Deutsche Telekom AG - The 2009 financial year

Roll out network-centric ICT. T-Systems identified the trend toward convergent IT and telecommunica- tions services and applications at an early stage and realigned its strategy to focus on customized solutions for corporate customers. The entity man- ages networks and computing centers worldwide and develops solutions for global corporate networks, mobility, security, and sustainability. On this basis, T-Systems successfully continued its international growth strategy in 2009 and won a large number of tenders for cloud services, dynamic SAP services, and telecommunications and data services. Such large-scale contracts give T-Systems the critical mass it needs to continue offering multinational corporations in key markets attractive services locally. Growth through targeted acquisition. In May 2009, T-Systems expanded its operations in Southwestern Europe with the acquisition of IT service provider Metrolico. Cloud computing. In the future, corporate customers will obtain the soft- ware, storage capacity and bandwidth they need online. T-Systems already provides more than 300 corporate customers with IT services from the cloud and plans to continue growing in this area. From January 2010, T-Systems will also provide global computing center and SAP services for Philips. In the future, international T-Systems locations will provide services using a secure proprietary network – a “private cloud” – on an as-needed basis. SAP services. T-Systems is the world leader for customized SAP solutions, as confirmed in studies by analysts at Forrester Research and AMR Research. T-Systems scored points for customer satisfaction, SAP exper- tise, and also revenue strength thanks also to large-scale deals with the Nuance Group and Komatsu in South Africa and the acquisition of SAP AG’s hosting business in Europe. Telecommunications and data services. Many large corporations such as Linde and Deutsche Post DHL already benefit from T-Systems’ experi- ence and expertise in telecommunications solutions and data services. In December 2009, T-Systems was commissioned by BP to migrate the petro- leum giant’s data network to the next generation, in the course of which it will provide all telecommunications services in over 50 countries. Strategic partnerships. T-Systems participates in selected partnerships to safeguard its long-term competitiveness and global delivery capacity. T-Systems and Microsoft signed an exclusive partnership agreement to offer business software from the Internet for companies with over 5,000 users. T-Systems is the only German sales partner for such cloud services with Microsoft products. The partnership with Cognizant concluded back in 2008 resulted in orders for systems integration services, e.g., from the R&D unit of Continental’s tire division. Deutsche Telekom will continue to hold its own in the dynamic competitive environment in the 2010 financial year and concentrate on achieving its long-term vision of becoming a global leader in connected life and work. Nevertheless, the Group is using its success in implementing the “Focus, fix and grow” Group strategy with its four strategic areas of action and, not least, its more integrated structure acquired under the One Company approach as an opportunity to review and refine its strategy in the first quarter of 2010. Group management. Group management focuses on the expectations Deutsche Telekom’s four groups of stakeholders (shareholders, providers of debt capital, employees, and the Group’s “entrepreneurs within the enterprise”) have of the Group: 1. Shareholders expect an appropriate, reliable return on their capital employed. 2. Providers of debt capital and banks expect an appropriate return and that Deutsche Telekom is able to repay its debts. 3. Employees expect long-term, secure jobs with prospects for the future and that any staff restructuring that may be necessary will be done in a socially responsible manner. 4. “Entrepreneurs within the enterprise” expect to be given sufficient investment funding to be able to shape Deutsche Telekom’s future business and to develop products, innovations, and services for the customer. The purpose of Group management is to strike a balance between these contrasting stakeholder expectations and interests so that sufficient funding is available for investment, socially responsible staff restructuring, debt repayment, and an attractive dividend policy. 64