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Deutsche Telekom AG - Interim Group report - January 1 to September 30, 2011

13Interim Group management report Group management. Group management focuses on the expectations Deutsche Telekom’s four groups of stakeholders (shareholders, providers of debt capital, employees, and the “entrepreneurs within the enterprise”) have of the Group: −− Shareholders expect an appropriate, reliable return on their capital employed. −− Providers of debt capital and banks expect an appropriate return and that Deutsche Telekom is able to repay its debts. −− Employees expect jobs that are secure in the long term, prospects for the future, and that any necessary staff restructuring will be done in a socially responsible manner. −− “Entrepreneurs within the enterprise” expect sufficient investment fund- ing to be able to shape Deutsche Telekom’s future business and to develop products, innovations, and services for the customer. The purpose of Group management is to strike a balance between the contrast- ing expectations and interests of these stakeholders so that sufficient funding is available for investment, socially responsible staff restructuring, debt repay- ment, and an attractive dividend. Finance strategy. Our 3-year finance strategy for the years 2010 through 2012. Shareholders Providers of debt capital Shareholder remuneration strategy 2010 through 2012* − Annual remuneration totaling € 3.4 billion − Minimum dividend of € 0.70 per share
 − Share buy-backs totaling up to € 1.2 billion over 3 years Rating A-/BBB+ Relative debt 2 to 2.5x Equity ratio 25 to 35 % Gearing 0.8 to 1.2 Liquidity reserve covers maturities of the next 24 months Sustained employee orientation − Securing jobs − Prospects of further qualification and promotion − Satisfaction at work − Socially responsible staff restructuring Capital expenditure for 2011 around € 9 billion (before spectrum investment, if any) Employees “Entrepreneurs within the enterprise” Improvement of around 150 basis points through 2012 ROCE In addition to our three-year shareholder remuneration strategy from 2010 to 2012, once the sale of T-Mobile USA to AT&T has been completed we are plan- ning to use approximately EUR 5 billion of the proceeds to buy back shares (after the required resolutions and in accordance with the legal requirements) and to use approximately EUR 13 billion to reduce our net debt. For us ROCE (return on capital employed) is the main benchmark for focus- ing all operational measures on increasing the value of the Group. We believe that ROCE best reflects the expectations of the aforementioned groups of stakeholders. It represents the result a company has achieved in relation to the assets employed in achieving that result. ROCE is calculated using the ratio of profit from operations after depreciation, amortization and impairment losses, and imputed taxes (i.e., net operating profit after taxes, or NOPAT) to the average value of the assets tied up for this purpose in the course of the year (i.e., net operating assets, or NOA). Our goal is to achieve or exceed the return targets imposed on us by providers of debt capital and equity on the basis of capital market requirements and thus to generate value. We measure return targets using the weighted average cost of capital (WACC). * Please refer to footnote 2 on page 47.