Please activate JavaScript!
Please install Adobe Flash Player, click here for download

Deutsche Telekom AG - Interim Group report - January 1 to March 31, 2011

57Interim consolidated financial statements Selected notes to the consolidated statement of financial position. Cash and cash equivalents. Cash and cash equivalents decreased from EUR 2,8 billion to EUR 1,7 billion as of March 31, 2011. Detailed information can be found in the consolidated statement of cash flows. Non-current assets and disposal groups held for sale. As of March 31, 2011, current assets recognized in the consolidated state- ment of financial position included EUR 35.7 billion in non-current assets and disposal groups held for sale as well as directly associated liabilities of EUR 10.3 billion. United States operating segment (T-Mobile USA). On March 20, 2011, Deutsche Telekom AG and AT&T Inc., Dallas, United States (AT&T) entered into an agreement on the sale of T-Mobile USA to AT&T. The agreement provides for a purchase price of USD 39 billion, consisting of USD 25 billion in cash and approximately USD 14 billion of the AT&T common stock. The exact number of shares of common stock is linked to a number of parameters. Firstly, the price of the AT&T shares will be determined prior to the closing of the transaction using a contractually agreed method. In any event, the number of shares of common stock will be computed using a price of not less than USD 26.0165 and not more than USD 30.2354. Secondly, the follow- ing key parameters could have a negative effect on the exact number of shares of common stock to be received: the amount of T-Mobile USA’s indebtedness as of the date of the closing of the transaction, certain divestiture and regulatory costs and any distributions to Deutsche Telekom in excess of agreed amounts of T-Mobile USA cash flow. In addition, AT&T has the right to increase the cash portion of the purchase price by up to USD 4.2 billion and instead to decrease the number of shares of common stock to be issued. However, Deutsche Telekom will receive no less than 5.0 percent of AT&T’s shares under the trans- action. The agreement between the two companies furthermore provides for Deutsche Telekom to be granted a seat on the board of AT&T in the future. The purchase agreement stipulates that T-Mobile USA is to be transferred free of debt upon closing of the transaction. As of March 31, 2011, the Group- internal financing relationships between T-Mobile USA and Deutsche Telekom totaled EUR 11.5 billion. The transaction is still subject to approval by the U.S. Department of Justice (DoJ) and the U.S. regulatory authority, the Federal Com- munications Commission (FCC). The closing of the transaction is expected to be completed in the first half of 2012. As a result of this agreement, Deutsche Telekom recognizes T-Mobile USA’s assets and the directly associated liabilities in the consolidated statement of financial position as held for sale. The discontinued operation’s profit/loss after taxes is shown in aggregate form in the consolidated income statement as profit/loss from discontinued operations. The prior-year figures in the consoli- dated income statement have been adjusted accordingly with retroactive ef- fect. T-Mobile USA’s assets and the directly associated liabilities are measured at the lower of carrying amount and fair value less costs to sell. If the fair value less costs to sell is lower than the carrying amount, the difference must be rec- ognized as an impairment loss. As of March 31, 2011, there were no indications that would have resulted in impairment. Upon closing of the transaction, Deutsche Telekom will deconsolidate the as- sets and the liabilities directly associated with T-Mobile USA. In addition to the assets and liabilities disclosed in the table above, T-Mobile USA accounted for EUR -3.5 billion of total other comprehensive income in shareholders’ equity as of March 31, 2011. The following table shows the carrying amounts of the major classes of assets and liabilities classified as held for sale: