Deutsche Telekom AG - The 2009 financial year

Business in Germany made good progress despite the challenging economic environment, regulatory requirements, and intense competition, with a market share of new broadband customers of 45 percent and market leadership in service revenues extended in the mobile communications sector. Fixed network. As growth on the broadband market in Germany became more restrained in the 2009 financial year, the number of retail lines increased by 0.9 million year-on-year to a total of 11.5 million. Since 2007, Deutsche Telekom’s broadband market share has remained stable at around 46 percent (according to internal calculations) despite increasingly intense competition. More than 1.0 million Entertain packages had been sold and around 0.8 million connected by the end of 2009. Fixed-network line losses in Germany totaled 2.1 million in the 2009 finan- cial year, 0.4 million lines down on the prior year. The line losses include fixed-network lines previously operated by Deutsche Telekom but now run as IP-based lines by other providers on the basis of the unbundled local loop (ULL) line. Other line losses are mainly attributable to customers switching to cable companies, alternative telecommunications carriers, and mobile operators. Growth in ULLs slowed down compared with the previous year. In 2009, the number of ULLs rose by 0.8 million to 9.1 million. The decrease of 0.9 million in wholesale bundled lines (e.g., Resale/IP-BSA lines) since the end of 2008 has partially been offset by the growth in wholesale unbundled lines (e.g., IP-BSA Stand Alone lines), around 0.6 million of which had been sold between the market launch in mid-2008 and the end of 2009. Mobile communications. In the German mobile communications market, which is saturated in terms of customers with a penetration rate of approxi- mately 132 percent, the focus is mainly on value-driven growth. The higher-value contract customer business developed positively in the 2009 financial year. The number of customers increased by 1.1 percent year-on-year to 17.2 million. The share of contract customers increased to 44 percent of the total customer base compared with the figure at the end of the previous year, encouraged by attractive smartphones like the Apple iPhone. The proportion of customers with integrated flat-rate plans for telephony and data usage increased substantially. The focus on value-driven growth is also reflected in the stabilization of average revenue and increased usage per customer compared with the prior year. 81Group management report Development of business in the operating segments