37 Capital management

Disclosures on capital management. The overriding aim of Deutsche ­Telekom’s capital management is to strike a balance between the contrasting expectations of the following four stakeholders:

  • Shareholders
  • Providers of debt capital
  • Employees
  • “Entrepreneurs within the enterprise”

For further information, please refer to the section “Management of the Group” in the combined management report.

An important key performance indicator for the capital market communication with investors, analysts, and rating agencies is relative debt, i.e., net debt to adjusted EBITDA. This ratio stood at 2.3 at December 31, 2017 (December 31, 2016: 2.3). The target corridor for relative debt is between 2.0 and 2.5. Net debt is a non-GAAP figure not governed by International Financial Reporting Standards, and its definition and calculation may vary from one company to another. A further essential key performance indicator is the equity ratio, i.e., the ratio of shareholders’ equity to total assets as shown in the consolidated statement of financial position. The equity ratio was 30.0 percent as of December 31, 2017 (December 31, 2016: 26.2 percent). The target corridor is between 25 and 35 percent. In addition, Deutsche Telekom maintains a liquidity reserve covering all maturities of the next 24 months.

Calculation of net debt; shareholders’ equity
millions of €    
  Dec. 31, 2017 Dec. 31, 2016
Financial liabilities (current) 8,358 14,422
Financial liabilities (non-current) 49,171 50,228
Financial liabilities 57,529 64,650
Accrued interest (692) (955)
Other (781) (1,029)
Gross debt 56,056 62,666
Cash and cash equivalents 3,312 7,747
Available-for-sale financial assets/financial assets held for trading 7 10
Derivative financial assets 1,317 2,379
Other financial assets 629 2,571
Net debt 50,791 49,959
Shareholders’ equity 42,470 38,845