehensive description of the new standards, amendments to standards and interpretations relevant to the Group, please refer to the disclosures in the Consolidated Financial Statements for the year ended 31 December 2017 (see Note 3, Accounting Policies). An assessment is made there of the expected effects on the net assets, financial position and results of operations of the Group, which will continue to apply to the Interim Consolidated Financial Statements as of 30 June 2018.
Since 1 January 2018, Telefónica Deutschland Group has applied IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments .
The following table presents the effects which arise from the first-time application of the two standards:
| (Euros in millions) | 31 December 2017 | Adjustment due to IFRS 15 |
Adjustment due to IFRS 9 |
1 January 2018 |
|---|---|---|---|---|
| Non-current assets | ||||
| Trade and other receivables | 69 | 1 | – | 70 |
| Other non-financial assets | 129 | 107 | – | 236 |
| Deferred tax assets | 162 | (33) | – | 129 |
| Current assets | ||||
| Trade and other receivables | 1,265 | (49) | (2) | 1,214 |
| Other non-financial assets | 186 | 329 | – | 515 |
| Equity | ||||
| Retained earnings | 523 | 276 | (2) | 797 |
| Non-current liabilities | ||||
| Deferred income | 255 | 2 | – | 257 |
| Deferred tax liabilities | 1 | 101 | – | 102 |
| Current liabilities | ||||
| Deferred income | 527 | (25) | – | 502 |
IFRS 15 anchors the rules from various standards and interpretations with a cross-industry approach into one unified standard. IFRS 15 has therefore superseded IAS 18 – Revenue and IAS 11 – Construction Contracts in particular. IFRS 15 defines a comprehensive framework to determine whether revenue is reported, the amount of the revenue and the time said revenue must be reported.
The core principle of IFRS 15 is that revenue should be recognised for the amount that is the expected equivalent value of the performance obligation. The new standard employs a five-step model framework for determining the amount and timing of revenue in order to implement this principle:
Furthermore, the standard contains some additional clarifications regarding detailed questions and no longer includes certain currently applied accounting rules. For example, for the allocation of the transaction price, it is no longer of importance whether the supply of goods or the provision of services take place in the future. Moreover, under certain conditions, IFRS 15 governs that the costs of obtaining contracts directly attributable to a contract, such as commissions, are capitalised and allocated over the underlying amortisation period. Due to the customary fixed-term contracts, the first-time application starting from 1 January 2018 required an analysis of the contracts concluded in previous financial years that were not yet completed as of 1 January 2018. The standard gives the user the choice between two methods for the time of the first-time application:
During the transition to IFRS 15, the Telefónica Deutschland Group decided to apply the modified retrospective method, according to which the accumulated adjustment must be recognised as of 1 January 2018. As a result, the Group did not apply
the requirements of IFRS 15 to the comparative period presented. The comparative period 2017 has been set up in line with the accounting policies presented in the Consolidated Financial Statements of the financial year ended 31 December 2017 (see Note 3, Accounting Policies).
In principle, the requirements of IFRS 15 should be applied to every individual contract. However, the standard also offers the possibility of applying the recognition requirements to a portfolio of contracts with similar characteristics if it is expected that the effects on the financial statements of applying the Standard to the portfolio would not differ materially from applying the Standard to the individual contracts. The Telefónica Deutschland Group analysed the existing contracts and aggregated them into portfolios. The Group applies the provisions of IFRS 15 at the level of these defined portfolios.
With the introduction of IFRS 15, it was necessary to adjust certain accounting processes. In particular, the requirements for the analysis of the customer contracts as part of the product creation process needed to be specified further in order to meet the requirements of IFRS 15. An IT tool was also introduced to calculate the adjustments within the scope of IFRS 15.
The effect of the first-time application of IFRS 15 is presented in the section IFRS 15 and IFRS 9 – Effects of first-time adoption.
The total adjustment of equity (after taxes) in the opening balance arising from the first-time application of IFRS 15 was EUR 276 million as of 1 January 2018.
The biggest effect of the adjustments resulted from the capitalisation of cost of obtaining contracts in other non-financial assets. For contracts which had not yet ended as of 31 December 2017, an amount of EUR 419 million was capitalised.
However, costs of obtaining a contract are not capitalised in the tax base relevant for the Group, but are recognised directly in the Income Statement. To ensure proper representation of this temporary difference, deferred taxes amounting to EUR 134 million were recognised as at the first-time application, which reduces equity accordingly. These were partially offset against existing deferred tax assets.
In addition to the two largest effects resulting from the capitalisation of costs of obtaining a contract and the deferred taxes formed thereon, the application of IFRS 15 also resulted in further effects on the consolidated balance sheet due to the differences in the recognition of contracts with customers. Trade and other receivables fell by EUR 48 million with an effect on equity. The other non-financial assets increased by EUR 17 million. Deferred income decreased by EUR 22 million.
The following table shows the balances as of 30 June 2018 for which a change arises due to the application of IFRS 15.
| (Euros in millions) | Balance sheet as of 30 June 2018 |
Adjustments | Value without application of IFRS 15 |
|---|---|---|---|
| Non-current assets | |||
| Trade and other receivables | 59 | (2) | 58 |
| Other non-financial assets | 223 | (109) | 114 |
| Deferred tax assets | 129 | 33 | 162 |
| Current assets | |||
| Trade and other receivables | 1,159 | 37 | 1,196 |
| Other non-financial assets | 571 | (338) | 233 |
| Equity | |||
| Retained earnings1 | (67) | (293) | (361) |
| Non-current liabilities | |||
| Deferred income | 225 | 25 | 250 |
| Deferred tax liabilities | 102 | (101) | 1 |
| Current liabilities | |||
| Deferred income | 495 | (9) | 486 |
1 The adjustment as of 30 June 2018 includes the effects recognised in equity in connection with the first-time application of IFRS 15 and the adjustment of the result for the period as of 30 June 2018 due to the first-time application of IFRS 15.
Without the first-time application of IFRS 15, the following differences in the Consolidated Income Statement would arise for the period from 1 January to 30 June 2018.
| (Euros in millions) | Consolidated Income Statement for the period from 1 January to 30 June 2018 |
Adjustments | Value without application of IFRS 15 |
|---|---|---|---|
| Revenues | 3,525 | (11) | 3,514 |
| Mobile business | 3,127 | (9) | 3,117 |
| Mobile service revenues | 2,598 | (7) | 2,591 |
| Handset revenues | 529 | (3) | 526 |
| Fixed line/DSL business revenues | 391 | (6) | 384 |
| Other revenues | 7 | 5 | 12 |
| Impairment losses in accordance with IFRS 9 | (39) | 1 | (39) |
| Other expenses | (1,262) | (8) | (1,270) |
| Operating income before depreciation and amortisation (OIBDA) | 863 | (18) | 845 |
| Financial result | (19) | 1 | (18) |
The following topics in particular were identified and analysed to ensure that the requirements of IFRS 15 are properly represented.
Telefónica Deutschland Group provides both mobile and fixedline services that are performed over a specified period of time. According to IFRS 15, the progress of the performance is determined using output-based methods. On the basis of the output-based methods, revenue is recognised on the basis of the value of previously supplied services for the customer in relation to the remaining contractually agreed services. Accordingly, varying discounts on this service are recognised and linearised over the term of the contract.
In addition to pure service contracts, Telefónica Deutschland Group offers its customers products under multi-component contracts. In particular, discounts are granted on mobile services if a mobile device is purchased together with the mobile services. There is no discount on the mobile device.
According to the requirements of IFRS 15, the discounts are allocated, whereby all the contractual components which influence the transaction price of a contract are accounted for when calculating the allocation factor. Exemplarily, connection fees are included in the allocation of contractual components as part of the overall assessment and are recognised as revenue accordingly over the underlying contract term under IFRS 15. Discounts granted for the simultaneous usage of a mobile contract and a DSL contract are reported as a reduction of mobile service revenue or fixed line/DSL revenue based on the relative standalone selling price of the underlying tariffs.
When determining the transaction price, significant financing components must be taken into account under IFRS 15. In accordance with the standard, Telefónica Deutschland Group does not take these financing components into account because the analysis of the underlying contracts showed that they are insignificant.
Unlike the rest of the industry, the Telefónica Deutschland Group will not report a contract asset based on the allocation of a part of the transaction price to free-of-charge or heavily discounted mobile devices since almost no subsidised devices were ever offered in the past.
Since the varying discounts were already linearised under IAS 18, the application of IFRS 15 will not have a significant effect for the future. Under the requirements of IAS 18, the discounts were already divided between both components mobile service and mobile device, i.e. a part of the hardware revenue was deferred to later performance periods. However, according to IAS 18, additional contract components were not included in the allocation but were deferred individually. This changes the allocation of revenue between service revenue and hardware revenue and thus the timing of revenue recognition. While under IAS 18 for example, the connection fee was deferred individually over the average customer retention period and recognised as revenue, it is included in the allocation of the contract components under IFRS 15 as part of the overall assessment and recognised as revenue accordingly over the underlying term of the contract. Discounts which were granted for the simultaneous usage of a mobile contract and a DSL contract were not reallocated under IAS 18.
Expenses are recognised in profit or loss when the underlying service is performed. Costs of obtaining a contract which are incurred by their very nature in order to complete a contract and are directly attributable to a customer must be capitalised according to IFRS 15. Amortisation will depend on how the performance obligations to which the costs relate are transferred to the customer under the relevant contract. Under this method, the costs of obtaining a contract will be recognised in profit or loss on a straight-line basis over the underlying amortisation
period. Assuming costs in instalments, a smoothing effect in the Income Statement is to be expected over the course of time. As part of the capitalisation, the Telefónica Deutschland Group uses the practical expedients defined in the standard and only capitalises contract acquisition costs with an underlying amortisation period of more than one year.
In addition to the capitalisation of costs of obtaining a contract, the standard also regulates the capitalisation of costs to fulfil a contract. The analysis of the underlying contracts showed that there are no costs to fulfil a contract that Telefónica Deutschland Group is required to report in the balance sheet.
Under IAS 18, neither costs of obtaining a contract nor costs to fulfil a contract were capitalised.
According to IFRS 15, there are more complex requirements with regard to the reporting of contract modifications compared to the existing regulations. In some cases, contract modifications are accounted for prospectively, forming a separate contract. In other cases, the contract modifications result in a modification of the existing contract. As a result, various cumulated income adjustments may occur.
Despite the more complex requirements, there are essentially no changes compared to IAS 18.
According to IFRS 15, the judgement as to whether Telefónica Deutschland Group is the principal or the agent is based on whether the Group has control of particular goods or services before they are transferred to the end customer.
According to IAS 18, however, it was Telefónica Deutschland Group's potential exposure to significant risks and opportunities in connection with the purchase of goods that was relevant. The analysis of essential services rendered by third parties concludes that no significant changes have occurred with regard to the assessment vis-a-vis IAS 18.
Telefónica Deutschland Group does not grant licences to customers that must be accounted for within the scope of IFRS 15. Consequently, based on Telefónica Deutschland Group's assessment of these transactions, no significant effects on the Interim Financial Statements arise.
Every mobile service tariff postpaid is classified as a distinct performance obligation as part of the identification of the distinct performance obligations in the five-step model of IFRS 15. To determine the stand-alone selling price of this performance obligation, the transaction price specified on the
invoice is used first. Taking into account the average discounts granted to customers of Telefónica Deutschland Group, this transaction price is then reduced by a lump sum rate.
The reduced transaction price corresponds with the stand-alone selling price of the performance obligation concerned.
Potential changes in estimates could lead to changes in both the amount and timing of future recognition of revenues.
Changes which are arising from the first-time adoption of IFRS 9 will be, except of the following points, retrospectively applied:
credit risk of the financial asset has not increased significantly since the initial recognition.
— All hedging relationships which were designated as of 31 December 2017 according to IAS 39 meet the criteria for the recognition of hedging relationships under IFRS 9 as of 1 January 2018. Therefore, they are seen as ongoing hedging relationships and continued to be measured in accordance with the requirements of IFRS 9 as of 1 January 2018.
The Telefónica Deutschland Group has decided to exercise the option to apply the simplified approach to non-current trade receivables and assets in accordance with IFRS 9.
For further information regarding the effects of the first-time adoption of IFRS 9, please refer to Note 7 Measurement Categories of Financial Assets and Financial Liabilities.
For an explanation of the changes in the following items, please refer to Net Assets in the Management Report.
Other intangible assets are comprised of the following:
| (Euros in millions) | Service concession arrangements and licenses |
Customer base | Software | Brand names | Others | Construction in progress/ prepayments on intangible assets |
Other intangible assets |
|---|---|---|---|---|---|---|---|
| Net book value | |||||||
| As of 31 December 2017 | 2,695 | 1,886 | 504 | 48 | 11 | 342 | 5,485 |
| As of 30 June 2018 | 2,489 | 1,722 | 499 | 46 | 8 | 348 | 5,113 |
Property, plant and equipment are comprised of the following:
| (Euros in millions) | Land and buildings |
Plant and machinery |
Furniture, office equipment tools and other items |
PP&E in progress |
Property, plant and equipment |
|---|---|---|---|---|---|
| Net book value | |||||
| As of 31 December 2017 | 114 | 3,683 | 98 | 146 | 4,041 |
| As of 30 June 2018 | 96 | 3,583 | 109 | 115 | 3,904 |
The breakdown of this item included in the Consolidated Statement of Financial Position is as follows:
| As of 31 December 2017 | ||||
|---|---|---|---|---|
| Non-current | Current | Non-current | Current | |
| 59 | 1,089 | 76 | 1,272 | |
| – | 63 | – | 77 | |
| – | 88 | – | 58 | |
| – | (80) | (7) | (142) | |
| 59 | 1,159 | 69 | 1,265 | |
| As of 30 June 2018 |
The breakdown of this item included in the Consolidated Statement of Financial Position is as follows:
| As of 30 June 2018 | As of 31 December 2017 | |||
|---|---|---|---|---|
| (Euros in millions) | Non-current | Current | Non-current | Current |
| Prepayments | 114 | 231 | 129 | 107 |
| Prepayments to related parties | – | 2 | – | 0 |
| Capitalised costs of obtaining contracts | 105 | 324 | – | – |
| Contract asset | 4 | 14 | – | – |
| Other tax receivables | – | 0 | – | 79 |
| Other non-financial assets | 223 | 571 | 129 | 186 |
As already presented in the Accounting Policies, costs of obtaining contracts are capitalised subject to certain requirements of IFRS 15. These contain costs for commissions which can be directly attributed to contracts with customers.
According to IAS 18, costs of obtaining a contract were not capitalised, but were recognised directly as expenditure.
The breakdown of this item included in the Consolidated Statement of Financial Position is as follows:
The contract asset contains contracts for which Telefónica Deutschland Group fulfilled its performance obligations by transferring mobile hardware and performing mobile services or fixed line/DSL services before consideration was paid or became due.
The prepayments primarily relate to prepaid rent for antenna locations.
| As of 30 June 2018 | As of 31 December 2017 | |||
|---|---|---|---|---|
| (Euros in millions) | Non-current | Current | Non-current | Current |
| Bonds | 504 | 612 | 504 | 613 |
| Promissory notes and registered bonds | 474 | 77 | 299 | 4 |
| Loans | 450 | 200 | 450 | 0 |
| Finance leases | 23 | 7 | 15 | 19 |
| Contribution and compensation obligations | – | 2 | – | 2 |
| Interest-bearing debt | 1,451 | 898 | 1,268 | 637 |
The Group signed a EUR 750 million revolving credit facility (RCF) on 22 March 2016. The term of this credit facility was extended by one year until March 2023 for the last time in February 2018.
The RCF bears a variable interest rate at Euribor money market conditions plus an agreed margin. As of 30 June 2018, the credit facility had not been used.
31 / 32
On 13 June 2016, the Group signed a financing agreement with the European Investment Bank (EIB) to the value of EUR 450 million. As of 30 June 2018, this loan had been utilised in the form of two fixed-interest tranches totalling EUR 450 million. The funds provided by the EIB are due by December 2024 and May 2025 and will be repaid in equal instalments starting in December 2019 and May 2020 respectively. The benchmark interest rate for the fixed-interest tranches is determined according to the principles defined by the bodies of the EIB for loans of the same type.
On 31 July 2017, the Telefónica Deutschland Group concluded a bilateral revolving credit facility with Telfisa Global B.V., which
amounted to EUR 500 million. It serves general business purposes and has a term of one year. As of 30 June 2018, the credit facility had been utilised in the amount of EUR 200 million.
In February 2018, Telefonica Germany GmbH & Co. OHG placed promissory note loans in various tranches and a registered bond in an overall volume totaling EUR 250 million. The promissory note loans placed have tranches with terms of 1 year with variable interest rates as well as terms of 5 and 7 years with variable and fixed interest rates and a tranch with a 10-year term with a fixed interest rate. The respective interest rates for the fixed tranches is 1.051%, 1.468% and 1.962% p.a. The registered bond has a term of 15 years and a fixed interest rate of 2.506% p.a.
Trade and other payables and deferred income consist of the following:
| As of 31 December 2017 | |||
|---|---|---|---|
| Non-current | Current | Non-current | Current |
| – | 646 | – | 773 |
| 19 | 831 | 17 | 842 |
| – | 266 | – | 374 |
| 19 | 1,744 | 17 | 1,989 |
| 1 | 113 | 1 | 125 |
| – | 52 | – | 40 |
| – | 109 | – | 69 |
| 1 | 273 | 1 | 235 |
| 20 | 2,017 | 19 | 2,224 |
| 225 | 495 | 255 | 527 |
| As of 30 June 2018 |
Accruals relate mainly to outstanding invoices for goods and services and for non-current assets.
Other payables non-trade mainly consists of liabilities due to personnel and payables from silent factoring.
Other payables mainly comprise debtors with credit balances.
Deferred income primarily contains contracts for which Telefónica Deutschland Group has not yet fulfilled its performance obligations by transferring mobile hardware and performing mobile services or fixed line/DSL services but has already
received a payment. These include advance payments on prepaid credit as well as advance payments received in the course of the Mobile Bitstream Access Mobile Virtual Network Operator (MBA MVNO) contract of MS Mobile Service GmbH (Drillisch).
The payment received from Drillisch as well as other advance payments received for future service performance are broken down by maturity according to their expected utilisation. Advance payments received for prepaid credits are classified exclusively as current.
Provisions are recorded at the following amounts:
| As of 30 June 2018 | As of 31 December 2017 | ||||
|---|---|---|---|---|---|
| (Euros in millions) | Non-current | Current | Non-current | Current | |
| Pension obligations | 162 | – | 151 | – | |
| Restructuring | 30 | 52 | 43 | 64 | |
| Asset retirement obligations | 337 | 84 | 378 | 73 | |
| Other provisions | 33 | 6 | 28 | 6 | |
| Provisions | 563 | 142 | 599 | 142 | |
For an explanation of the changes in the following items, please refer to Results of Operations in the Management Report.
Revenues are comprised of the following:
| 1 April to 30 June | |||
|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 |
| 1,503 | 1,535 | 2,989 | 3,051 |
| 255 | 235 | 536 | 491 |
| 1,758 | 1,771 | 3,525 | 3,542 |
Revenues from the rendering of services include mobile service revenues as well as revenues from fixed line/DSL business. Other revenues include handset revenues and miscellaneous other revenues.
None of the Telefónica Deutschland Group's customers accounts for more than 10% of total revenues.
The breakdown of revenues according to mobile business and fixed line/DSL business is shown in the following table:
| 1 April to 30 June | 1 January to 30 June | ||
|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 |
| 1,560 | 1,548 | 3,127 | 3,092 |
| 1,311 | 1,318 | 2,598 | 2,610 |
| 249 | 229 | 529 | 482 |
| 192 | 217 | 391 | 440 |
| 6 | 6 | 7 | 9 |
| 1,758 | 1,771 | 3,525 | 3,542 |
| 1 April to 30 June | 1 January to 30 June | |||
|---|---|---|---|---|
| (Euros in millions) | 2018 | 2017 | 2018 | 2017 |
| Other third-party services | 525 | 525 | 1,087 | 1,068 |
| Other operating expenses | 22 | 39 | 49 | 65 |
| Allowance for current assets | 1 | 0 | 3 | 3 |
| Advertising | 66 | 64 | 123 | 142 |
| Other expenses | 614 | 629 | 1,262 | 1,278 |
Depreciation and amortisation are as follows:
| 1 January to 30 June | ||||
|---|---|---|---|---|
| (Euros in millions) | 2018 | 2017 | 2018 | 2017 |
| Depreciation of property, plant and equipment | 217 | 232 | 433 | 463 |
| Amortisation of intangible assets | 254 | 251 | 505 | 501 |
| Depreciation and amortisation | 471 | 483 | 937 | 964 |
In the following tables, the fair values of all financial assets and financial liabilities of the Telefónica Deutschland Group are disclosed in accordance with the measurement categories as determined by IFRS 9 with regard to the requirements of IFRS 13.
For further information, please refer to the Consolidated Financial Statements of the financial year ended 31 December 2017 (see Note 9, Measurement Categories of Financial Assets and Financial Liabilities).
In addition, the tables show the categorisation of the financial assets and financial liabilities in accordance with the importance of the input factors that are used for their respective measurement. For this purpose, three levels or measurement hierarchies are defined:
Financial assets
| Measurement hierarchy | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Euros in millions) | Hedging relationships (no measurement category according to the meaning of IFRS 9) |
Financial assets measured at fair value through profit and loss |
Financial assets measured at fair value through other comprehensive income |
Financial assets measured at amortised cost |
Level 1 (Quoted prices) |
Level 2 (Significant other observable input parameters) |
Level 3 (Significant unobservable input parameters) |
Total carrying amount |
Total fair value |
Not in the scope of IFRS 7 |
| Non-current trade and other receivables (Note 5c) |
– | – | 59 | – | – | 59 | – | 59 | 59 | – |
| Other non-current financial assets |
6 | 20 | – | 11 | – | 16 | 20 | 36 | 36 | 66 |
| thereof derivatives | 6 | – | – | – | – | 6 | – | 6 | 6 | – |
| thereof investments in start-ups |
– | 20 | – | – | – | – | 20 | 20 | 20 | – |
| thereof other | – | – | – | 11 | – | 11 | – | 11 | 11 | – |
| Current trade and other receivables (Note 5c) |
– | – | 520 | 637 | – | 1,157 | – | 1,157 | 1,157 | 2 |
| Other current financial assets |
3 | – | – | 9 | – | 12 | – | 12 | 12 | – |
| thereof derivatives | 3 | – | – | – | – | 3 | – | 3 | 3 | – |
| thereof other | – | – | – | 9 | – | 9 | – | 9 | 9 | – |
| Cash and cash equivalents | – | – | – | 321 | – | 321 | – | 321 | 321 | – |
| Total | 9 | 20 | 579 | 978 | – | 1,566 | 20 | 1,586 | 1,586 | 67 |
As of 31 December 2017 Financial assets
| Total | 10 | 18 | – | 1,944 | – | 1,955 | – | 1,973 | 1,955 | 59 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash and cash equivalents | – | – | – | 587 | – | 587 | – | 587 | 587 | – |
| thereof other | – | – | – | 13 | – | 13 | – | 13 | 13 | – |
| thereof derivatives | 4 | – | – | – | – | 4 | – | 4 | 4 | – |
| Other current financial assets |
4 | – | – | 13 | – | 17 | – | 17 | 17 | – |
| Current trade and other receivables (Note 5c) |
– | – | – | 1,263 | – | 1,263 | – | 1,263 | 1,263 | 2 |
| thereof other | – | – | – | 12 | – | 12 | – | 12 | 12 | 57 |
| thereof investments in start-ups |
– | 18 | – | – | – | – | – | 18 | – | – |
| thereof derivatives | 6 | – | – | – | – | 6 | – | 6 | 6 | – |
| Other non-current financial assets |
6 | 18 | – | 12 | – | 18 | – | 36 | 18 | 57 |
| Non-current trade and other receivables (Note 5c) |
– | – | – | 69 | – | 69 | – | 69 | 69 | – |
| (Euros in millions) | Hedging relationships (no measurement category according to the meaning of IAS 39) |
Available for-sale financial assets |
Held-to maturity financial assets |
Loans and receivables |
Level 1 (Quoted prices) |
Level 2 (Significant other observable input parameters) |
Level 3 (Significant unobservable input parameters) |
Total carrying amount |
Total fair value |
Not in the scope of IFRS 7 |
As of 30 June 2018, EUR 6 million of other non-current financial assets and EUR 3 million of other current financial assets were designated into a hedge relationship. These relate to the swaps concluded in connection with bond issues.
In addition, EUR 20 million of other non-current financial assets are classified as financial assets measured at fair value through profit or loss. These relate primarily to investments in start-ups. These assets were measured according to Level 3. The measurement at fair value is based on a variety of unpredictable premises.
The fair value of other non-current financial assets is determined by discounting future cash flows at current market interest rates.
The valuation of the investments in start-ups held by Telefónica Deutschland Group was carried out as of 30 June 2018. All underlying and relevant information that has an impact on the value of the investments and that market participants would consider to determine the fair value of the investment were taken into consideration. The valuation includes prices for the most recent investments in start-ups, multiples of comparable listed companies and comparable transactions, considering the minority stakes in start-ups and the deductions applicable to certain circumstances that relate to both the assets and the investments in the start-ups.
New classification of financial assets according to IFRS 9:
Trade receivables were partly classified as financial assets measured at fair value through other comprehensive income. These are receivables that can be sold as part of factoring transactions.
All other financial assets as of 30 June 2018 were categorised as financial assets measured at amortised cost.
| (Euros in millions) | Footnote | Original categorisation under IAS 39 |
New categorisation under IFRS 9 |
Original carrying amount under IAS 39 / Long-term |
Original carrying amount under IAS 39 / Short-term |
New carrying amount under IFRS 9 / Long-term |
New carrying amount under IFRS 9 / Short-term |
|---|---|---|---|---|---|---|---|
| Trade and other receivables (factoring) |
a | Loans and receivables | Financial assets measured at fair value through other comprehensive income |
69 | 488 | 70 | 487 |
| Trade and other receivables (other) |
b | Loans and receivables | Financial assets measured at amortised cost |
— | 775 | — | 774 |
| Investments in start-ups | c | Available-for-sale financial assets |
Financial assets measured at fair value through profit and loss |
18 | — | 18 | — |
| Other financial assets, thereof other |
Loans and receivables | Financial assets measured at amortised cost |
12 | 13 | 12 | 13 | |
| Cash and cash equivalents | Loans and receivables | Financial assets measured at amortised cost |
— | 587 | — | 587 |
The reporting requirements of the Group in regard to the classification of financial instruments under IFRS 9 are described in Note 4, Accounting Policies. The adoption of the requirements led to the above-mentioned reclassifications which are explained below:
Financial liabilities
| Measurement hierarchy | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Euros in millions) | Hedging relationship (no measurement category according to the meaning of IFRS 9) |
Financial liabilities at amortised costs |
Finance leases |
Level 1 (Quoted prices) |
Level 2 (Significant other observable input parameters) |
Level 3 (Significant unobservable input parameters) |
Total carrying amount |
Total fair value |
Not in the scope of IFRS 7 |
| Non-current interest-bearing debt (Note 5e) | 157 | 1,271 | 23 | 527 | 950 | – | 1,451 | 1,476 | – |
| Non-current trade and other payables (Note 5f) | – | 19 | – | – | 19 | – | 19 | 19 | 1 |
| Current interest-bearing debt (Note 5e) | 201 | 690 | 7 | 605 | 298 | – | 898 | 902 | – |
| Current trade and other payables (Note 5f) | – | 1,959 | – | – | 1,959 | – | 1,959 | 1,959 | 58 |
| Total | 358 | 3,938 | 30 | 1,131 | 3,225 | – | 4,327 | 4,357 | 59 |
As of 31 December 2017 Financial liabilities
| Measurement hierarchy | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Euros in millions) | Hedging relationship (no measurement category according to the meaning of IAS 39) |
Financial liabilities at amortised costs |
Finance leases |
Level 1 (Quoted prices) |
Level 2 (Significant other observable input parameters) |
Level 3 (Significant unobservable input parameters) |
Total carrying amount |
Total fair value |
Not in the scope of IFRS 7 |
| Non-current interest-bearing debt (Note 5e) | 155 | 1,098 | 15 | 537 | 778 | – | 1,268 | 1,315 | – |
| Non-current trade and other payables (Note 5f) | – | 17 | – | – | 17 | – | 17 | 17 | 1 |
| Current interest-bearing debt (Note 5e) | 202 | 419 | 17 | 615 | 25 | – | 637 | 639 | – |
| Current trade and other payables (Note 5f) | – | 2,161 | – | – | 2,161 | – | 2,161 | 2,161 | 62 |
| Total | 357 | 3,695 | 31 | 1,152 | 2,981 | – | 4,084 | 4,134 | 64 |
As of 30 June 2018, EUR 157 million of non-current interestbearing debt and EUR 201 million of current interest-bearing debt are designated to a hedge relationship. These relate to a portion of the bonds, which are each accounted for with an interest rate swap as a fair value hedge.
The fair value of the bonds (non-current and current interestbearing debt) is determined based on primary market values (unadjusted quoted prices in active markets, level 1). The fair value of the other non-current interest-bearing debt is determined by discounting the future cash flows using current market interest rates.
In addition to the bonds, the non-current and current interestbearing debt as of 30 June 2018 contains promissory notes and registered bonds with a nominal value of around EUR 550 million and the utilisation of a credit facility amounting to EUR 650 million. These debts are categorised as financial liabilities measured at amortised cost.
The non-current and current trade and other payables are categorised as financial liabilities at amortised cost.
The Telefónica Deutschland Group is subject to claims or other proceedings arising in the ordinary course of business. The possible effects are of minor significance for the Group's net assets, financial position and results of operations.
For further information, please refer to the Consolidated Financial Statements as of 31 December 2017 (see Note 17, Contingent Assets and Liabilities).
The Telefónica Deutschland Group placed a 7 years unsecured bond with a volume of EUR 600 million on 5 July 2018. The bond will mature on 5 July 2025 and was issued by O2 Telefónica Deutschland Finanzierungs GmbH, Munich and is guaranteed by Telefónica Deutschland Holding AG. The annual coupon of the fixed-interest bond, which has to be paid yearly, amounts to 1.75% and the issue price is 99.628%. The bond has a denomination of EUR 100,000 and was issued on the basis of a bond prospectus. The bond serves to refinance the bond due in November and is for general corporate purposes.
Change in the Supervisory Board of Telefónica Deutschland
Enrique Medina Malo resigned as of the end of 24 July 2018 as a Member of the Supervisory Board. With effect as of 25 July 2018, the relevant court appointed Pablo de Carvajal Gonza´lez as his successor.
Pursuant to a decision of the bodies of Telefo´nica Deutschland in July 2018, the Telefo´nica Deutschland Group began negotiations for a possible sale of its entire holdings in Shortcut I GmbH & Co. KG. Accordingly, these shares are classified as of this date as "assets and liabilities held for sale".
No other events subject to disclosure requirements occurred after the end of the reporting period.
Munich, 6 August 2018
Telefónica Deutschland Holding AG
Management Board
Valentina Daiber Guido Eidmann
Cayetano Carbajo Martín Wolfgang Metze
Markus Haas Markus Rolle
Nicole Gerhardt Alfons Lösing
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting and with generally accepted accounting principles, the Interim Condensed Consolidated Financial Statements give a true and fair view of the net assets, financial position and results of operations of the Group, and the Interim Condensed Group Management Report
includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Munich, 6 August 2018
Telefónica Deutschland Holding AG
Management Board
Valentina Daiber Guido Eidmann
Nicole Gerhardt Alfons Lösing
Cayetano Carbajo Martín Wolfgang Metze
Markus Haas Markus Rolle
To Telefónica Deutschland Holding AG, Munich
We have reviewed the condensed consolidated interim financial statements - comprising the balance sheet, the income statement, the statement of income and expense recognized in equity, the cash flow statement, the statement of changes in equity and selected explanatory notes - and the interim group management report of Telefónica Deutschland Holding AG for the period from January 1, 2018 to June 30, 2018 which are part of the half-year financial report pursuant to § (Article) 115 WpHG ("Wertpapierhandelsgesetz": German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the parent Company's Board of Managing Directors. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW) and additionally observed the International Standard on Review Engagements "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE 2410). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.
Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.
Munich, 6 August 2018
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft
Stefano Mulas ppa. Gabor Krüpl German public auditor German public auditor
The glossary also contains abbreviations as used in the Group Management Report.
| ARPU | Average Revenue per User |
|---|---|
| BNetzA | Bundesnetzagentur |
| Capital Expenditure: additions to property, plant and equipment and intangible assets | |
| CapEx | excluding investments in licences for mobile phone frequency usage rights |
| CF | Cashflow |
| DSL | Digital Subscriber Line: technology to transmit data in the local loop to private end-customers |
| EU | European Union |
| Euribor | Euro Interbank Offered Rate |
| FCF | Free cashflow |
| HGB | Handelsgesetzbuch (German Commercial Code) |
| IFRS | International Financial Reporting Standards |
| ISIN | International Securities Identification Number |
| IT | Information Technology |
| KPN | Koninklijke KPN N.V., The Hague, Netherlands |
| LTE | Long Term Evolution: further development of the UMTS/HSPA mobile communications standard |
| M2M | Machine-to-Machine communication: automatic exchange of information between machines |
| MBA | Mobile Bitstream Access |
| MVNO | Mobile Virtual Network Operator: |
| Net Adds | New customers for the period less those customers leaving are designated as net additional customers |
| O2 (Europe) Limited | O2 (Europe) Limited, Slough, United Kingdom |
| O2 Free |
The "O2 Free" data plan allows customers to remain online with speeds of up to 1 Mbit/s even after they have used all of their high-speed data |
| OIBDA | Operating Income before Depreciation and Amortisation |
| OpEx | Operating expenses |
| OTT | Over-the-top |
| OTT services | (WhatsApp, Facebook, etc.) |
| Prepaid/Postpaid | In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance without the contractual obligations that would result from a fixed term |
| Roaming | Using a communication device or subscriber identity in a different network other than one's home network |
| SMS | Short Message Service |
| Telefónica Deutschland | Telefónica Deutschland Holding AG, Munich, Germany |
| Telefónica, S.A. | Telefónica S.A., Madrid, Spain |
| Telefónica Deutschland Group |
The companies included in the Consolidated Financial Statements of Telefónica Deutschland |
| Telxius S.A. | Telxius Telecom S.A., the infrastructure entity of Telefónica |
|---|---|
| ULL | Unbundled Local Loop: bridges the distance between the local exchange and the termination point on the customer's premises or in their home, so it is also known as the "last mile" |
| UMTS | Universal Mobile Telecommunications Service: international mobile communications standard of the third generation which unites mobile multimedia and telematics service under the frequency spectrum of 2GHz. |
| VDSL | Very High Data Rate Digital Subscriber Line (see DSL) |
| Wholesale | Selling services to third parties who sell them to their own end customers either directly or after further processing |
| WLAN | Wireless Local Area Network (WiFi) |
Telefónica Deutschland Holding AG Georg-Brauchle-Ring 50 80992 Munich, Germany Tel.: +49 89 2442 0 www.telefonica.de
Investor Relations Telefónica Deutschland Holding AG Investor Relations Georg-Brauchle-Ring 50 80992 Munich, Germany Tel.: +49 89 2442 1010 E-mail for private investors: [email protected] E-mail for institutional investors: [email protected] www.telefonica.de/ir
This report was published in German and English. In case of doubt please refer to the German version which is mandatory.
Telefónica Deutschland Corporate Communications, Munich Design and Layout: Donnelley Financial Data Solutions, Frankfurt Translation: SDL plc
This publication does not constitute an offer to sell securities, nor a solicitation to purchase securities in the United States of America. Securities not registered pursuant to the US Securities Act of 1933, as amended, or not exceptions in accordance with the law, may not be offered or sold in the United States of America. The issuer has neither registered securities pursuant to the US Securities Act of 1933, as amended, nor does it intend to register them as such, or offer securities in the United States of America.
The information included in this publication is not intended for dissemination or further transmission to or within the United States of America, Canada, Australia, South Africa or Japan.
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