Development of business in the Group

The new accounting standards IFRS 15 “Revenue from Contracts with Customers” and IFRS 9 “Financial Instruments” took effect as of January 1, 2018. Prior-year comparatives were not adjusted. Application of these standards did not have any material effect on the Group’s results of operations.

IFRS 15 introduces an amended model for determining and recognizing revenue. The effects of the new regulations on our operating segments differ depending on the underlying business model and, for the most part, neutralize each other. For example, in our Germany operating segment – where the sale of subsidized handsets in combination with service contracts is still customary – the amortization of capitalized contract assets reduces revenue to a minor extent. In our United States operating segment – where customers are predominantly offered payment-by-installment models or leased models – the capitalization of customer acquisition costs and their distribution over the average customer retention period have a slightly positive impact on EBITDA.

IFRS 15 has a material impact on the presentation of the Group’s results of operations and its financial position. The main effects are explained where the changes in the relevant items of the statement of financial position are discussed.

For a more detailed explanation of these remeasurement and reclassification effects, please refer to the section “Accounting policies” of the interim consolidated financial statements.