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

18 7.7 percent. By systematically reducing our overhead costs, for example by means of efficient measures in Hungary and Greece in particular, we partially offset the negative effects in the Europe operating segment resulting from the year-on-year revenue decline. In the United States operating segment, adjusted EBITDA decreased by 11.7 percent year-on-year in the first three quarters of 2011 to EUR 2.8 billion as a result of the aforementioned decline in revenue. Operating expenses decreased year-on-year primarily as a result of exchange rate effects. On a U.S. dollar basis, operating expenses also decreased year-on-year, in particular due to lower volume-driven handset and commission costs. Cost savings in the first nine months of 2011 were offset by increased costs, in particular associated with the build-out of the 4G HSPA+ network and higher marketing expenses. In the first nine months of this year, the Systems Solutions operating segment generated adjusted EBITDA of EUR 0.6 billion. Despite an increase in revenue compared with the first three quarters of 2010 (up 3.3 percent), adjusted EBITDA decreased by 9.1 percent. This decline is primarily due to increased contract-related expenses, such as for the successful migration of the customer infrastructure to T-Systems’ operational business, start-up expenses for new contracts, and the development of new business areas, such as intelligent networks, energy, healthcare and connected vehicles. Savings generated by the comprehensive restructuring and efficiency enhancement program Save for Service did not offset the rise in costs. EBIT. EBIT in the Group from continuing operations decreased by EUR 0.6 billion year-on-year to EUR 3.5 billion in the first nine months of 2011, primarily due to the aforementioned effects. At EUR 6.7 billion, depreciation, amortization and impairment losses were at the same level as in the first three quarters of 2010. Profit/loss before income taxes. Profit before income taxes from continuing operations decreased by EUR 0.4 billion to EUR 1.5 billion in the reporting period. The decrease of EUR 0.2 billion in loss from financial activities was not sufficient to offset the aforementioned effects. The improvement in the loss from financial activities compared with the first nine months of 2010 was mainly the result of a decrease in finance costs. Profit/loss from continuing operations. Profit after taxes from continuing operations decreased by EUR 0.4 billion to EUR 1.0 billion in the reporting period, primarily due to the aforementioned effects. Compared with the first three quarters of 2010, the decrease in in- come tax expense from continuing operations was relatively small in spite of a EUR 0.4 billion decline in profit before income taxes. This is mainly attributable to the lower tax rate in the prior-year period resulting from the first-time capital- ization of deferred taxes of EUR 0.3 billion on temporary differences and tax loss carryforwards in Europe. The loss resulting from the deconsolidation of T-Mobile UK, which had no tax effect, and a special tax imposed in Greece had an offsetting effect at the time but these effects were not as significant as that of the first-time capitalization of deferred taxes. Profit/loss from discontinued operations. Profit after taxes from discontinued operations increased by EUR 0.2 billion compared with the first nine months of 2010. For an explanation of the develop- ment of operations, please refer to the section on the United States operating segment under “Development of business in the operating segments.” In addi- tion to the development presented in that section, an expense of EUR 0.1 billion from deferred taxes arose as a result of temporary differences in connection with the carrying amount of the investment, which was allocated to discontinued operations. According to measurement rules laid down in IFRS 5, the non-current assets assigned to the segment were no longer depreciated or amortized from the time it was classified as a discontinued operation. This resulted in a post-tax effect of EUR 0.7 billion in 2011. Net profit. We generated net profit of EUR 1.9 billion in the first nine months of 2011 compared with EUR 2.2 billion in the first three quarters of 2010, due to the aforementioned effects. Profit attributable to non-controlling interests increased by EUR 0.1 billion year-on-year to EUR 0.3 billion.