10 Financial liabilities

millions of €
  Dec. 31, 2017 Dec. 31, 2016
  Total Due within
1 year
Due > 1 year
 ≤ 5 years
Due > 5 years Total Due within
1 year
Due > 1 year
 ≤ 5 years
Due > 5 years
Bonds and other securitized liabilities 45,453 3,762 14,982 26,709 50,090 8,175 15,216 26,699
Liabilities to banks 4,974 1,365 2,739 870 4,097 1,293 2,071 733
Of which: promissory notes 539 150 287 102 191 61 130
Of which: loans from the European Investment Bank 3,149 159 2,315 675 2,359 243 1,616 500
Of which: other loans 1,286 1,056 137 93 1,547 1,050 394 103
  50,427 5,127 17,721 27,579 54,187 9,468 17,287 27,432
Finance lease liabilities 2,635 751 1,284 600 2,547 585 1,275 687
Liabilities to non-banks from promissory notes 480 49 209 222 535 35 204 296
Liabilities with the right of creditors to priority repayment in the event of default 1,866 19 76 1,771
Other interest-bearing liabilities 1,598 1,025 427 146 1,823 1,268 381 174
Other non-interest-bearing liabilities 1,443 1,311 129 3 1,958 1,769 186 3
Derivative financial liabilities 946 95 81 770 1,734 1,278 315 141
  7,102 3,231 2,130 1,741 10,463 4,954 2,437 3,072
Financial liabilities 57,529 8,358 19,851 29,320 64,650 14,422 19,724 30,504

Financial liabilities decreased year-on-year by EUR 7.1 billion to a total of EUR 57.5 billion.

Deutsche Telekom has established ongoing liquidity management. To ensure the Group’s and Deutsche Telekom AG’s solvency and financial flexibility at all times, Deutsche Telekom maintains a liquidity reserve in the form of credit lines and cash. This liquidity reserve is to cover the capital market maturities of the next 24 months at any time.

In addition to the reported liabilities to banks, Deutsche Telekom had ­standardized bilateral credit agreements with 22 banks for a total of EUR 12.9 billion as of December 31, 2017. As of December 31, 2017, EUR 0.2 billion of these credit lines had been utilized. None of these credit lines were utilized in the prior year. Pursuant to the credit agreements, the terms and conditions depend on Deutsche Telekom’s rating. The bilateral credit agreements have an original maturity of 36 months and can, after each period of twelve months, be extended by a further twelve months to renew the maturity of 36 months. From today’s perspective, access to the international debt capital markets is not jeopardized.

In January 2017, Deutsche Telekom placed U.S. dollar bonds with a volume of USD 3.5 billion (around EUR 3.3 billion) with institutional investors. These comprised a 3-year variable-interest bond with a volume of USD 0.400 billion and a mark-up of 58 basis points above the 3-month USD Libor; a 3-year fixed-interest bond with a volume of USD 0.850 billion and a coupon of 2.225 percent; a 5-year bond with a volume of USD 1.0 billion and a coupon of 2.820 percent; and a 10-year bond with a volume of USD 1.250 billion and a coupon of 3.600 percent. The bonds were issued by Deutsche ­Telekom International Finance B.V. and guaranteed by Deutsche Telekom AG.

Under its debt issuance program, Deutsche Telekom International Finance B.V. additionally placed the following bonds – guaranteed by Deutsche Telekom – with institutional investors:

  • In January 2017, euro bonds with a total volume of EUR 3.5 billion, ­comprising a 4 ¾-year fixed-interest bond with a volume of EUR 1.0 billion and a coupon of 0.375 percent; a 7-year fixed-interest bond with a volume of EUR 1.25 billion and a coupon of 0.875 percent; and a 10-year bond with a volume of EUR 1.25 billion and a fixed coupon of 1.375 percent;
  • In April 2017, a 12-year fixed-interest pound sterling bond with a nominal volume of GBP 0.25 billion (around EUR 0.3 billion) and a coupon of 2.25 percent, and a 10-year fixed-interest Hong Kong dollar bond with a nominal volume of HKD 1.3 billion (around EUR 0.2 billion) and a coupon of 2.95 percent;
  • In May 2017, a 9-year fixed-interest euro bond with a volume of EUR 0.75 billion and a coupon of 1.125 percent;
  • In December 2017, a 7-year fixed-interest euro bond with a volume of EUR 0.75 billion and a coupon of 0.625 percent.

Under its debt issuance program, Deutsche Telekom also issued a 10-year fixed-interest Norwegian krone bond with a volume of NOK 1 billion (around EUR 0.1 billion) and a coupon of 2.7 percent in July 2017.

In the first half of 2017, T-Mobile US prematurely repaid senior notes with a total volume of USD 8.25 billion (around EUR 7.6 billion). These included, on February 10, 2017, senior notes for an amount of USD 1.0 billion (around EUR 0.9 billion) with an interest rate of 6.625 percent at a price of 102.208 percent ­of the nominal amount (plus accrued interest). On March 6, 2017, further senior notes were repaid in the amount of USD 0.5 billion (around EUR 0.5 billion) with an interest rate of 5.250 percent at a price of 101.313 percent of the nominal amount (plus accrued interest). On April 3, 2017, further senior notes were repaid in the amount of USD 1.75 billion (around EUR 1.6 billion) with an interest rate of 6.250 percent at a price of 103.125 percent of the nominal amount (plus accrued interest). The other senior notes with an aggregate volume of USD 5.0 billion (around EUR 4.6 billion) and an interest rate ranging between 6.464 and 6.731 percent were repaid on April 28, 2017 at prices between 100.000 percent and 103.366 percent of the nominal amount (plus accrued interest). Further, T-Mobile US prematurely repaid a secured external loan in the amount of USD 2.0 billion (around EUR 1.9 billion) in the first half of 2017.

In December 2017, T-Mobile US repaid the Mandatory Convertible Preferred Stock issued in December 2014 with a nominal volume of USD 1.0 billion and bearing interest of 5.5 percent, by way of mandatory conversion into ordinary shares of the company. The conversion rights, which were disclosed under derivative financial liabilities until December 2017 and embedded in the 
T-Mobile US Mandatory Convertible Preferred Stock, were recognized for a final time on their maturity date through profit or loss and then derecognized in the amount of EUR 0.9 billion with no effect on the income statement as part of the share issue (please also refer to Note 36 “Financial instruments and risk management”).

In addition, in the reporting period, euro bonds in a total amount of EUR 2.1 billion were repaid along with a U.S. dollar bond totaling USD 1.0 billion (around EUR 0.9 billion), a bond in Australian dollars amounting to AUD 0.1 billion (around EUR 0.1 billion), and a Norwegian krone bond for NOK 1.3 billion (around EUR 0.1 billion).

In March 2017, T-Mobile US placed high-yield notes with an aggregate volume of USD 1.5 billion (around EUR 1.4 billion) in a public offering in three tranches of USD 500 million each (at 4.000 percent and due in 2022, at 5.125 percent and due in 2025, and at 5.375 percent and due in 2027). These notes replace higher-interest bonds that T-Mobile US prematurely repaid.

The net change of EUR 0.5 billion in commercial paper also increased the carrying amount of the financial liabilities. The total increase of EUR 0.9 billion in liabilities to banks compared with the end of 2016 was mainly due to promotional loans to the Group companies issued by the ­European Investment Bank in the reporting year for a total amount of EUR 0.8 billion, and the issuance of new promissory notes totaling EUR 0.4 billion. ­Repayments in the reporting year had an offsetting effect.

A year-on-year decrease in the carrying amount of the financial liabilities of around EUR 1.8 billion relates to exchange rate effects in the United States operating segment.

The following tables show Deutsche Telekom’s contractually agreed (undiscounted) interest payments and repayments of the non-derivative financial liabilities and the derivatives with positive and negative fair values:

millions of €
  Carrying amounts
Dec. 31, 2017
Cash flows in 2018 Cash flows in 2019 Cash flows in 2020‒2022 Cash flows in 2023‒2027 Cash flows in 2028 and thereafter
    Fixed interest rate Variable interest rate Repayment Fixed interest rate Variable interest rate Repayment Fixed interest rate Variable interest rate Repayment Fixed interest rate Variable interest rate Repayment Fixed interest rate Variable interest rate Repayment
Non-derivative financial liabilities                                
Bonds, other securitized liabilities, liabilities to banks and liabilities to non-banks from promissory notes and similar liabilities (50,907) (1,084) (17) (4,145) (1,630) (16) (3,352) (4,355) (4) (14,623) (4,124) (1) (19,093) (2,079)   (8,676)
Finance lease liabilities (2,635) (117)   (751) (91)   (687) (180)   (597) (164)   (365) (51)   (235)
Liabilities with the right of creditors to priority repayment in the event of default                              
Other interest-bearing liabilities (1,598) (11) (9) (1,025) (19) (5) (192) (61) (1) (235) (38)   (74) (25)   (74)
Other non-interest-bearing liabilities (1,443)     (1,311)     (125)     (4)     (1)     (2)
Derivative financial liabilities and assets                                
Derivative financial liabilities:                                
Currency derivatives without a hedging relationship (59)     (54)                        
Currency derivatives in connection with cash flow hedges (3)     (3)                        
Currency derivatives in connection with net investment hedges 0                              
Embedded derivatives without a hedging relationship (56)     (2)     (4)     (23)     (20)     (28)
Other derivatives without a hedging relationship (3)     (3)                        
Interest rate derivatives without a hedging relationship (219) (177) (115)   (148) 120 2 (464) 410   (139) 117 3 28 27 2
Interest rate derivatives in connection with fair value hedges (442) 219 (233)   219 (233) 0 626 (661) 0 751 (865) (23) 225 (345) (101)
Interest rate derivatives in connection with cash flow hedges (164) (35)     35 0 0 104 0 19 170 0 0 21 0 170
Derivative financial assets:                                
Currency derivatives without a hedging relationship 49     44                        
Currency derivatives in connection with cash flow hedges 37     22                        
Other derivatives without a hedging relationship 1           2                  
Interest rate derivatives without a hedging relationship 702 (175) 159 198 (209) 179 96 (353) 218 98 1 (1) 136   126 43
Interest rate derivatives in connection with fair value hedges 172 160 (68) 0 158 (58) 0 326 (124) 0 419 (203)   607 (434) 0
Interest rate derivatives in connection with cash flow hedges 5 2   0 2   7 0 0 0     0     0
Financial guarantees and loan commitments a                              
 
a For more detailed information, please refer to Note 36 “Financial instruments and risk management”.
millions of €
    Cash flows in
  Carrying amounts
Dec. 31, 2016
         
  31.12.2016 2017 2018 2019‒2021 2022‒2026 2027 and thereafter
             
Non-derivative financial liabilities            
Bonds, other securitized liabilities, liabilities to banks and liabilities to non-banks from promissory notes and similar liabilities (54,722) (9,981) (4,771) (20,298) (22,863) (11,956)
Finance lease liabilities (2,547) (710) (581) (1,014) (610) (338)
Liabilities with the right of creditors to priority repayment in the event of default (1,866) (81) (81) (239) (1,844)  
Other interest-bearing liabilities (1,823) (1,285) (216) (238) (145) (108)
Other non-interest-bearing liabilities (1,958) (1,769) (171) (15) (3)  
Derivative financial liabilities and assets            
Derivative financial liabilities:            
Currency derivatives without a hedging relationship (249) (266)        
Currency derivatives in connection with cash flow hedges (36) (38)        
Currency derivatives in connection with net investment hedges 0          
Other derivatives without a hedging relationship (5) (3) (3)      
Interest rate derivatives without a hedging relationship (516) (219) (236) (30) (33) 164
Interest rate derivatives in connection with fair value hedges (79) (26) (8) (22) (41) (1)
Interest rate derivatives in connection with cash flow hedges (12) 3 3 10 34 17
Derivative financial assets:            
Currency derivatives without a hedging relationship 131 134        
Currency derivatives in connection with cash flow hedges 25 13        
Other derivatives without a hedging relationship 3 0 0 1 0 0
Interest rate derivatives without a hedging relationship 832 270 207 120 96 207
Interest rate derivatives in connection with fair value hedges 230 52 64 92 17 266
Interest rate derivatives in connection with cash flow hedges 243 61 61 194 311 588
Derivative financial liabilities directly associated with non-current assets and disposal groups held for sale (without a hedging relationship) a (50)          
Financial guarantees and loan commitments b (1) (75)        
 
a For more detailed information, please refer to Note 36 “Financial instruments and risk management”. In each case, the maximum payment at the earliest possible date of utilization is shown.
b For more information, please refer to Note 36 “Financial instruments and risk management”.

All instruments held at December 31, 2017 and for which payments were already contractually agreed were included. Planning data for future, new liabilities were not included. Amounts in foreign currency were each translated at the closing rate at the reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December 31, 2017. Financial liabilities that can be repaid at any time are always assigned to the earliest possible time period. In accordance with § 2 (4) of the German Act on the Transformation of the Deutsche Bundespost Enterprises into the Legal Structure of Stock Corporation (Stock Corporation Transformation Act – Postumwandlungsgesetz), the Federal Republic is guarantor of all Deutsche Telekom AG’s liabilities that were already outstanding as at January 1, 1995. At Decem­-ber 31, 2017, this figure was a nominal EUR 1.7 billion (December 31, 2016: EUR 1.6 billion).