Deutsche Telekom AG - The 2009 financial year

Total revenue. Total revenue in the Germany operating segment decreased by 3.7 percent year-on-year to EUR 25.4 billion, mainly caused by the continuing losses of fixed-network lines due to competition and by regulatory pricing measures in fixed-network and mobile communications. Fixed network. Total revenue in the fixed network declined by 5.3 percent year-on-year to EUR 18.7 billion in the full year 2009, compared with a decline of 7.2 percent in the 2008 financial year. The decrease in revenue was thus 1.9 percentage points lower year-on-year. The increased number of complete broadband packages and unbundled local loop lines had a positive effect on the development of revenue. This volume growth only partially offset the decline in revenue, however, which was mainly attributable to continuing line losses resulting from increased competition, falling usage-related charges, and volume-driven decreases in revenues from resale and network services and from inter- connection services. Mobile communications. In the 2009 financial year, the operating segment maintained and extended its market leadership in service revenues. In addition, continued growth in non-voice (data and messaging) revenue had a positive effect. Non-voice revenue increased as a proportion of service revenues by 4 percentage points in the course of one year. Data revenues developed positively in the 2009 financial year, increasing 46 percent year- on-year. For the overall market in Germany, Deutsche Telekom estimates the mobile data revenue growth rate to be 25 to 30 percent in 2009. Total mobile communications revenue rose by EUR 40 million or 0.5 percent to EUR 8.1 billion. The increase in revenue was partially offset by more restrictive regulation, in particular lower termination charges from April 1, 2009, new EU roaming regulation as of July 1, 2009, and continuing intense price competition. The national roaming agreement with O2 expired at the end of 2009. The national roaming revenues generated with O2 in 2009 were on a par with the prior-year level. EBIT, adjusted EBITDA. EBIT in the Germany operating segment increased by 9.5 percent year- on-year to approximately EUR 5.1 billion. The reduction in revenue was compensated by cost savings and fewer special factors. Adjusted EBITDA totaled EUR 9.6 billion in the 2009 financial year. The year-on-year decrease of around EUR 0.2 billion was caused primarily by a reduction in fixed- network revenue, which was not fully offset despite systematic cost cutting. In the fixed network, adjusted EBITDA of EUR 6.2 billion was generated in the 2009 financial year; the adjusted EBITDA margin rose 0.9 percentage points year-on-year to 33.3 percent. Lower revenue-driven costs and reduced costs in particular for third-party services, rental, energy, IT and personnel made up for a major part of the decrease in revenue in the traditional fixed- network business. Adjusted EBITDA and the adjusted EBITDA margin remained on a par with the prior-year level in the 2009 financial year although regulation and the consistently high level of competition in Germany had a negative effect on EBITDA. Factoring out the disposal of an intangible asset in the third quarter of the prior year (positive EBITDA effect of EUR 0.1 billion), both adjusted EBITDA and the EBITDA margin increased in 2009. Cash capex. Cash capex increased EUR 0.1 billion year-on-year in the 2009 reporting year to EUR 3.2 billion, mainly as a result of capital expenditures in the fixed network for the IP transport platform, broadband roll-out and IT sys- tems. Cash capex in mobile communications mainly resulted from capital expenditures for the network build-out, mainly UMTS sites, capacity increases, and investments in IT products. Personnel. The average headcount decreased by 6 percent year-on-year to 84,584 employees, primarily due to staff reductions in the fixed-network area. 83Group management report Development of business in the operating segments