Deutsche Telekom AG - The 2009 financial year

The shareholders’ meeting on April 30, 2009 authorized the Board of Management to purchase up to 436,131,999 no par value shares in Deutsche Telekom AG by October 29, 2010, with the amount of share capital accounted for by these shares totaling up to EUR 1,116,497,917.44, provided the shares to be purchased on the basis of this authorization in conjunction with the other shares of Deutsche Telekom AG which it has already purchased and still possesses or are to be assigned to it under § 71d and § 71e AktG do not at any time account for more than 10 percent of the Deutsche Telekom AG’s share capital. This authorization may be exercised in full or in part. The purchase can be carried out in partial tranches spread over various purchase dates within the authorization period until the maximum purchase volume is reached. Dependent Group companies of Deutsche Telekom AG within the meaning of §17 AktG or third parties acting for the account of Deutsche Telekom AG or for the account of dependent Group companies of Deutsche Telekom AG within the meaning of §17 AktG are also entitled to purchase the shares. The purchase takes place without prejudice to the principle of equal treatment through the stock exchange or a public purchase offer addressed to all shareholders. By resolution of the shareholders’ meeting of April 30, 2009, the Board of Management is authorized to redeem Deutsche Telekom AG’s shares purchased on the basis of the aforementioned authorization, with- out such redemption or its implementation requiring a further resolution of the shareholders’ meeting. The main agreements entered into by Deutsche Telekom AG, which include a clause in the event of a change of control, principally relate to bilateral credit lines and several loan agreements. In the event of a take- over, the individual lenders have the right to terminate the credit line and, if necessary, serve notice or demand repayment of the loans. A takeover is assumed when a third party, which can also be a group acting jointly, acquires control over Deutsche Telekom AG. In addition, the other members of the Toll Collect consortium (Daimler Financial Services AG and Cofiroute SA) have a call option in the event that the ownership structure of Deutsche Telekom AG changes such that over 50 percent of its share capital or voting rights are held by a new shareholder and this change was not approved by the other members of the consor- tium. § 22 (1) of the German Securities Trading Act (Wertpapierhandels- gesetz – WphG) similarly applies to the allocation of voting rights. Should Deutsche Telekom AG be taken over by another company that is not a telecommunications company based in the European Union or the United States of a similar size and stature to Deutsche Telekom AG, the Hellenic Republic shall have the right to purchase from Deutsche Telekom AG all the shares Deutsche Telekom AG owns in the Greek company Hellenic Telecommunications Organization S.A., Athens, Greece (OTE). For this purpose, Deutsche Telekom shall be deemed to have been taken over if one or several entities, with the exception of the Federal Republic of Germany, directly or indirectly acquires 35 percent of the voting rights in Deutsche Telekom AG. In the 2009 financial year Deutsche Telekom AG and France Télécom S.A. agreed to merge their British companies, T-Mobile UK and Orange UK, in a 50:50 joint venture. Under the terms of the joint venture agreement, if a third party were to take a controlling stake in Deutsche Telekom, for a period of one year France Télécom would be relieved of all restrictions imposed on the shareholders relating to the transfer of their shares. Trans- ferring shares to competitors would remain prohibited even in this situation, however. The principal subsidiaries of Deutsche Telekom AG are listed in the notes to the consolidated financial statements in the section “Summary of accounting policies” under “Consolidated group.” In addition to Deutsche Telekom AG, 62 German and 182 foreign subsidiaries are fully consolidated in Deutsche Telekom’s consolidated financial statements (December 31, 2008: 65 and 164). 12 associates (December 31, 2008: 14) and 5 joint ventures (December 31, 2008: 5) are also included using the equity method. The changes in the consolidated group relate to both acquisitions and divestments. In the 2008 financial year, Deutsche Telekom acquired 25 percent plus one share in Hellenic Telecommunications Organization S.A., Athens, Greece (OTE). In May 2008, the Greek government and Deutsche Telekom signed a shareholders’ agreement regarding an investment in the telecommunica- tions company. Together, the two shareholders hold a majority of 50 percent plus two votes in OTE, with Deutsche Telekom being granted the possibility of controlling OTE’s financial and operating policies once all necessary steps of the transaction have been completed. The changes to OTE’s Articles of Incorporation necessary for full implementation of the shareholders’ agreement were approved at the extraordinary shareholders’ meeting of OTE on February 6, 2009. Upon implementation of the shareholders’ agreement on February 6, 2009, OTE is no longer accounted for using the equity method, but fully consolidated in the Southern and Eastern Europe operating segment. Under the share purchase agreement, Deutsche Telekom has additionally granted the Hellenic Republic two put options for an additional 5 percent (put option I) and 10 percent (put option II) of the shares. The Hellenic Republic exercised the first put option on July 31, 2009. As a result of the aforementioned transactions, Deutsche Telekom holds a stake in OTE of 30 percent plus one share. For further details, please refer to the disclosures on “Business combinations” in the notes to the consolidated financial statements. 58