Deutsche Telekom AG - The 2009 financial year

a regulation-induced reduction in revenues from termination charges, this decline was offset by revenue growth in broadband fixed-network business at Online (formerly: Orange Nederland Breedband B.V.). The year-on-year increase in non-voice revenue at all mobile operations in the Europe oper- ating segment also helped to offset the revenue decrease from voice telephony. EBIT, adjusted EBITDA. EBIT in the Europe operating segment declined by EUR 1.4 billion year- on-year in 2009. This includes the impairment loss of EUR 1.8 billion recognized on the goodwill of the cash-generating unit T-Mobile UK in the first quarter of 2009. EBIT was also reduced year-on-year by the same negative factors that impacted EBITDA. On the other hand, lower deprecia- tion, amortization and impairment losses at PTC, T-Mobile Netherlands, T-Mobile CZ, and T-Mobile Austria had an offsetting effect on the EBIT decline. Adjusted EBITDA in the Europe operating segment decreased by EUR 0.4 billion or 13.0 percent in the 2009 financial year compared with the prior year, mainly caused by the negative exchange rate effects of the Polish zloty, the pound sterling, and the Czech koruna. After elimination of these exchange rate effects, the operating segment’s EBITDA still decreased, mainly impacted by T Mobile UK and PTC. In 2009, EBITDA generated at T-Mobile Austria was on a par with the prior-year level and an increase in EBITDA was recorded at T-Mobile CZ (in local currency) and T-Mobile Netherlands, partially offsetting the effects of lower EBITDA at the UK and Polish companies. At T-Mobile UK, the decrease in EBITDA in local currency primarily resulted from lower service revenues. This effect was only partially offset by systematic cuts in customer acquisition costs and overheads. At PTC, the year-on-year reduction in EBITDA was mainly driven by a regulation-induced reduction in revenues from termination charges. Lower revenue-related costs as well as savings in customer acquisition costs and overheads only partially compensated for the negative impact of lower revenues. Due to strict cost management mainly in overheads, and cuts in customer retention costs, T-Mobile Austria fully offset the negative effects of the year- on-year reduction in revenue, which stabilized EBITDA at T-Mobile Austria. T-Mobile CZ generated a year-on-year increase in EBITDA adjusted for exchange rate effects, mainly as a result of a reduction in overheads and customer retention and acquisition costs. EBITDA also increased year-on- year at T-Mobile Netherlands due to expenditure cuts and higher earnings from broadband fixed-network business. Cash capex. Cash capex in the Europe operating segment decreased by EUR 0.3 billion year-on-year to EUR 0.9 billion due to lower capital expenditures in Poland, the United Kingdom, Austria and the Netherlands, whereas capital expen- ditures increased only slightly in the Czech Republic. Personnel. The average number of employees in the Europe operating segment remained largely stable compared with the prior year, but the development of headcount figures varied at the individual companies. At T-Mobile CZ, the number of employees increased compared with the prior year due to the transfer of temporary customer service staff to permanent contracts. At T-Mobile Nederland, the year-on-year headcount increase was mainly attributable to technical integration projects associated with the acquisition of Orange Nederland. At PTC, the number of employees remained almost unchanged year-on-year, whereas average staff numbers at T-Mobile Austria declined in Sales and Customer Care. Headcount at T-Mobile UK declined at the call centers and in the technology area as a result of outsourcing measures. 88