DEUTSCHE TELEKOM INTERNATIONAL FINANCE B.V.

MAASTRICHT

Annual Report

for the year ended December 31, 2022

Company boards reports	3
Report of the Management Board	4
Report of the Supervisory Board	7
Financial statements	8
Statement of comprehensive income	9
Statement of financial position	10
Statement of changes in equity	11
Statement of cash flows	12
Notes to the financial statements	13
Other information	33
Proposed appropriation of result according to article 21 of the articles of association	33
Independent auditor’s report	33

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Company boards reports
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Report of the Management Board

The Management Board is pleased to present the financial statements of Deutsche Telekom International Finance B.V. (“the Company”) for the financial year ended December 31, 2022.

Objectives, structure, and staffing

The Company was incorporated in the Netherlands in 1995 as a wholly owned subsidiary of Deutsche Telekom AG (DTAG). The purpose of the Company is to finance business and companies belonging to the Deutsche Telekom Group by raising funds from the capital markets. The Company has a two-tier board structure. The Management Board consists of two members and no further staff is hired. The Supervisory Board consists of three members, all hired by DTAG. According to the regulations of the Dutch Civil Law (Wet Toezicht Bestuur effective as of 1 January 2013 and the gender appointment quota for supervisory boards effective as of 1 January 2022), the Company’s Management Board is unbalanced since less than 30% of its members are female. The Company’s Management Board members have been appointed based on qualifications and availability, irrespective of gender. In order to create more balance, the Boards will take these regulations into account with respect to future appointments of Board members.

War in Ukraine

The Management has reviewed the impact of the war in Ukraine to the collectability of its financial assets and concluded that no impairment for this reason had to be recognized. Neither the business of the company nor that of DTAG hitherto has been directly affected. We cannot assess with certainty how the Company and DTAG will be indirectly affected, in particular by the impact on the global economy. Based on the experience so far, the Management expects that the war in Ukraine will have limited impact to the business in 2023 going forward as well.

Business activities

In 2022 the Company did not issue any new bonds, nor did it draw any new bank loans. In 2022 the Company redeemed four EUR bonds with a total nominal amount of EUR 2,225 million and one GBP bond with a nominal amount of GBP 700 million (EUR 840 million). Loans granted to DTAG were repaid to the Company for the same total nominal amounts.

Financial developments

Before income taxes, the Company made a loss of EUR 32,649 thousand in 2022 versus a profit before income taxes of EUR 34,319 thousand in 2021. The result before income taxes of the Company under IFRS is volatile since derivatives are carried at fair value and the non-derivative financial instruments at amortized cost and is additionally affected by the increased impairment of loan assets in 2022 compared with the impairment of loan assets in 2021. We refer to note 6 of the notes to the financial statements for further details.

The Company made a net profit of EUR 46,099 thousand in 2022 versus a net profit of EUR 23,705 thousand in 2021. The net results in 2021 and in 2022 respectively were affected by the current and deferred tax positions the Company had taken. In 2022 the Company received refunds of income taxes over the financial years 2018 and 2019 for a total amount of EUR 6,167 thousand and recognized additional expected income tax receivables for the years 2020, 2021 and 2022 for a total amount of EUR 8,337 thousand. The refunds of income taxes are a result of adoption of corporate income tax calculation according to the cost-plus method for the relevant financial years. Furthermore, the Management Board reassessed the deferred tax position it had taken in past financial statements. With the calculation of deferred tax, it was always assumed that there were taxable temporarily differences between the result under IFRS and the result for tax purposes. In the latest analysis it was concluded that these timing differences did not and do not exist. Therefore, as of December 31, 2021 and earlier years, no deferred taxes should have been recognized according to definitions of IFRS 12.5. The Management Board has decided to record the release of all deferred tax assets and liabilities via the 2022 statement of comprehensive income and not via equity in the opening balance given the limited size of the correction. We refer to note 5 of the notes to the financial statements for further details.

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Management Board policy with respect to risks

The Management Board is responsible for the strategy, operations, financial position, financial reporting and compliance of the Company. Within each of these fields the Company faces certain risks which are managed by the Management Board. Each of the risk fields are reviewed and discussed in the Management Board meetings and measurements are mitigated. However, the way the Company has been structured makes it inherently very limited exposed to risks. The strategic decisions are liaised with DTAG - Group Treasury and the Supervisory Board of the Company. Therefore, the risks related to the Company’s strategy are minimized.

The operational activities of the Company are performed by a small team of experienced staff. Nevertheless, management has established a fall-back procedure for mitigating the risks relating to the operational activities like omissions and fraud. Furthermore, the Company participates in the DTAG’s Internal Control System (ICS). The accounting-related ICS comprises both preventive and detective controls which include general IT management checks, four eyes principle, segregation of functions and the monitoring of the accounting reporting process. The internal audit department of DTAG is responsible for independently reviewing the functionality and effectiveness of the ICS and the Audit Committee of DTAG monitors the effectiveness of the ICS and the DTAG risk management system. The control test assessments in 2022 and 2021 respectively have proved that the ICS of the Company is effective.

The main financial risks arising from the Company’s financial instruments are currency risk, interest rate risk and liquidity risk. Additionally, there is a limited credit and counterparty default risk. Management of these risks is performed in accordance with DTAG Group financial risk management policy. We regard effective management of the interest rate risk and foreign currency risk as one of our main tasks. The currency risk is mitigated by means of raising the funds in the same currency as the corresponding financing provided to the borrowers. However, currency results under IFRS arise because the Company concluded two USD interest financial instruments in the past which are classified and valuated differently compared to the USD loans for which hedges these contracts were concluded. The interest rate levels and the maturities of the Company’s funding do in principle match with the interest rate levels, including a margin, and the maturities of the corresponding loans provided by the Company. The credit and counterparty default risks are mainly covered by the guarantee agreement with DTAG. In this guarantee agreement the own risk for the Company is limited to EUR 10 million in total for all outstanding financial assets.

The Company has obligations to disclose annual and non-audited semi-annual external financial reporting and a monthly internal financial reporting. Since the activities of the Company and the kind of transactions closed do not differ much from previous ones, the risk of false or misleading reporting is low.

Compliance with rules and regulations is a main risk which has a narrow focus with the Management Board. Within DTAG the Management is in close contact with the departments Group Compliance, Legal and Tax in order to mitigate the risks related to relevant changes in laws and regulations. Furthermore, the Management Board has access to a network of external legal and tax advisors in order to mitigate possible risks and uncertainties.

For further details of the risk policies we refer to note 1 of the notes to the financial statements.

Code of Conduct and corporate culture

The Company applies and is in compliance with the Deutsche Telekom’s group Code of Conduct. The code includes measurements regarding Corporate Governance, dealing with business relationship, avoiding conflicts of interest, private use of company property, handling information and rules of behaviour. Deutsche Telekom actively stimulates staff of all its group companies to live the corporate culture. The six Guiding Principles help to keep the shared values in mind at all times and to align actions.

Future business and financing developments and expectations

The Management Board does not expect any new financings in 2023. Since derivatives are carried at fair value and the non-derivative instruments at amortized costs, the financial result under IFRS of the Company is expected to remain volatile. However, management expects net positive cash flow for the year ending December 31, 2023 as well as in each of the following years.

Events after the statement of financial position date

On February 1, 2023 the Company redeemed parts of eight EUR bonds for a total nominal value of EUR 2,089 million and parts of two GBP bonds for a total nominal value of GBP 239 million (EUR 271 million). On March 13, 2023 the company additionally redeemed parts of two USD bonds for a total nominal value of USD 632 million (EUR 591 million). Parts of loans to DTAG with the same aggregate nominal amounts were repaid to the Company. On March 17, 2023 the Company redeemed a EUR Bond with a nominal value of EUR 200 million and a loan to DTAG with the same nominal amount was repaid to the Company. These repayments will cause a negative impact of TEUR 1,366 on the interest result and equity of the Company in 2023.

Management representation

The members of the Management Board certify that, to the best of their knowledge:

the financial statements give a true and fair view, in all material respects, of the assets, the liabilities, the financial position and profit and loss of the Company;

the annual report gives a true and fair view, in all material respects, of the Company as per December 31, 2022 and the business activities during 2022; and

the annual report describes the material risks that the Company is facing.

Maastricht, March 27, 2023

The members of the Management Board,

Markus Schäfer Frans Roose

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Report of the Supervisory Board

As per December 31, 2022 the Supervisory Board of Deutsche Telekom International Finance B.V. comprised the following members:

 S. Wiemann, (m), Group Treasurer at Deutsche Telekom AG, Bonn, Germany; appointed on March 7, 2016

 Dr. Ch. Dorenkamp, (m), Head of Group Tax at Deutsche Telekom AG, Bonn, Germany; appointed on July 1, 2014

 Dr. A. Lützner (m), Head of Legal GD/USA & Organization EU at Deutsche Telekom AG, Bonn, Germany; appointed on November 1, 2007

According to the regulations of the Dutch Civil Law (Wet Toezicht Bestuur effective as of January 1, 2013 and the gender appointment quota for supervisory boards effective as of January 1, 2022), the Company’s Supervisory Board is unbalanced since less than 30% of its members are female. The Company’s Supervisory Board members have been appointed for an indefinite period and based on qualifications and availability, irrespective of gender. In order to create more balance, the Boards will take these regulations into account with respect to future appointments of Board members.

The Supervisory Board met once on March 2, 2022. During this meeting the Management Board presented the business results for the year 2021 and a forecast for 2022. As a result of the withdrawal of the statutory auditor, the Management was requested to tender a new statutory auditor for 2022 and beyond. Furthermore, the German tax audit with DTAG for the years 2018, 2019 and 2020 was discussed. The German Tax Authorities (GTA) concluded that the method used by the Company for calculating its remuneration for its function and bearing certain risks, as agreed upon with the Dutch Tax Authorities (DTA) in the Advance Pricing Agreement (APA), would not be applicable according to the GTA but should be exchanged by the cost-plus-method. It was discussed that, as long as the DTA did not adjust the Corporate Income Tax (CIT) returns for the years past, the Company will file its new CIT returns according to the agreements in the APA, which expired on December 31, 2021.

In the reporting year, bonds and assignable loans to group companies were repaid in aggregate volumes per currency of EUR 2,225 million and GBP 700 million (EUR 840 million), respectively. After the reporting year, the Company redeemed parts of eight EUR bonds for a total nominal value of EUR 2,089 million and parts of two GBP bonds for a total nominal value of GBP 239 million (EUR 271 million). Parts of loans to DTAG with the same aggregate nominal amounts were repaid to the Company, all settled on February 1, 2023. Additionally, on March 13, 2023 the company redeemed parts of two USD bonds for a total nominal value of USD 632 million (EUR 591 million) and parts of loans to DTAG for the same aggregate nominal value were repaid to the Company. On March 17, 2023 the Company redeemed a EUR Bond with a nominal value of EUR 200 million and a loan to DTAG with the same nominal amount was repaid to the Company.

The Supervisory Board has taken notice of the performed ICS control test assessment in 2022. It was concluded that the ICS of the Company is effective, and the risk of fraud has been mitigated by the controls and payment procedures.

The Supervisory Board has taken notice of and agrees with the conclusion of the Management Board that the war in Ukraine and the global economic crisis as a consequence thereof did not trigger impairment of the financial assets.

The financial statements for the year 2022 as presented by the Management Board have been audited and were given an unqualified opinion by the independent external auditor of Deloitte Accountants B.V. The independent auditor’s report is included in this report. The Supervisory Board has authorized the financial statements for the year 2022 of Deutsche Telekom International Finance B.V. for issue by the management Board on March 27, 2023 for approval of the General Meeting of Shareholders. The Supervisory Board recommends that the General Meeting of Shareholders adopts the financial statements for the year 2022.

The statement of comprehensive income for the year 2022 discloses a net profit of EUR 46,099 thousand. The Supervisory Board shares the decision of the Management Board to release all deferred taxes in 2022. The Management Board and the Supervisory Board have not yet decided about their proposal for the allocation of the result to the General Meeting of Shareholders.

The Supervisory Board takes this opportunity to express its appreciation for the performance of the Management Board during the financial year 2022.

Maastricht, March 27, 2023

Dr. Ch. Dorenkamp Dr. A. Lützner S. Wiemann

‎Financial Statements

‎Statement of comprehensive income

thousands of €
	Note	2022	2021

Finance income	2
Interest income		907,043	947,235
Interest expense		(933,333)	(968,407)
Impairment reversals on financial assets	2, 6	-	38,030
Impairment on financial assets	2, 6	(2,316)	-
Other financial (expense) / income	3	(3,688)	17,709

(Loss) / Profit from financial activities		(32,294)	34,567

General and administrative expenses	4	(397)	(288)
Other operating income		42	40

Loss from operations		(355)	(248)

(Loss) / Profit before income taxes		(32,649)	34,319

Income taxes	5	78,748	(10,614)

(Loss) / Profit after income taxes		46,099	23,705

Other comprehensive income		-	-

(Loss) / Profit attributable to owners:		46,099	23,705
Total comprehensive (loss) profit attributable to the owners:		46,099	23,705

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Statement of financial position

(Before proposed appropriation of result)

thousands of €
	Note	31-12-2022	31-12-2021

ASSETS

Non-current assets		20,064,012	22,999,560
Financial assets	6	20,064,012	22,999,560

Current assets		3,266,754	3,411,589
Financial assets	6	3,239,496	3,398,052
Income tax receivable	5	8,337	378
Other assets		5	3
Cash and cash equivalents with aff. comp.		18,916	13,156

TOTAL ASSETS		23,330,766	26,411,149

SHAREHOLDER'S EQUITY AND LIABILITIES

Shareholder's equity	8	249,518	211,040
Issued Capital		500	500
Retained earnings		202,919	186,835
Net profit (loss)		46,099	23,705

Non-current liabilities		19,852,667	22,812,654
Financial liabilities	7	19,852,667	22,745,417
Deferred tax liability	5	-	67,237

Current liabilities		3,228,581	3,387,455
Financial liabilities	7	3,228,469	3,387,364
Other liabilities		112	91

Liabilities		23,081,248	26,200,109

TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES		23,330,766	26,411,149

‎Statement of changes in equity

thousands of €	Note	Issued share capital	Retained earnings	Result for the year	Total
		Issued share capital	Retained earnings	Result for the year	Total
	8

Balance as at January 1, 2021		500	255,797	(57,543)	198,754

Movements
Net (loss) / profit				23,705	23,705
Appropriation of result			(57,543)	57,543	-
Transactions with owners
Dividends paid			(11,419)		(11,419)

Balance as at December 31, 2021		500	186,835	23,705	211,040

thousands of €	Note	Issued share capital	Retained earnings	Result for the year	Total
		Issued share capital	Retained earnings	Result for the year	Total
	8

Balance as at January 1, 2022		500	186,835	23,705	211,040

Movements
Net (loss) / profit				46,099	46,099
Appropriation of result			23,705	(23,705)	-
Transactions with owners
Dividends paid			(7,621)		(7,621)

Balance as at December 31, 2022		500	202,919	46,099	249,518

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Statement of cash flows

thousands of €
	Note	2022	2021
	9
Interest received	2	966,105	975,992
Interest paid	2	(965,549)	(969,556)
Interest received from derivatives	3	172,661	138,435
Interest paid from derivatives	3	(140,037)	(108,964)
Guarantee fees paid	7	(22,976)	(25,091)
Net income tax received / (paid)	5	3,552	(3,345)
Others	4	(375)	(363)

Net cash generated from operating activities		13,382	7,108

Proceeds from repayments of loans	6	3,089,530	2,803,289

Net cash generated from investing activities		3,089,530	2,803,289

Repayment of financial liabilities	7	(3,089,530)	(2,803,289)
Dividend payments	8	(7,621)	(11,419)

Net cash used in financing activities		(3,097,151)	(2,814,708)

Net (decrease) increase in cash and cash equivalents with aff. comp.		5,760	(4,311)

Cash and cash equivalents with aff. comp., at the beginning of the year		13,156	17,467

Cash and cash equivalents with aff. comp., at the end of the year		18,916	13,156

‎Notes to the financial statements

General information

Deutsche Telekom International Finance B.V. (hereafter “the Company”) is the financing company of Deutsche Telekom AG, Bonn, Germany (hereafter “DTAG”). Its principal activities consist of the issuance of debt instruments and funding of the Deutsche Telekom Group. The Company has its registered office at Stationsplein 8-K, Maastricht, the Netherlands, registered under number 33274743 with the Dutch trade register “Kamer van Koophandel” and is a 100% subsidiary of DTAG, which is also the ultimate parent of the Company. The Company’s financial statements are included in the consolidated financial statements of DTAG. The financial statements of the Company for the 2022 financial year were authorised for issue by the Management Board on March 27, 2023.

Basis of preparation

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of its derivatives. The financial statements have been prepared in accordance with International Financial Reporting Standards (hereafter “IFRS”) as adopted by the EU and with Part 9 of Book 2 of the Dutch Civil Code. All IFRSs issued by the International Accounting Standards Board (hereafter “IASB”) adopted by the European Commission for use in the EU and effective at the time of preparing these financial statements have been applied by the Company. The financial year corresponds to the calendar year. Both the functional and presentation currency of the Company is Euro (EUR). All values are rounded to the nearest thousand except when indicated otherwise.

Initial application of standards, interpretations and amendments to standards and interpretations in the financial year

In the 2022 financial year, the Company applied the following IASB pronouncements and/or amendments to such pronouncements for the first time:


Pronouncement	Title	Applied by the	Changes	Impact on the presentation of the Company’s results of operations and financial position
Pronouncement	Title	Company from	Changes
Amendments to IAS 16	Proceeds before Intended Use	Jan. 1, 2022	The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The definition of the costs of testing is specified. Revenue and cost that relate to items produced that are not an output of the entity’s ordinary activities must be presented separately. The line item in the statement of comprehensive income that includes such revenue must be stated.	No material impact.
Amendments to IAS 37	Onerous Contracts – Cost of Fulfilling a Contract	Jan. 1, 2022	The amendment clarifies that the cost of fulfilling a contract includes all directly attributable costs. The cost of fulfilling the contract includes both the incremental costs of fulfilling that contract (such as direct wage and material costs) and an allocation of other costs that relate directly to fulfilling contracts. In addition, it is clarified that before a provision for an onerous contract is established, an entity should recognize any impairment loss that has occurred on assets used in (previously: dedicated to) fulfilling the contract.	No material impact.
Amendments to IFRS 3	Reference to the Conceptual Framework	Jan. 1, 2022	A reference was included in IFRS 3 to the revised 2018 Conceptual Framework for Financial Reporting. Requirement that, for identifying liabilities within the scope of IAS 37 or IFRIC 21, an acquirer should apply IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination. Addition of an explicit statement that an acquirer should not recognize contingent assets acquired in a business combination.	No material impact.
Annual Improvements Project	Annual Improvements to IFRSs 2018-2020 Cycle	Jan. 1, 2022	Revision of specific aspects in IFRS 1, IFRS 9, IFRS 16, and IAS 41.	No material impact.

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Standards, interpretations and amendments issued, but not yet to be applied

Pronouncement	Title	To be applied by	Changes	Expected impact on the presentation of the Company’s results of operations and financial position
Pronouncement	Title	the Company from	Changes
IFRSs endorsed by the EU
IFRS 17	Insurance Contracts	Jan. 1, 2023	IFRS 17 governs the accounting for insurance contracts and replaces IFRS 4.	No material impact.
Amendments to IFRS 17	Insurance Contracts	Jan. 1, 2023	The initial application of IFRS 17 is postponed until January 1, 2023. The fundamental principles under IFRS 17 remain unaffected. The amendments to the standard, which refer to specific topics, are aimed at helping entities implement the standard and, at the same time, avoiding a significant loss of useful information. The option for companies to delay application of IFRS 9 until the initial application of IFRS 17 has also been extended until January 1, 2023.	No material impact.
Amendments to IFRS 17	Initial Application of IFRS 17 and IFRS 9 – Comparative information	Jan. 1, 2023	Supplementary transition option relating to comparatives in the first reporting year, which allows for the option of a different classification pursuant to IFRS 9 (classification overlay) for the comparative periods in the year of first-time application of both standards. In addition, for financial assets that relate to insurance contracts, existing classification options under IFRS 9 can be exercised again if IFRS 9 was applied prior to the first-time application of IFRS 17.	No material impact.
Amendments to IAS 1 and IFRS Practice Statement 2	Presentation of Financial Statements	Jan. 1, 2023	The amendments to IAS 1 will require entities to disclose their material accounting policies in the future rather than their significant accounting policies. The amendments to IFRS Practice Statement 2 “Making Materiality Judgements” contain guidance on applying materiality judgments to accounting policy disclosures.	No material impact.
Amendments to IAS 8	Definition of Accounting Estimates	Jan. 1, 2023	The amendments relate to the definition of accounting estimates. It is clarified how entities can distinguish between changes to accounting policies and to accounting estimates.	No material impact.
Amendments to IAS 12	Deferred Tax related to Assets and Liabilities arising from a Single Transaction	Jan. 1, 2023	IAS 12 provides for exemptions to the recognition of deferred taxes in specific cases. It was previously unclear as to whether the initial recognition exemptions also apply for transactions in which the initial recognition of an asset and a liability gives rise to equal taxable and deductible temporary differences. The exemptions apply specifically to leases and restoration obligations. The IASB now clarifies that the exemption relating to the recognition of deferred taxes is not applicable in the aforementioned configuration.	No material impact.
IFRSs not yet endorsed by the EU ^a
Amendments to IAS 1	Classification of Liabilities as Current or Non-current	Jan. 1, 2024	The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. The amendment also clarifies the definition of settlement of a liability.	No material impact.
Amendments to IAS 1	Non-current Liabilities with Covenants	Jan. 1, 2024	The amendments clarify that covenants in loan agreements with which an entity is required to comply only after the reporting date do not affect the classification of a liability on the reporting date as current or non-current. By contrast, covenants with which an entity must comply on or before the reporting date affect the classification.	No material impact.
Amendments to IFRS 16	Lease Liability in a Sale and Leaseback	Jan. 1, 2024	The amendments require a seller-lessee to subsequently measure lease liabilities arising from a sale and leaseback transaction in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The requirements for initial measurement of the right-of-use asset have not been amended. By contrast, the change to the subsequent measurement of the lease liability requires variable lease payments that do not depend on an index or interest rate to also be considered in the initial measurement of the lease liability from a sale and leaseback transaction.	No material impact.

^a For standards not yet endorsed by the EU, the date of first-time adoption scheduled by the IASB is assumed for the time being as the likely date of first-time adoption.

With the exception of the standards, interpretations, and amendments of standards and interpretations that are effective for the first time in the financial year, the Company did not make any major changes in its accounting policies.

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Correction of prior period errors

Deferred Tax. In 2022 the Company has corrected its deferred tax position as disclosed in previous years via a release in the statement of comprehensive income. Deferred tax is not applicable since no temporarily differences were recognized between the income for tax purposes and the income in the financial statements. Any differences arisen when filing income tax returns had a permanent character. As the deferred taxes only affects the income after taxation and given the limited size of the error, the Management Board decided to correct the error from previous years prospectively in the 2022 financial statements instead of making retrospective restatements. The following line items and amounts of correction in the statement of financial position were affected and presented as it these amounts would have been corrected in 2021:

Thousands of €

Line item	As presented in 2021 FS	Correction	In 2021 as if adjustment has been recorded

Non-current liabilities	22,812,654	(67,237)	22,745,417
Deferred tax liability	67,237	(67,237)	-

Shareholder's equity	211,040	8,141	219,181
Net profit (loss) 2021	23,705	8,141	31,846

Cash flows. In the Statement of cash flows the class “Net cash generated from investing activities” has been inserted. The line item “Proceeds from repayments of loans” was reclassified from the class “Net cash generated from operating activities” to “Net cash generated from investing activities” and has no impact on net result and equity.

Accounting policies

Key assets and liabilities shown in the statement of financial position are subsequently measured as follows:

Items in the statement of financial position	Measurement principle
Items in the statement of financial position	Measurement principle
ASSETS
CURRENT ASSETS
Cash and cash equivalents	Amortized cost
Other financial assets
Loans to group companies; including interest receivables	Amortized cost
Derivative financial instruments	At fair value through profit and loss
ASSETS
NON-CURRENT ASSETS
Other financial assets
Loans to group companies	Amortized cost
Derivative financial instruments	At fair value through profit and loss
Deferred tax assets	Non-discounted amount measured at the tax rates that are expected to apply to the period when the asset is realized or the liability settled
SHAREHOLDERS' EQUITY AND LIABILITIES
CURRENT LIABILITIES
Financial liabilities
Bonds and other securitized liabilities	Amortized cost
Derivative financial instruments	At fair value through profit and loss
Income tax liabilities	Amount expected to be paid to the taxation authorities, using the tax rates that have been enacted or substantively enacted by the end of the reporting period
Other liabilities	Amortized cost
SHAREHOLDERS' EQUITY AND LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities
Bonds and other securitized liabilities	Amortized cost
Derivative financial instruments	At fair value through profit and loss
Deferred tax liabilities	Non-discounted amount measured at the tax rates that are expected to apply to the period when the asset is realized or the liability settled

‎The material principles on recognition and measurement outlined below were applied uniformly to all accounting periods presented in these financial statements.

Cash and cash equivalents with aff. comp., which include the balance from bank accounts included in the cash pooling and the inter-company current account with DTAG, are generally measured at amortized cost.

Financial instruments

Financial instruments are recognized as soon as the Company becomes a party to the contractual regulations of the financial instrument. However, in the case of regular way purchase or sale, the settlement date is relevant for the initial recognition and derecognition. This is the day on which the asset is delivered to or by the Company. In general, financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the entity currently has a right to offset the recognized amounts and intends to settle on a net basis. Transferred financial assets are derecognized in full if substantially all the risks and rewards of ownership are transferred or if some of the risks and rewards of ownership are transferred (risk sharing) and the acquirer has both the legal and the practical ability to sell the assets to a third party. If, in cases where risk is shared, the acquirer is unable to sell the assets to a third party, the assets will continue to be recognized to the extent the maximum risk retained. Financial liabilities are derecognized when the obligation specified in the contract expires or if there is a substantial modification of the terms of the contract. The Company has not yet made use of the option to designate financial instruments upon initial recognition as at fair value through profit or loss.

Financial assets include loans to group companies, interest receivables and derivative financial assets. They are measured at fair value upon initial recognition. For all financial assets not subsequently measured at fair value through profit or loss, the transaction costs directly attributable to the acquisition are recognized plus, in the case of loans to group companies, a loss account for expected credit losses. The fair values recognized in the statement of financial position are generally based on market prices of the financial assets. If these are not available, the fair value is determined using standard valuation models based on current market parameters. For this calculation, the cash flows already fixed or determined by way of forward rates using the current yield curve taking into account maturity adjusted spreads are discounted at the measurement date using the discount factors calculated from the yield curve applicable at the reporting date. Middle rates are used.

For the classification and measurement of Loans to group companies, the respective business model for managing the loans and whether the instruments have the characteristics of a standard loan, i.e., whether the cash flows are solely payments of principal and interest, is relevant. Assuming the assets have these characteristics and if the business model is to hold to collect the asset’s contractual cash flows, they are measured at amortized cost. This is computed using the effective interest method. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. On each statement of financial position date, the Company determines the recoverable amount of the assets by the calculation of the expected credit losses contributable to each of the items.

At initial recognition, Loans to group companies are measured including a loss allowance account for expected credit losses. The loss allowance is determined at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. Otherwise, the loss allowance is calculated at an amount equal to twelve-month expected credit losses. In this case, losses incurred later than twelve months after the reporting date would therefore not be considered. Based on the low credit risk assumption of Loans to group companies, the Company applies the practical expedient related to the identification of significant increase in credit risk.

When a loss allowance for expected credit losses is being determined, the historical probability of default supplemented by the relevant future parameters for the credit risk is used as the basis for the calculation. For all Loans to group companies, publicly available market data related to the Deutsche Telekom Group debt portfolio is used to determine the loss allowance for expected credit losses.

The loss allowance takes adequate account of the future expected credit risk; write-offs lead to the derecognition of the respective receivables. For allowances, financial assets are grouped together on the basis of similar credit risk characteristics, tested collectively for impairment, and written off, if necessary. The cash flows are discounted on the basis of the weighted average of the original effective interest rates of the financial assets in the relevant portfolio. Impairments of trade receivables are recognized in some cases using allowance accounts. The decision to account for credit risks using an allowance account or by directly reducing the receivable will depend on the reliability of the risk assessment.

Derivative financial assets are measured at fair value through profit and loss.

Financial liabilities are measured at fair value on initial recognition. For all financial liabilities not subsequently measured at fair value through profit and loss, the transaction costs directly attributable to the acquisition are also a component of the carrying amount. Subsequent to initial recognition all non-derivative financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are derecognized when the obligation under the liability is discharged, cancelled or expires.

Derivative financial liabilities are measured at fair value through profit and loss.

The Company uses derivative financial instruments to mitigate the interest rate risk resulting from its activities. The Company does not hold derivatives for speculative nor trading purposes. The Company does not apply hedge accounting as defined under IFRS 9. Derivatives that are not part of an effective hedging relationship as set out in IFRS 9 must be classified as and reported at fair value through profit or loss. If the fair values are negative, the derivatives are recognized as financial liabilities. Derivatives are recognized initially at fair value. Subsequent to initial recognition, derivatives are measured at fair value and changes in the fair value of derivatives are recognized immediately in other financial income (expense) in profit and loss. In the case that no market value is available, the fair value must be calculated using standard financial valuation models. The fair value of derivatives is the value that the Company would receive or have to pay if the financial instrument was discontinued at the reporting date. This is calculated on the basis of the contracting parties’ relevant exchange rates, interest rates and credit ratings at the reporting date. Calculations are made using mid rates. Currency basis and inter-tenor spreads are taken into account. In the case of interest-bearing derivatives, a distinction is made between the ”clean price” and the ”dirty price”. In contrast to the clean price the dirty price also includes the interest accrued. The fair values carried correspond to the full fair value or the dirty price.

INCOME TAXES

Income taxes include current income taxes as well as (correction of) deferred taxes. Current and deferred tax assets and liabilities must be recognized where they are probable. They are measured in accordance with the tax laws applicable or already announced as of the reporting date, provided said announcement has the effect of actual enactment. Where current and deferred tax is recognized, it must be reported as income or expense except to the extent that the tax arises from a transaction which is recognized outside profit and loss, either in other comprehensive income or directly in equity, or in connection with a business combination. Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset in the statement of financial position if the Company has a legally enforceable right to set off current tax assets against current tax liabilities, has an intention to settle net, and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amounts are those that are enacted by the statement of financial position date.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Other liabilities comprise provisions and other current obligations and are generally measured at face value.

Dividend distribution to the Company’s shareholder is recognized as a liability in the financial statement in the period in which the dividends are approved by the Company’s shareholder.

Interest income (expense) is recognized as it accrues, using the effective interest method.

Other financial income (expense) includes gains (losses) from derivative financial instruments and from foreign exchange. Foreign-currency transactions are translated into the functional currency at the exchange rate at the date of transaction. At statement of financial position dates, monetary items are translated at the closing rate, and non-monetary items are translated at the exchange rate at the date of transaction.

‎Exchange rate differences are recognized in other financial income (expense) in profit or loss.

The exchange rates of significant currencies changed as follows:

in €	Average rate		Rate at balance sheet date
	2022	2021	31-12-2022	31-12-2021

1 Pound sterling (GBP)	1,17289	1,16336	1,12695	1,19006
1 Hong Kong dollar (HKD)	0,12125	0,10880	0,12012	0,11320
1 U.S. dollar (USD)	0,94930	0,84568	0,93655	0,88285

General administrative expenses include personnel costs, service fees, audit and consultancy fees and operational leases (telephone, computer equipment and office rent) and are recognized at cost.

Judgements and estimates

The Company exercises judgement in measuring and recognizing provisions. Judgement is necessary in assessing the likelihood that a liability will arise and to quantify the possible range of the final settlement. These estimates are subject to change as new information becomes available.

The determination of impairments to loan assets involves the exercise of judgement of the methodology used and the assumptions made for the calculation of the expected credit loss. We refer to the section under accounting policies (Financial assets) and Note 6 in the Financial Statements.

Regarding assumptions made for the calculation of fair values we refer to the section under accounting policies (Derivative financial instruments).

War in Ukraine

There is uncertainty regarding the extent to which business activities and thus the results of operations and financial position of DTAG will further be affected overall. Possible future effects on the measurement of individual assets and liabilities are being analysed on an ongoing basis. DTAG has informed the Company that it has put in place cost-saving measures to mitigate potential effects on earnings.

Based on the analyses made by the Company and DTAG, the Company trust that DTAG will continue to be able to fulfil their liabilities towards the Company and judges the default risk being limited. The effects of the war in Ukraine and the economic crisis as a result thereof will not have a direct impact to the results, equity or valuation of the financial assets of the Company. The Company itself has taken additional measures to mitigate its operational risks.

‎Notes to the statement of comprehensive income

1. Risk management, financial derivatives and other disclosures on capital management

Principles of risk management

The Company’s principal financial liabilities, other than derivatives, mainly comprise issued bonds and the Company’s financial assets, other than derivatives, mainly comprise loans to group companies. These financial liabilities and financial assets are the result of the Company’s main purpose, i.e. to raise funds for DTAG or group companies of DTAG.

The main risks arising from the Company’s financial instruments are currency risk, interest rate risk and liquidity risk. Additionally, there is a limited credit and counterparty default risk. Management of these risks is performed in accordance with DTAG Group financial risk management policy. The Management Board regards effective management of the interest rate risk and foreign currency risk as one of its main tasks.

Historically, the Company has entered into various derivative transactions, primarily interest rate swaps and cross currency interest rate swaps, to mitigate the interest rate risk and currency translation risk arising from the group’s operations and its sources of funding. It is the Company’s policy that derivatives are exclusively used as hedging instruments, i.e. neither for trading nor for other speculative purposes. In 2022 and in 2021the Company did not conclude any new derivative contracts.

For the presentation of market risks, IFRS 7 requires sensitivity analysis that show the effects of hypothetical changes of the relevant risk variables on profit or loss and shareholder’s equity. In addition to currency risks the Company is exposed to interest rate risks according to the definition of IFRS 7. The periodic effects are determined by relating the hypothetical changes in the risk variables to the balance of financial instruments at the reporting date. It is assumed that the balance at the reporting date is representative for the year as a whole.

Currency risk

Currency risk as defined by IFRS 7 arises on account of financial instruments being denominated in a currency that is not the functional currency and being of a monetary nature. The Company’s currency risk relates to positions in GBP, HKD and USD. The currency risk is mitigated by means of raising the funds in the same currency as the financing provided to the borrowers.

The currency sensitivity analysis is based on the following assumptions:

Major non-derivative monetary financial instruments (loans and other financial assets and interest-bearing and non-interest-bearing liabilities) are directly denominated in the functional currency.

Whereas derivatives are valued at fair value, non-derivative financial instruments are carried at amortized cost. The currency valuation result of both derivatives and non-derivative financial instruments are included in other financial income (expense). Therefore, a change in exchange rates has an impact on the result of the Company.

Interest income and interest expense from financial instruments are recorded directly in the functional currency. The Company does not hedge the future net margins. This has an impact on the net profit margin of the Company.

If the euro had gained 10 percent against all currencies at December 31, 2022, other financial income would have been EUR 20.5 million lower and the equity would have been EUR 15.2 million lower (December 31, 2021: respectively EUR 24.1 million lower and EUR 18.1 million lower). If the euro had lost 10 percent against all currencies at December 31, 2021 the result would be in the opposite direction.

The hypothetical effect on profit or loss before income taxes of EUR 20.5 million mainly results from the currency sensitivity EUR/USD: EUR 20.4 million (2021: EUR 24.0 million).
‎

Interest rate risk

The Company is exposed to interest rate risk on the interest-bearing receivables and interest-bearing liabilities. However, the interest rates on the Company’s funding do in principle match with the interest rates on the corresponding loans provided by the Company (including a margin). Any interest rate exposure that arose nevertheless historically at the level of the Company has been mitigated by means of derivative contracts with DTAG so there will effectively be no interest rate risk with respect to cash flows at the level of the Company. However, as these derivatives are presented at fair value, a change in interest rates has an impact on the result of the company of the respective year.

The following table provides a breakdown of the USD Interest Rate Swaps concluded with DTAG:



Maturity	CCY	Notional	Pay	Receive

June 15, 2030	USD	1,685,000,000	6.28525%	6MUSLibor +1.12025%
June 15, 2030	USD	1,685,000,000	6MUSLibor +1.045%	8.250%

Interest rate risks are presented by way of sensitivity analyses in accordance with IFRS 7. These show the effects of changes in market interest rates on interest payments, interest income and expense, other income components and, if appropriate, shareholder’s equity. The interest rate sensitivity analyses are based on the following assumptions:

Changes in the market interest rates of non-derivative financial fixed instruments do not affect income because they are not measured at fair value but at amortized cost.

Changes in the market interest rates of non-derivative financial variable instruments do not affect income because these instruments are back-to-back transactions.

Changes in the market interest rate of derivatives do affect other financial income or expense since they are measured at fair value and are not part of a hedging relationship as set out in IFRS 9. They are therefore taken into consideration in the income-related sensitivity calculations.

If the market interest rates had been 100 basis points higher (lower) at December 31, 2022, the profit or loss before income taxes would have been EUR 7.4 million lower (higher) and the equity would have been EUR 5.5 million lower (higher) (December 31, 2021: respectively EUR 8.9 million lower (higher) and 6.7 lower (higher)).

Some issued bonds and attributed loan contracts granted to DTAG include a step-clause. If the rating of DTAG changes and triggers the step-clause of the specific bonds and loan contracts, the interest rates of those contracts are adjusted. If the rating of DTAG had been upgraded to A3 and A- as of December 31, 2022, this would trigger interest rates of two Bonds and three loan contracts being lowered by 0.5%. Two loan contracts have been concluded with different starting dates and interest levels as the underlying bond and which were hedged by the derivatives concluded with DTAG. Consequently, by the decrease of the interest rate by 0.5% the profit or loss before income taxes would have been EUR 3.0 million lower (December 31, 2021: EUR 3.5 million lower). If the rating of DTAG had been downgraded below Baa1 and BBB+ as of December 31, 2022, the interest rates of two other bonds and two other loan contracts would have been increased by 0.5%. However, in that case the profit or loss before income taxes and equity would not have materially changed.

‎

Credit and counterparty default risk

Loans are granted only to DTAG and DTAG group companies and as per the end of 2022, all existing loans are with DTAG. The maximum exposure to credit and counterparty default risk is generally represented by the carrying amounts of the financial assets that are carried in the statement of financial position, including derivatives with positive market values. However, the Company has concluded a guarantee and credit default insurance agreement with DTAG in favour of the owners of financial liabilities issued by the Company, for which the Company pays a fix guarantee fee plus a onetime premium on occasion of default, calculated as a ratio of the loan amount in default divided by the total amount of loans outstanding multiplied by EUR 10 million. This guarantee and credit default insurance agreement also covers the derivatives which were closed with DTAG, only for the reason of covering the interest exposures related to certain loans to affiliates companies. Therefore, management has assessed that the risk exposure of default (CVA/DVA) with regard to the two derivatives is not material.

The loans granted are unsecured and management does not expect non-performance by the counterparties of these loans. However, under IFRS 9 it is required to recognize and measure potential impairments in loans and receivables which are measured at Amortized Cost by the expected credit loss model. The general approach is applied. As per 31.12.2021 the provision on financial assets under IFRS 9 amounted to 1,408 thousands of euro (hereafter “TEUR”) and as per 31.12.2022 this was calculated at an amount of TEUR 3,724. This increase of the impairment is due to the increased one-year default probability (1YDP) rate of DTAG per 31.12.2022 compared to 31.12.2021. The difference of TEUR 2,316 has been recognized through comprehensive profit (loss). Please also refer to Note 6.

Liquidity risk

Please refer to Note 7.

Capital management

The overriding aim of the Company's capital management is to match amounts, return and maturities of its financial assets with its financial liabilities in order to ensure its capability to repay its debt. The Company's objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for the shareholder and benefits for other stakeholders.

‎

2. Finance income (expense)

The following table provides a breakdown of finance income (expense):


thousands of €	2022	2021

Interest income	907,043	947,235
Interest expense	(933,333)	(968,407)

	(26,290)	(21,172)

Interest income of TEUR 907,043 has been earned from loan contracts or cash deposits with Deutsche Telekom group companies in 2022 (2021: TEUR 947,235). All interest expense in 2022 and 2021 respectively has been derived from Deutsche Telekom group external debt. The negative interest result is mainly due to the fact that hedge accounting as defined in IFRS 9 is not applied. We refer to Note 1, 3 and 6.

The impairment and impairment reversals on financial assets in 2022 and 2021 are the recognition and release of provisions related to the expected credit losses on loans to group companies in accordance with IFRS 9. We refer to note 6.

3. Other financial income (expense)

The item “Other financial income” breaks down as follows:


thousands of €	2022	2021

(Loss) / Gain from financial instruments	(5,052)	16,477
Gain from foreign exchange differences	1,364	1,232

	(3,688)	17,709

The position “(Loss) /Gain from financial instruments” in 2022 (and 2021) comprise the fair value change of two USD interest derivatives which were concluded with DTAG. The Company does not apply hedge accounting under IFRS. Therefore, all movements in fair value of financial instruments and related income and expenses are included in 'Other financial income’. The position “Gain from foreign exchange differences” includes a gain of TEUR 9 (2021: a loss of TEUR 11) resulted from spot trades (the exchange of net interest margin in foreign currencies into euro) and is not disclosed in the net gain/loss by measurement category in Note 7.

‎

4. General and administrative expenses

The following table provides a breakdown of total general and administrative expenses:


thousands of €	2022	2021
Personnel costs
Remuneration Management Board	102	100
Other personnel benefits	3	2
Other social security costs	10	10
Total personnel costs	115	112

Other general and administrative expenses
Office rent	16	16
Service fees	141	141
Audit and tax consultancy fees	107	3
Computer lease	13	11
Other	5	5
Total other general and administrative expenses	282	176

Total general and administrative expenses	397	288

As at December 31, 2022 the Company employed 1 person (2021: 1 person).

Service fees of TEUR 141 have been paid in 2022 for services related to accounting, mainly provided by the shared service centre of DTAG (2021: TEUR 141). Furthermore, computer and software leasing fees of TEUR 13 have been paid in 2022 to DTAG (2021: TEUR 11).

The Audit and tax consultancy fees listed above relate to the procedures applied to the Company by accounting firms and external auditors as referred to in Section 1, subsection 1 of the Audit Firms Supervision Act (‘Wet toezicht accountantsorganisaties - Wta’) as well as by Dutch and foreign-based accounting firms, including their tax services and advisory groups. An amount of TEUR 71 has been recognized as fees for the audit of the 2022 financial statements performed by Deloitte Accountants B.V. (2021: TEUR 97, performed by Ernst & Young Accountants LLP) and TEUR 36 for tax services, regardless of whether the work was performed during the financial year (2021: TEUR 14). In 2021 a reservation of fees for the audit of 2019 and 2020 amounting to TEUR 107 was reversed. Deloitte Accountants B.V. and Ernst & Young respectively have not performed any other services to the Company in 2022 and 2021 respectively.

Remuneration Management Board and Supervisory Board

The remuneration of the Management Board consists of short-term employee benefits and complies with the “bezoldiging bestuurders” in accordance with Dutch law article “2:383 BW” and IAS24. The Management Board consists of two persons of which one is remunerated by the Company and one is employed by DTAG. There are no long-term benefits, no pension plan or agreements are applied. The remuneration of the Supervisory Board in 2022 was nil (2021: nil). All Supervisory Board members are employed by DTAG. DTAG does not recharge expenses made by its employees related to the tasks performed to the Company, which is not at arm’s length. As per 31.12.2022 and 31.12.2021 respectively no loan contracts were outstanding with the Management Board or the Supervisory Board.

5. Income taxes

Income taxes in the statement of comprehensive income:


thousands of €	2022	2021

Current income tax expenses	(38)	(2,499)
Adjustment in respect of current income tax of prior years	11,549	26
Deferred tax (expense)	-	(8,141)
Release of deferred tax through income statement	67,237	-

	78,748	(10,614)

‎On December 31, 2021 the Advance Pricing Agreement (APA) concluded with the Dutch Tax Authority expired and was not extended. The amount in “Current income tax expenses” reflects the calculated amount of income tax due over the year without having received a final assessment.

In 2022 the Company received refunds of Corporate Income Tax (CIT) for the years 2018 and 2019 amounting to TEUR 2,947 and TEUR 3,220 respectively. These refunds were a result of the settlement of a dispute between DTAG and the auditor of the German tax authorities related to the remuneration the Company received via the interest spread on the loans to group companies granted by the Company. In the year, the Dutch tax authorities have assumed the calculation by the German tax authorities based on the cost-plus method and decided to adjust the CIT returns of the Company for 2018 and 2019. As the audit was performed in Germany with a focus on DTAG and the dispute was ongoing, the Company did not anticipate on these refunds before it was informed about a settlement. For the years 2020 and 2021 the Company has recalculated the CIT and has anticipated for additional refunds amounting to TEUR 2,919 and TEUR 2,463 respectively.

The Dutch Government announced changes in corporate income tax rates to be enacted in the years 2022 and 2023 respectively. The Company used the 2022 income tax rates for its calculation of the deferred tax assets and liabilities in 2021 which resulted in additional deferred tax expenses in 2021. With the calculation of deferred tax in the past it was assumed that there were taxable temporarily differences between the result under IFRS and the result for tax purposes. However, in 2022 it was concluded that these timing differences did not and do not exist. Therefore, no deferred taxes should have been recognized according to definitions of IFRS 12.5. It has been decided to record the release of all deferred tax assets and liabilities prospectively via the 2022 statement of comprehensive income and not retrospectively via equity in the opening balance.

The following table shows the analyses of the effective income tax rate:


thousands of €	2022	2021

(Loss) / Profit before income taxes	(32,649)	34,319
Income tax benefit (expense) according to income statement	78,748	(10,614)
Effective income tax rate	241.2%	30.9%

Difference between effective tax rate and nominal tax rate can be explained as follows:


thousands of €	2022	2021

Current income tax (expense) based on cost-plus calculation, effective starting with 2022*	(38)	-
Current income tax (expense) based on APA, valid until 31.12.2021 including refund previous year	-	(8,529)
Effect from the change in income tax rate in deferred tax	-	(2,085)
Release of deferred tax through income statement **	67,237	-
Income tax previous years ***	11,549	-
Total income tax (expense)	78,748	(10,614)

* The CIT for 2022 is based on cost-plus basis and has been calculated as follows:

Taxable income: 254

15% CIT: 38

** In 2022 deferred tax liabilities recognized in the 2021 financial statement were released

*** In 2022, refunds of income tax were received for the financial years 2018 and 2019 and further refunds were anticipated for the financial years 2020 and 2021.

Income taxes in the statement of financial position:

Current income taxes in the statement of financial position refer to receivable income taxes related to refunds expected for the financial years 2020, 2021 and 2022 amounting to TEUR 8,337 as of December 31, 2022 (December 31, 2021: receivable income taxes of TEUR 378). All income taxes are payable in the Netherlands.

‎

Notes to the statement of financial position

6. Financial assets

The following table provides a breakdown of the financial assets:



thousands of €	31-12-2022		31-12-2021
	Total	Of which: current	Total	Of which: current

Loans to group companies	22,750,053	2,998,575	25,430,617	3,089,433
Derivative financial instruments	312,534	-	658,376	-
Interest receivables	240,921	240,921	308,619	308,619

	23,303,508	3,239,496	26,397,612	3,398,052

In 2022, loans to group companies were repaid to the Company for total nominal amounts of EUR 2,250 million and GBP 700 million resulting in a decrease of the book value of TEUR 3,089,530. Other movements in the value of “Loans to group companies” compared to 2021 consist of FX differences, impairment and amortization. As per 31.12.2022 and 31.12.2021 respectively all Loans to group companies were with DTAG.

The following table shows the movement of the provision on financial assets under IFRS 9:

Movement of provision in accordance with IFRS 9	2022	2021
thousands of €

Provision previous year	(1,408)	(39,438)
Provision in the year through comprehensive profit (loss)	(2,316)	-
Release of provision in the year through comprehensive profit (loss)	-	38,030
Provision end of year	(3,724)	(1,408)

A financial asset is in default when it is 90 days past due and by an individual assessment of the Unlikeness to Pay (UtP).

With regard to all loans and receivables, none of those are past due.

There are no indications as of the reporting date that the debtors will not meet their payment obligations.

The Management Board calculates the provision on financial assets under IFRS 9 by using the 1-year Default Probability (PD) rate of DTAG and a Loss Giving Default (LGD) of 60%. All current and non-current financial assets relate to loans to the shareholder DTAG. The rating of DTAG is BBB (according to Standard & Poor’s), BBB+ (according to Fitch) and Baa1 (according to Moody’s).

The loans have stated coupon interest rates as per December 31, 2022 of 0.755% to 9.33% (2021: 0.15% to 9.33%) and mature up to 19 years (2021: up to 20 years). The average interest rate of the loans was 3.63% as of December 31, 2022 (2021: 3.62%).

The Company does not hold derivatives for speculative nor for trading purposes. All derivatives have been contracted with the parent company DTAG. The Company does not make use of hedge accounting as defined under IFRS 9. Since derivatives are carried at fair value and the non-derivative instruments at amortized costs, the financial result under IFRS of the Company is volatile. As shown by the liquidity analysis under note 7 the Company always has net positive cash flows in every year until the last contract expires.

All interest receivables as of December 31, 2022 (and December 31, 2021 respectively) refer to accrued interest from loans to DTAG.

‎

7. Financial liabilities

The following table provides a breakdown of financial liabilities and its maturities:

thousands of €	31-12-2022
	Total	due within	due > 1 year	due
		1 year	< 5 years	> 5 years
Bonds and other securitized liablities	22,651,646	2,988,161	7,853,986	11,809,499
Guarantee fees payable	92,848	10,174	21,322	61,352
Interest liabilities	230,134	230,134	-	-
Derivative financial instruments	106,508	-	-	106,508

	23,081,136	3,228,469	7,875,308	11,977,359

thousands of €	31-12-2021
	Total	due within	due > 1 year	due
		1 year	< 5 years	> 5 years
Bonds and other securitized liablities	25,311,872	3,079,443	8,185,248	14,047,181
Guarantee fees payable	109,868	11,554	20,234	78,080
Interest liabilities	296,367	296,367	-	-
Derivative financial instruments	414,674	-	-	414,674

	26,132,781	3,387,364	8,205,482	14,539,935

The average interest rate for bonds is 3.70% as of December 31, 2022 (2021: 3.66%).

Guarantee fee liabilities to be paid to DTAG are paid over the terms of the external financial instruments. DTAG provides a full and irrevocable guarantee for all liabilities issued by the Company, except for the own risk of EUR 10 million the Company is exposed to. Payment dates of guarantee fees are generally matched with interest payment dates of the external financial liabilities.

In 2022 (and 2021 respectively) all interest liabilities refer to group external debt.

In 2022 bonds were repaid by the Company for total nominal amounts of EUR 2,250 million and GBP 700 million resulting in a decrease of the book value of TEUR 3,089,530. Other movements in the value of “Bonds and other securitized liabilities” compared to 2021 consist of FX differences and amortization.

Liquidity analysis

The following table shows the contractually agreed undiscounted interest and guarantee payments and repayments of the non-derivative financial instruments and the derivatives with positive and negative values as of December 31, 2022 and as of December 31, 2021 respectively. All instruments held at December 31, 2022 (December 31, 2021 respectively) and for which payments were already contractually agreed are included. Planning data for future new assets or liabilities were not included. Each amount in foreign currency was translated at the closing rate prevailing on reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December 31, 2022 (December 31, 2021 respectively). Based on this liquidity analysis the Company expects net positive cash flows in all years presented herein.

‎

The following tables show the undiscounted liquidity analysis as of December 31, 2022:

thousands of €	2023	2024-2027	>2027	Total cash flows	Carrying amount

Non derivative borrowings (cash payables)	(3,831,814)	(10,851,308)	(14,257,143)	(28,940,265)	(22,651,646)
Bonds fix	(3,831,814)	(10,851,308)	(14,257,143)	(28,940,265)

Guarantees payable	(20,203)	(55,537)	(35,839)	(111,579)	(92,848)

Derivatives	32,209	128,772	80,482	241,463	206,026
IR Derivatives outflow	(198,662)	(787,092)	(491,933)	(1,477,687)
IR Derivatives inflow	230,871	915,864	572,415	1,719,150

Loans granted (cash receivables)	3,828,913	10,804,659	14,227,684	28,861,256	22,750,053
Loans to aff. comp. fix	3,828,913	10,804,659	14,227,684	28,861,256

Total Cash Flow	9,105	26,586	15,184	50,875

The following tables show the liquidity analysis as of December 31, 2021:

thousands of €	2022	2023-2026	>2026	Total cash flows	Carrying amount

Non derivative borrowings (cash payables)	(4,013,729)	(11,244,116)	(17,085,112)	(32,342,957)	(25,311,872)
Bonds fix	(3,613,729)	(11,244,116)	(17,085,112)	(31,942,957)
Bonds floating	(400,000)	-	-	(400,000)

Guarantees payable	(22,566)	(68,833)	(45,691)	(132,090)	(109,868)

Derivatives	30,362	121,388	106,214	257,964	243,702
IR Derivatives outflow	(114,042)	(456,335)	(399,293)	(969,670)
IR Derivatives inflow	144,404	577,723	505,507	1,227,634

Loans granted (cash receivables)	4,015,894	11,216,448	17,044,597	32,276,939	25,430,617
Loans to aff. comp. fix	3,615,282	11,216,448	17,044,597	31,876,327
Loans to aff. comp. floating	400,612	-	-	400,612

Total Cash Flow	9,961	29,887	20,008	59,856

‎

Additional disclosures on financial instruments

The following table provides carrying amounts, amounts recognized and fair values by measurement categories:


thousands of €	Category in accordance to IFRS 9	Carrying amount 31.12.2022	Amounts recognized in statement of financial position according to IFRS 9		Fair Value 31.12.2022

			Amortized cost	Fair value recognized in profit or loss
Assets
Cash and cash equivalents with aff. comp¹	AC	18,916	18,916	-	-
Loans to aff. comp.	AC	22,750,053	22,750,053	-	23,181,781
Other financial assets¹	AC	240,921	240,921	-	-
Derivative financial assets	FVTPL	312,534	-	312,534	312,534
Liabilities
Bonds and other securitized liablities	AC	22,651,646	22,651,646	-	22,858,461
Other financial liabilities	AC	322,982	322,982	-	317,263
Derivative financial liabilities	FVTPL	106,508	-	106,508	106,508

Thereof aggregated according to IFRS 9 categories
Assets
Financial assets carried at amortized cost	AC	23,009,890	23,009,890	-	23,181,781
Financial assets at fair value through profit and loss	FVTPL	312,534	-	312,534	312,534
Liabilities
Financial liabilities carried at amortized cost	AC	22,974,628	22,974,628	-	23,175,724
Financial liabilities at fair value through profit and loss	FVTPL	106,508	-	106,508	106,508


thousands of €	Category in accordance to IFRS 9	Carrying amount 31.12.2021	Amounts recognized in statement of financial position according to IFRS 9		Fair Value 31.12.2021

			Amortized cost	Fair value recognized in profit or loss
Assets
Cash and cash equivalents with aff. comp.¹	AC	13,156	13,156	-	-
Loans to aff. comp.	AC	25,430,617	25,430,617	-	29,773,211
Other financial assets¹	AC	308,619	308,619	-	-
Derivative financial assets	FVTPL	658,376	-	658,376	658,376
Liabilities
Bonds and other securitized liablities	AC	25,311,872	25,311,872	-	29,353,837
Other financial liabilities	AC	406,235	406,235	-	415,402
Derivative financial liabilities	FVTPL	414,674	-	414,674	414,674

Thereof aggregated according to IFRS 9 categories
Assets
Financial assets carried at amortized cost	AC	25,752,392	25,752,392	-	29,773,211
Financial assets at fair value through profit and loss	FVTPL	658,376	-	658,376	658,376
Liabilities
Financial liabilities carried at amortized cost	AC	25,718,107	25,718,107	-	29,769,239
Financial liabilities at fair value through profit and loss	FVTPL	414,674	-	414,674	414,674

¹ We refer to the exception of IFRS 7.29(a) for the disclosure of the fair value. The amounts disclosed are approximately equal to the fair values.

AC = Amortized Cost

FVTPL = Fair Value and changes in Profit and Loss

‎

Only derivative financial instruments are measured at fair value in the statement of financial position of the Company. IFRS 7 requires that the classification of financial instruments at fair value is determined by reference to the source of input used to derive the fair value. The classification uses the following three-level hierarchy: Level 1 uses quoted prices in active markets for identical assets or liabilities as input for the determination of the fair value, level 2 uses inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) and level 3 uses inputs for the asset or liability that are not based on observable market data (unobservable inputs). The derivatives of the Company are exclusively categorised under level 2 in the fair value hierarchy of IFRS 7.

The fair values recognized in the statement of financial position generally correspond to the market prices of the financial assets. If these are not immediately available, they must be calculated using standard valuation models based on current market parameters. For this calculation, the cash flows already fixed or determined by way of forward rates using the current yield curve taking into account maturity adjusted spreads are discounted at the measurement date using the discount factors calculated from the yield curve applicable at the reporting date. Middle rates are used.

Since no quoted prices are available for the derivative financial instruments of the Company, the fair value is determined with the use of standard valuation models based on observable market parameters. For this calculation, the cash flows already fixed or determined by way of forward rates using the current yield curve taking into account maturity adjusted spreads are discounted at the measurement date using the discount factors calculated from the yield curve applicable at the reporting date. Middle rates are used. A distinction between the Clean and the Dirty price is made. The Dirty Price also comprises accrued interest. The recognized Fair Values correspond to the Full Fair Value or the Dirty Price.

The classification in level 1 or level 2 of quoted bonds has been determined by the trading volume of the instrument. USD and EUR denominated bonds traded in an active market have been classified in level 1, all other, traded in less liquid markets, in level 2.

In 2022 and in 2021 the guarantee fees have been classified in level 2 and a fair value for the Other financial liabilities is disclosed accordingly. The fair values of the financial instruments classified in level 1 equal the nominal amounts multiplied by the price quotations at the reporting date. All other fair values of the financial instruments classified in level 2 are calculated as present values of the payments associated with the debts, based on the applicable yield curve and DTAG’s credit spread curve for specific currencies.

The following table shows the classification of financial instruments that are not recognized at fair value but whose fair values are disclosed:

thousands of €	31-12-2022

	Level 1	Level 2	Total
Assets
Loans to aff. comp.		23,181,781	23,181,781

Liabilities
Financial liabilities at amortized cost	19,620,640	3,555,084	23,175,724
- of which marketable securities	19,620,640		19,620,640
- of which non-marketable securities		3,237,821	3,237,821
- of which other financial liabilities		317,263	317,263

thousands of €	31-12-2021

	Level 1	Level 2	Total
Assets
Loans to aff. comp.		29,773,211	29,773,211

Liabilities
Financial liabilities at amortized cost	19,797,888	9,971,351	29,769,239
- of which marketable securities	19,797,888		19,797,888
- of which non-marketable securities		9,555,949	9,555,949
- of which other financial liabilities		415,402	415,402

‎

The following table provides net gains and losses from interests by measurement categories:


thousands of €	From interest	From subsequent measurement		From derecognition	Net gain (loss)
		At fair value	Currency translation		2022
Financial Assets at Amortized Cost (AC)	907,043	-	402,646	(2,316)	1,307,373
Financial Instruments measure at Fair Value and changes in Profit and Loss		(5,052)		-	(5,052)
Financial liabilities measured at amortized cost (AC)	(933,333)	-	(401,291)	-	(1,334,624)


thousands of €	From interest	From subsequent measurement		From derecognition	Net gain (loss)
		At fair value	Currency translation		2021
Financial Assets at Amortized Cost (AC)	947,235	-	815,552	38,030	1,800,817
Financial Instruments measure at Fair Value and changes in Profit and Loss		16,477		-	16,477
Financial liabilities measured at amortized cost (AC)	(968,407)	-	(814,310)	-	(1,782,717)

The following financial instruments are subject to enforceable master netting arrangements and similar agreements. The counterparty for all those derivative financial instruments is DTAG. Even though a netting option exists, netting is currently not applied. However, both parties will have the potential right to settle all derivative financial instruments on a net basis in the event of default of the other party.

Offsetting 31.12.2022:



thousands of €	Derivative financial assets	Derivative financial liabilities
Net amount presented in the balance sheet	312,534	106,508
Related amounts not set off in the balance sheet	106,508	106,508
thereof: financial instruments	106,508	106,508
thereof: collaterals	-	-
Net amount	206,026	-

Offsetting 31.12.2021:


thousands of €	Derivative financial assets	Derivative financial liabilities
Net amount presented in the balance sheet	658,376	414,674
Related amounts not set off in the balance sheet	414,674	414,674
thereof: financial instruments	414,674	414,674
thereof: collaterals	-	-
Net amount	243,702	-

Interest from financial instruments is recognized in finance income and other financial income (expense). We refer to notes 2 and 3.

Currency translation from financial instruments is recognized in other financial income (expense). We refer to note 3.

The net result from the subsequent measurement for financial instruments held for trading also includes interest and currency translation effects.

Finance expense from financial liabilities measured at amortized cost primarily consists of interest expense on bonds and other financial liabilities.

Finance income from loans and receivables primarily consists of interest income on loans to group companies.

‎8. Equity

The issued share capital amounts to EUR 500,000 and consists of 1,000 shares of common stock at a par value of EUR 500. There were no movements in the number of shares in 2022 or 2021. All shares are held by DTAG.

In 2022 the Company paid EUR 7,621 dividend per share (2021: EUR 11,419). In 2021 as well as in 2022 the Management Board assessed that the Company expects net positive cash flows for the year ending December 31, 2023 as well as in each of the following years. For the result of these assessments, we refer to the liquidity analyses in note 7 of these notes. The Management Board has not yet decided about the appropriation of the result.

9. Notes to the statement of cash flows

The statement of cash flows has been prepared using the direct method, showing each major class of gross receipts and gross cash payments.

The position of “Cash and cash equivalents with aff. comp.” refers to the balance from bank accounts included in the cash pooling and the inter-company current account, both with DTAG and is completely available for use by the Company.

Net cash generated from operating activities is mainly a result of the net margin earned by the Company. Net cash generated from investing activities comprises from cash inflows for loans that have been repaid to the Company. Net cash used in financing activities mainly includes cash outflows for the redeemed bonds and dividend payment to the Companies’ shareholder.

As far as applicable for the years 2021 and 2022 the cash in- and outflows for loan and derivative repayments and for new loans granted to companies of DTAG Group matched the cash in- and outflows from issues and/or repayments of bonds.

10. Segment reporting

The primary activity of the Company is to finance its parent company DTAG and DTAG group companies. Therefore, segment information other than geographic information and information per major customer is not reported separately. There is only one reportable segment.

Geographic information

Interest income from group companies according to their country of operations:


thousands of €	2022	2021

Germany	907,043	942,932
Hungary	-	4,303
	907,043	947,235

All interest income from group companies in Germany is earned from loans to DTAG and the cash-pooling and inter-company current accounts with DTAG.

For non-current loan receivables, we refer to note 6.

‎

11. Events after the statement of financial position date

On February 1, 2023 the Company redeemed parts of eight EUR Bonds with a total nominal amount of EUR 2,089 million and parts of two GBP Bonds with a total nominal amount of GBP 239 million (EUR 271 million). On March 13, 2023 the company additionally redeemed parts of two USD bonds for a total nominal value of USD 632 million (EUR 591million). Parts of loans to DTAG with the same aggregate nominal amounts were repaid to the Company. On March 17, 2023 the Company redeemed a EUR Bond with a nominal value of EUR 200 million and a loan to DTAG with the same nominal amount was repaid to the Company. These repayments will cause a negative impact of TEUR 1,366 on the interest result and equity of the Company in 2023.

No other events have occurred since December 31, 2022 which would make the present financial position materially different from that shown in the statement of financial position as of that date or which would require adjustment to or disclosure in the financial statement.

12. Related parties

The Company is a group finance company and hence it had related party transactions during 2022 and 2021 respectively. Main existing transactions are with DTAG and are covered by loan contracts, derivative agreements and a guarantee and credit default risk insurance agreement. Related party transactions with other Deutsche Telekom group companies, such as the shared service centre, were covered by service level agreements. All transactions with DTAG, except for the remuneration to the Management Board member and Supervisory Board members of the Company hired by DTAG, and other Deutsche Telekom group companies are based on the arm’s length principle. All amounts of material transactions with related parties are disclosed in notes 2, 3, 4, 6, 7, 8 and 10.

Maastricht, March 27, 2023

The Management Board:		The Supervisory Board:
F. Roose		S. Wiemann

M. Schäfer		Dr. Ch. Dorenkamp

		Dr. A. Lützner

‎

Other information

Proposed appropriation of result according to article 21 of the articles of association

Article 21.1 of the articles of association states that “The General Meeting has the authority to allocate the profits determined by the adoption of the annual accounts. If the General Meeting does not adopt a resolution regarding the allocation of the profits prior to or at the latest immediately after the adoption of the annual accounts, the profits will be reserved.”.

Article 21.2 of the articles of association states that “The General Meeting has the authority to make distributions. If the Company is required by law to maintain reserves, this authority only applies to the extent that the equity exceeds these reserves. No resolution of the General Meeting to distribute shall have effect without the consent of the Management Board. The Management Board may withhold such consent only if it knows or reasonably should expect that after the distribution, the Company will be unable to continue the payment of its due debts.”.

The Management Board and the Supervisory Board have not yet decided about their proposal for the allocation of the result to the General Meeting of Shareholders.

Independent audit

The company is required by Dutch law to have its financial statements audited. We refer to the independent auditor’s report as set out on the next pages.

‎

Independent auditor’s report

To the shareholders of Deutsche Telekom International Finance B.V.

Report on the audit of the financial statements 2022 included in the annual report

Our opinion

We have audited the financial statements 2022 of Deutsche Telekom International Finance B.V., based in Maastricht.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of Deutsche Telekom International Finance B.V. as at December 31, 2022, and of its result and its cash flows for 2022 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.

The financial statements comprise:

1.The statement of financial position as at December 31, 2022.

2.The following statements for 2022: the statement of comprehensive income, changes in equity and cash flows.

3.The notes comprising material accounting policy information.

Basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.

We are independent of Deutsche Telekom International Finance B.V. in accordance with the EU-Regulation on specific requirements regarding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information in support of our opinion

We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following information in support of our opinion was addressed in this context, and we do not provide a separate opinion or conclusion on these matters.

Materiality

Based on our professional judgement we determined the materiality for the financial statements as a

whole at EUR 233,000,000. The materiality is based on 1 % of total assets. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.

We agreed with the Supervisory Board that misstatements in excess of EUR 11,650,000, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

‎

Audit approach fraud risks

We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the entity and its environment and the components of the system of internal control, including the risk assessment process and management's process for responding to the risks of fraud and monitoring the system of internal control and how the Supervisory Board exercises oversight, as well as the outcomes. We refer to section Management Board policy with respect to risks of the management report for management's fraud risk assessment and section paragraph 4 of the Supervisory Board report in which the Supervisory Board reflects on this fraud risk assessment. We note that management has not formalized its fraud risk assessment.

We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as among others the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation and, where considered appropriate, tested

the operating effectiveness, of internal controls designed to mitigate fraud risks.

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption in close co-operation with our forensic specialists. We evaluated whether these factors indicate that a risk of material misstatement due fraud is present.

We identified the following fraud risks and performed the following specific procedures:

•Management override of controls:

owe have reviewed journal entries made and evaluated whether these include elements that could relate to fraud and management override;

owe have identified and obtained an understanding of the business rationale for significant or unusual transactions that are outside the normal course of business; and

owe have evaluated whether the judgments and decisions made by management in making the estimates included in the financial statements, even if they are individually reasonable, indicate a possible bias on the part of the entity’s management.

We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance.

We considered available information and made enquiries of management.

We tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements.

We evaluated whether the selection and application of accounting policies by the group, particularly those related to subjective measurements and complex transactions, may be indicative of fraudulent financial reporting.

We evaluated whether the judgments and decisions made by management in making the accounting estimates included in the financial statements indicate a possible bias that may represent a risk of material misstatement due to fraud. Management insights, estimates and assumptions that might have a major impact on the financial statements are disclosed in note Accounting policies of the financial statements.

We performed a retrospective review of management judgments and assumptions related to significant accounting estimates reflected in prior year financial statements. Impairment testing of fixed assets is a significant area to our audit as the determination whether these assets are not carried at more than their recoverable amounts is subject to significant management judgment.

For significant transactions such as redemption of bonds we evaluated whether the business rationale of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets.

This did not lead to indications for fraud potentially resulting in material misstatements.

‎

Audit approach compliance with laws and regulations

We assessed the laws and regulations relevant to the Company through discussion with management, reading minutes.

As a result of our risk assessment procedures, and while realizing that the effects from non-compliance could considerably vary, we considered the following laws and regulations: adherence to (corporate) tax law and financial reporting regulations, the requirements under the International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code with a direct effect on the financial statements as an integrated part of our audit procedures, to the extent material for the related financial statements.

We obtained sufficient appropriate audit evidence regarding provisions of those laws and regulations generally recognized to have a direct effect on the financial statements.

Apart from these, the Deutsche Telekom International Finance B.V. is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts and/or disclosures in the financial statements, for instance, through imposing fines or litigation.

Given the nature of Deutsche Telekom International Finance B.V.'s business and the complexity of the Company, there is a risk of non-compliance with the requirements of such laws and regulations.

Our procedures are more limited with respect to these laws and regulations that do not have a direct effect on the determination of the amounts and disclosures in the financial statements. Compliance with these

laws and regulations may be fundamental to the operating aspects of the business, to Deutsche Telekom International Finance B.V.'s ability to continue its business, or to avoid material penalties (e.g., compliance with the terms of operating licenses and permits or compliance with environmental regulations) and therefore non-compliance with such laws and regulations may have a material effect on the financial statements. Our responsibility is limited to undertaking specified audit procedures to help identify

non-compliance with those laws and regulations that may have a material effect on the financial statements. Our procedures are limited to (i) inquiry of management, the Supervisory Board, the Executive Board

and others within Deutsche Telekom International Finance B.V.'s as to whether the Deutsche Telekom International Finance B.V. is in compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or regulatory authorities to help identify non-compliance with those laws and regulations that may have a material effect on the financial statements.

Naturally, we remained alert to indications of (suspected) non-compliance throughout the audit.

Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and regulations have been disclosed to us.

Audit approach going concern

Management has prepared the annual report on the basis of going concern for the period of 12 months from the date of preparation of the annual report. Our work to review the Board’s going concern assessment includes, among others:

•Considering whether the management’s going concern assumption contains all relevant information.

•Determining whether management has identified events or circumstances that may cast significant doubt on the company’s ability to continue as a going concern.

•Analyzing whether the current and required financing for the continuation of the entire business activities is guaranteed.

Our audit procedures show that the going concern assumption used by management is acceptable and no going concern risks have been identified.

‎

Our key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.

Key audit matter: impairment of the loans to the group company

Key audit matter is the risk associated with the possible impairment of the loans to a group company. Reference is made to note 6 of the financial statements.

The loans to the group company, including the related interest, comprise a significant part of the Company’s balance sheet. The loans to the group company are valued at amortized cost less any impairments, if applicable.

The loans to the group company consist of receivables from the parent company, Deutsche Telekom AG. The risk of potential impairments is identified as a result of the significant part of the Company’s balance sheet and the fact that it mainly relates directly or indirectly to one counterparty. Inaccurate valuation of loans to Deutsche Telekom AG. could have a material impact on the valuation of the loans to Deutsche Telekom AG. We consider the valuation of these account balances to be a key audit matter.

How our audit addressed the matter

We performed the following procedures to audit the valuation of the loans to the group company:

• We recalculated the amortized cost value and the related interest income based on the effective interest method.

• We reviewed the audited 2022 financial statements of Deutsche Telekom AG, analyzed the financial performance and evaluated valuation of the loans to Deutsche Telekom AG to conclude on possible triggering events for impairment.

• We have challenged the information used by management.

• We concluded on existence of the receivables in verifying the outstanding amount with the loan agreements, the financial statements of the parent company and by signed confirmations from the parent company.

• We reviewed the Company’s disclosure note 6 on the matter.

Key observations and conclusion

Based on the procedures performed, as described above, we did not identify any material reportable matters in management’s assessment of the recoverability of the loans to the group company.

__________________________________

Key audit matter: Recognition of Deferred Corporate income tax

Key audit matter is the risk associated with the inaccurate or incomplete recognition of the account balance Deferred tax.

Through 2021, the Company has recognized a deferred tax balance for temporary differences between taxable results and commercial results. According to the 2021 financial statements, the deferred tax liability was recognized for an amount of EUR 67,237,000.

How our audit addressed the matter

We performed the following procedures to audit the tax position, including the Deferred tax position:

• We have discussed the matter with management of the Company.

• We have reviewed the Company’s position paper and calculations.

• We have shared this position paper with the auditor of the Company’s 2021 financial statements.

• We have discussed the matter with the tax advisor of the Company and reviewed their tax letter.

• We have discussed the matter with our internal tax specialist.

• We have reviewed the related disclosure note in the financial statement.

‎

Since the balance might comprise judgment and resulted in significant auditor’s attention during the audit, we consider this to be a key audit matter.

Key observations and conclusion

The conclusion was that the recognition of a deferred tax liability was not correct and should therefore be released. As a result, the Company recorded the release in the Company’s statement of comprehensive income 2022. We refer to the paragraph Correction of prior period errors of the financial statements 2022.

Based on the procedures performed, we did not identify any other material reportable matters.

Report on the other information included in the annual report

The annual report contains other information, in addition to the financial statements and our auditor's report thereon.

The other information consists of:

•Report of the Management Board.

•Report of the Supervisory Board.

•Other Information as required by Part 9 of Book 2 of the Dutch Civil Code.

Based on the following procedures performed, we conclude that the other information:

•Is consistent with the financial statements and does not contain material misstatements.

•Contains all the information regarding the management report and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.