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

35Interim Group management report Poland. In Poland, adjusted EBITDA decreased by 14.8 percent to EUR 144 million. Compared with the prior-year period, we made significant investments in acquiring and retaining customers in the first quarter of 2011 to protect our high-value customer base. In this context, selling and customer service ex- penses also increased. Czech Republic. Thanks to the positive exchange rate effects from the trans­ lation of Czech korunas into euros, adjusted EBITDA in the Czech Republic slightly increased year-on-year to EUR 136 million in the first quarter of the cur- rent year. In local currency, adjusted EBITDA decreased, in particular due to the negative impact of the decline in revenue. Lower customer acquisition costs and a reduction in overheads cushioned the negative effect of the decline in revenue. Croatia. In Croatia, adjusted EBITDA decreased by 8.0 percent to EUR 104 million in the first quarter of 2011, tracking the development in the mobile busi- ness. Savings in overheads were insufficient to fully offset the negative effect of lower mobile revenue and higher customer acquisition and retention costs. By contrast, adjusted EBITDA from the fixed-network business increased year- on-year, driven by, among other factors, efficiency gains achieved through the Save for Service program. Netherlands. In the first quarter of 2011, adjusted EBITDA in the Netherlands was down 19.6 percent to EUR 82 million. Apart from the decrease in revenue, the decline in earnings was attributable to higher customer retention costs. It was partially offset by savings in overheads. Slovakia. In Slovakia, adjusted EBITDA decreased by 11.2 percent year-on-year to EUR 95 million in the first quarter of 2011. Lower customer retention costs in mobile communications and savings in overheads were insufficient to fully offset the negative revenue effect in mobile and fixed-network business. Austria. In Austria, adjusted EBITDA declined year-on-year in the first quarter of 2011. The main contributor to this decrease was a positive one-time factor in the first quarter of 2010, which did not recur in the same way in the first quarter of 2011. The decline was partially offset by lower customer acquisition costs and savings in overheads. EBIT. In our Europe operating segment, EBIT declined year-on-year to EUR 365 mil- lion in the first quarter of 2011. The decrease is primarily attributable to lower EBITDA. Lower depreciation and amortization charges at segment level, espe- cially in Greece, resulted in an improvement in EBIT, but were unable to offset the negative effect of the decline in EBITDA. Cash capex. As of March 31, 2011, our Europe operating segment reported total cash capex of EUR 512 million. This corresponds to a year-on-year decline of 9.9 percent, or EUR 56 million, most of which is attributable to the deconsolidation of T-Mobile UK. In addition, the difficult market situation and charges such as the special tax in Hungary, led to restrained investment activity in most countries. The only significant increases in capital expenditure were recorded in the Czech Repub- lic and in the Netherlands. Employees. The Europe operating segment employed 62,366 people on average in the first quarter of 2011. Compared with the prior-year quarter, the headcount decreased by 11.1 percent, primarily due to the deconsolidation of T-Mobile UK. Downsizing programs as part of efficiency enhancement measures in several countries also reduced the average headcount. By contrast, some smaller-scale acquisitions added marginally to the headcount.