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Deutsche Telekom AG - Interim Group report - January 1 to March 31, 2011

26 Our share of the German broadband market remained stable at around 46 per- cent at the end of the first quarter of 2011. We recorded around 0.1 million net broadband additions in the first quarter of 2011, i.e., more than in the fourth quarter of the previous year. The total number of broadband lines has thus increased to 12.1 million; this includes 0.4 million customers using VDSL, which allows them to surf the Net with a bandwidth of 25 to 50 Mbit/s. Once again in the first quarter, more than 0.1 million people opted for our Entertain TV package, increasing the number of existing customers to around 1.3 million. At the heart of life everywhere: mobile telephony and data applications. In relation to the overall market, we are once again number one in the first quarter of 2011 in terms of mobile revenue in Germany, and we have continued to increase our market share. Our strategy of focusing this business on high- value contract customers has been a success. The number of mobile cus­ tomers decreased by 0.3 percent compared with the end of 2010, taking it to 34.6 million, but the number of contract customers remained more or less stable in the first quarter of 2011, at 17.2 million. The reasons for this trend can be found in our wide range of attractive and innovative smartphones and in the new rates for data traffic and telephony introduced at the end of 2010. The move to deregister inactive prepay customers' cards had a negative effect both on 2010 and on the first quarter of 2011. Consumers. The Consumers business in our Germany operating segment focuses on high- value consumers. These customers purchase fixed-network services like Inter- net and TV products (e.g., Entertain), and mobile services with integrated flat rates for data. Since the beginning of the year, we have offered our customers a fixed-network calling plan (Call & Surf) with more bandwidth throughout the country at a uniform price. In mobile communications, we have upgraded the service content of the con­ tracts, and at the end of 2010 we started to offer an entry-level double-play package with a data flat rate for the mobile Internet (Call & Surf Mobil). In the new mobile communications portfolio, packages with integrated flat rates for data for the mobile Internet (Call & Surf Mobil and Complete Mobil) have sold especially well. The decision to deregister inactive prepaid cards caused a decline in the number of subscribers in the first quarter of 2011 compared with the prior- year period. Business Customers. Sales campaigns helped further stabilize the year-on-year losses of lines. These campaigns were mainly designed to motivate our customers to move to higher- value lines (EthernetConnect) and IP networks (IntraSelect). In terms of accesses, more and more customers are switching from pure voice telephone lines to double- and triple-play products with flat rates for telephony, Internet and TV use. This move to higher-value packages made it possible to largely offset revenue losses. The trend in Internet use is toward higher bandwidths and all-round service. Our products like Company Connect and DSL Business Complete helped to increase this growth. With these new products, we are selling more per­ formance and higher-value services, helping to retain and win back cus­- tomers. In February 2011, we also introduced a new set of mobile calling plans for our business customers. The focus on packages with integrated flat rates for data for the mobile Internet contributed to a growth in subscribers compared with the prior-year period. Wholesale. The number of unbundled local loop lines (ULLs) increased by 1.1 percent year-on-year, to 9.6 million; network infrastructure providers need this upstream product to access their customers. The number of our bundled wholesale lines declined by 10.0 percent in the first quarter of 2011 to 0.9 million. We expect this trend to continue for the next few years, mainly as a result of the fact that our competitors are switching from bundled to unbundled wholesale products (IP bitstream access, or IP-BSA) in order to optimize their service to their own end-customers. Hence we recorded a growth of 10.0 percent in unbundled products, to 1.1 million.