Deutsche Telekom AG - The 2009 financial year

Earnings situation of the Group. The first-time full consolidation of the Greek company OTE was the primary driver behind the rise in net revenue in the 2009 financial year, contributing EUR 5.4 billion. Adjusted for the effects of changes in the composition of the Group totaling EUR 5.5 billion and negative exchange rate effects (EUR 0.4 billion), net revenue was below prior-year level. While the Group’s revenue in the United States and Southern and Eastern Europe operating segments increased, revenue in the Germany, Europe and Systems Solutions operating segments declined. Revenue in Deutsche Telekom’s operating segments developed as follows: The revenue increase in the United States operating segment was primarily the result of positive exchange rate effects from the translation of U.S. dollars to euros totaling EUR 0.8 billion. After elimination of these exchange rate effects, revenue decreased by EUR 0.3 billion, particularly as a result of lower revenue per customer. Revenue in the Southern and Eastern Europe operating segment increased principally as a result of the full consolidation of OTE for the first time. Exchange rate effects reduced the revenue generated by the Southern and Eastern Europe operating segment by EUR 0.2 billion. The most significant effect was from the translation of Hungarian forints to euros. The decline in revenue in the Germany operating segment was primarily a result of intense competition and price intervention by the regulator. Development of business in the Group. Proportion of revenue generated outside Germany continues to rise // Slight increase in adjusted EBITDA // Net profit EUR 0.4 billion // Free cash flow before dividend payments stable Besides the continued high level of competitive pressure, the decline in revenue in the Europe operating segment was mainly attributable to exchange rate effects of EUR 0.9 billion from the translation of pounds sterling, Polish zlotys, and Czech korunas to euros. Revenue in the Systems Solutions operating segment decreased, particu- larly within Germany, as a result of price erosion. Negative exchange rate effects had a further negative impact on revenue of EUR 0.1 billion. The proportion of international revenue continued to increase, rising by 3.4 percentage points year-on-year to 56.6 percent of net revenue. Contribution of the operating segments to net revenue. 2009 millions of € Proportion of net revenue of the Group % 2008 millions of € Proportion of net revenue of the Group % Change millions of € Change % 2007 millions of € Net revenue 64,602 100.0 61,666 100.0 2,936 4.8 62,516 Germany 23,813 36.9 24,754 40.1 (941) (3.8) 26,134 United States 15,457 23.9 14,942 24.3 515 3.4 14,050 Europe 9,486 14.7 10,798 17.5 (1,312) (12.2) 10,675 Southern and Eastern Europe 9,510 14.7 4,497 7.3 5,013 n.a. 4,458 Systems Solutions 6,083 9.4 6,368 10.3 (285) (4.5) 6,911 Group Headquarters & Shared Services 253 0.4 307 0.5 (54) (17.6) 288 2007 62.5 64.6 20092008 61.7 Breakdown of revenue by regions. billions of € Germany Europe (excluding Germany) North America Other countries 80 70 60 50 40 30 20 10 0 71Group management report The economic environment Development of business in the Group