We continued our growth trend as planned: Net revenue grew by 2.5 percent to EUR 74.9 billion.
Our United States operating segment contributed revenue growth of 5.9 percent to this trend. In our Europe and Germany operating segments revenue also increased slightly by 1.2 percent and 0.7 percent respectively.
In our Systems Solutions and Group Development operating segments we recorded declines in revenue of 1.1 percent and 3.6 percent respectively.
On a comparable basis, i.e., excluding exchange rate effects and effects from changes in the composition of the Group, net revenue increased by as much as 3.6 percent.
Adjusted EBITDA grew by 3.8 percent to EUR 22.2 billion. Adjusted for exchange rate effects and changes in the composition of the Group, we ended the year exactly within the target corridor of EUR 22.4 billion to EUR 22.5 billion, communicated most recently.
Due to the ongoing success of T-Mobile US, we generated an increase in adjusted EBITDA of 8.8 percent in the United States operating segment. Adjusted EBITDA in our Germany operating segment also grew, whereas our Europe, Systems Solutions, and Group Development operating segments recorded declines.
At 29.7 percent, the Group’s adjusted EBITDA margin increased slightly against the prior-year level of 29.3 percent. The EBITDA margin was 38.6 percent in Germany, 32.3 percent in Europe, and 26.1 percent in the United States.
EBIT increased by 2.4 percent to EUR 9.4 billion.
EBITDA included positive net special factors of EUR 1.7 billion, mainly attributable to the reversal of impairment losses previously recognized for spectrum licenses at T-Mobile US (EUR 1.7 billion), to the sale of Strato (EUR 0.5 billion) and of further shares in Scout24 AG (EUR 0.2 billion), and to a settlement agreement concluded with BT (EUR 0.2 billion). The prior year had profited from generally higher net positive special factors of EUR 1.1 billion, primarily from the sale of our stake in the EE joint venture (EUR 2.5 billion) and from transactions for the exchange of spectrum licenses in the United States (EUR 0.5 billion). Special factors in connection with staff-related measures (EUR 0.6 billion) were down EUR 1.1 billion compared with the prior year.
At EUR 14.6 billion, depreciation, amortization and impairment losses were up EUR 1.2 billion year-on-year, primarily due to the impairment of goodwill and property, plant and equipment in the Systems Solutions and Europe operating segments of EUR 2.2 billion in total (prior year: EUR 0.7 billion).
Net profit increased by EUR 0.8 billion to EUR 3.5 billion.
Loss from financial activities decreased by EUR 0.2 billion, mainly in connection with the EUR 1.5 billion (prior year: EUR 2.2 billion) impairments of our financial stake in BT recognized in profit and loss; negative remeasurement effects from the exercise and measurement of embedded derivatives at T-Mobile US had an increasing effect on loss from financial activities.
The tax benefit which was mainly attributable to the remeasurement of deferred taxes at T-Mobile US as a result of the U.S. tax reform amounted to EUR 0.6 billion, while in the prior year there had been a tax expense of EUR 1.4 billion.
Profit attributable to non-controlling interests increased by EUR 1.7 billion, primarily due to the reversal of impairment losses previously recognized for spectrum licenses and the remeasurement of deferred taxes at T-Mobile US.
Net debt increased by EUR 0.8 billion to EUR 50.8 billion compared with the end of 2016.
The increase was attributable to spectrum acquisition (EUR 7.4 billion), dividend payments – including to non-controlling interests – (EUR 1.6 billion), and the increase in liabilities from finance leases (EUR 1.0 billion). This increase was only partially offset by the positive effects from free cash flow (EUR 5.5 billion) and the sale of Strato (EUR 0.6 billion) and further shares in Scout24 AG (EUR 0.3 billion). Exchange rate effects of EUR 2.9 billion also had a positive effect.
Cash capex (including spectrum investment) increased from EUR 13.6 billion to EUR 19.5 billion.
In the reporting period, mobile spectrum licenses were acquired for a total of EUR 7.4 billion, mainly in the United States and in Europe. EUR 7.2 billion of this total was attributable to the spectrum auction concluded in the United States in April 2017. In the prior-year period, mobile spectrum licenses were acquired for a total of EUR 2.7 billion, primarily in the United States and Europe operating segments.
Excluding the effects of spectrum acquisitions, cash capex increased by EUR 1.1 billion, primarily in the United States, Germany, and Europe operating segments. In each case, this was due to investments we have made in the build-out and modernization of our networks.
FREE CASH FLOW (BEFORE DIVIDEND PAYMENTS AND SPECTRUM INVESTMENT)
Free cash flow increased by EUR 0.6 billion to EUR 5.5 billion and was thus exactly on target despite a consistently high level of capital expenditure.
The year-on-year increase of EUR 1.7 billion in net cash from operating activities, which profited mainly from the positive business development of the United States operating segment, had an increasing effect.
The year-on-year increase of EUR 1.1 billion in cash capex (before spectrum investment) reduced free cash flow.
Our key performance indicator ROCE (return on capital employed) improved by 0.1 percentage points in the reporting period to reach 5.8 percent.
This was attributable to an increase in net operating profit after taxes (NOPAT) while the average amount of net operating assets (NOA) remained virtually stable over the year.
NOPAT increased in 2017 on the back of significantly better adjusted EBITDA and the positive special factors. Impairment losses recognized in the reporting year on goodwill and property, plant and equipment had a negative effect on NOPAT.