Deutsche Telekom AG - The 2009 financial year

Group EBITDA totaled EUR 19.9 billion, up from EUR 18.0 billion in the prior year. Compared with the prior year, the decrease of EUR 0.7 billion in special factors had a positive effect on the development of EBITDA. These mainly involved expenses in connection with staff-related measures and non-staff-related restructuring. Group EBITDA adjusted for special factors amounted to EUR 20.7 billion compared with EUR 19.5 billion in the prior year. The increase is mainly attributable to the first-time full consolidation of OTE which contributed EUR 2.0 billion to adjusted EBITDA. While adjusted EBITDA generated by the United States and Southern and Eastern Europe operating segments increased, the Germany and Europe operating segments recorded decreases. Adjusted EBITDA in the operating segments developed as follows: The increase in adjusted EBITDA in the United States operating segment was attributable to positive exchange rate effects. After elimination of these effects, adjusted EBITDA decreased, mainly as a result of lower revenue. Adjusted EBITDA in the Southern and Eastern Europe operating segment increased by EUR 1.8 billion as a result of the first-time full consolidation of OTE. Restructuring and efficiency enhancement measures offset the effect of the decline in revenue on the adjusted EBITDA of the Systems Solutions operating segment. The slight year-on-year decrease in the adjusted EBITDA of the Germany operating segment primarily resulted from a reduction in fixed-network revenue, which was not fully offset despite cost cutting. The Europe operating segment recorded a decrease in adjusted EBITDA as a result of negative exchange rate effects, as well as a decline in revenue at T-Mobile UK and PTC in particular. Net profit decreased by EUR 1.1 billion in the 2009 financial year to EUR 0.4 billion, primarily as a result of impairment losses recognized on goodwill. An impairment loss of EUR 1.8 billion was recognized on goodwill of the cash-generating unit T-Mobile UK in the Europe operating segment in the first quarter of 2009, mainly as a consequence of the significant eco- nomic slowdown, tough competition, and regulatory decisions in the United Kingdom. On the basis of information available at the reporting date and expectations with respect to the market and competitive environ- ment, the impairment tests performed at the cash-generating units in the fourth quarter of 2009 identified the need for impairment losses totaling EUR 0.5 billion to be recognized in the Southern and Eastern Europe oper- ating segment in particular and at the Europe operating segment. These impairment losses were largely due to the country-specific risk in connection with the current financial and national crisis in Greece. Other impairment losses were primarily recognized as a result of the negative developments in connection with the financial market crisis. 2007 Special factors 2007 excluding special factors 62,516 62,516 (35,337) (1,252)s (34,085) 27,179 (1,252) 28,431 (16,644) (498)t (16,146) (5,133) (701)u (4,432) 1,645 419v 1,226 (1,761) (769)w (992) 5,286 (2,801) 8,087 (2,833) (9)x (2,824) 2,453 (2,810) 5,263 (1,373) 364y (1,737) 1,080 (2,446) 3,526 509 (12) 521 571 (2,434) 3,005 5,286 (2,801) 8,087 (11,611) (372)z (11,239) 16,897 (2,429) 19,326 27.0 30.9 Special factors in 2007: s Mainly expenses for staff-related measures and non-staff-related restructuring in the Germany (EUR – 0.7 billion), Systems Solutions (EUR – 0.3 billion), and Europe (EUR – 0.1 billion) operating segments. t Expenses for staff-related measures and non-staff-related restruc- turing in the Germany (EUR –0.4 billion) and Systems Solutions (EUR –0.1 billion) operating segments. u Mainly expenses for staff-related measures and non-staff- related restructuring at Group Headquarters & Shared Services (EUR – 0.5 billion) and in the Germany (EUR – 0.1 billion) and Systems Solutions (EUR –0.1 billion) operating segments. v Mainly gain on the disposal of T-Online France and T-Online Spain in the Germany operating segment (EUR 0.3 billion). w Mainly expenses from the disposal of Vivento business units at Group Headquarters & Shared Services (EUR –0.4 billion) and impairment losses on goodwill at T-Mobile Netherlands in connection with the subsequent recognition of tax loss carry- forwards in the Europe operating segment (EUR –0.3 billion). x Mainly expenses for interest added back to provisions for staff- related measures. These were partially offset by income from the disposal of the remaining shares in Sireo at Group Headquarters & Shared Services as well as income attributable to other periods from associates and joint ventures accounted for using the equity method in the Southern and Eastern Europe operating segment. y Mainly tax benefits from expenses for staff-related measures (EUR 0.7 billion). This also includes a tax benefit from the partial recognition of previously unrecognized taxes relating to loss carryforwards at T-Mobile Netherlands (EUR 0.3 billion) as well as an offsetting tax expense from the measurement of deferred tax items in response to the changes in the rates of taxation in connection with the 2008 corporate tax reform (EUR –0.7 billion). z Mainly expenses from impairment of goodwill at T-Mobile Netherlands in connection with the subsequent recognition of tax loss carryforwards in the Europe operating segment (EUR –0.3 billion). 73Group management report Development of business in the Group