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

26 Our share of the German broadband market remained at around 46 percent at the end of the first three quarters of 2011. The number of broadband lines increased by 1.7 percent to 12.2 million in the first nine months of 2011. This includes 0.5 million customers who use VDSL, i.e., these customers can surf the Internet at a bandwidth of 25 to 50 Mbit/s. As of September 30, 2011, a total of 1.4 million existing customers has chosen our television service Entertain. This includes some 14,000 lines for the TV via Satellite product, which has been available since September 1, 2011. At the heart of life everywhere: mobile telephony and data applications. In relation to the overall market, we continued to be mobile market leader in terms of service revenues in Germany in the first three quarters of 2011. Our strategy of focusing this business on high-value contract customers has been a success. The number of mobile customers increased by 0.2 million in the reporting period compared with the end of 2010, taking it to 34.9 million. In addition, the number of contract customers increased by 0.6 million during the first three quarters of 2011, to 17.8 million. This increase is mainly attributable to the sale of SIM card quotas to resellers and the positive trend with business customers. Due to the move to deregister the cards of inactive prepay custom- ers, the number of such cards in both 2010 and the first three quarters of 2011 decreased in the consumers segment. Consumers. The Consumers business in our Germany operating segment focuses on high-value consumers. These customers purchase fixed-network services like Internet and TV products (e.g., Entertain), and mobile services with integrated data flat rates. Since the end of last year, we have offered our customers a fixed- network calling plan (Call & Surf Comfort) with more bandwidth throughout the country at a uniform price. In mobile communications, we have upgraded the service content of the contracts, 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 data flat rates for the mobile Internet (Call & Surf Mobil and Complete Mobil) have sold especially well. The launch of the new special calling plans such as Special Call & Surf Mobil were well received by contract customers. The sale of quotas of SIM cards to resellers also developed positively over the past two quarters. The number of deactivations of prepaid cards decreased by more than half year-on-year in the first three quarters of 2011. 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-play products with flat rates for telephony and the Internet. 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 in- crease this growth. With these new products, we are selling more performance and higher-value services, helping to retain and win back customers. In February 2011, we also introduced a new set of mobile calling plans for our business customers. The focus on packages with integrated data flat rates 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 from the end of 2010 to 9.6 million in the first three quarters of 2011. Network infra- structure providers require this upstream product to access their customers. The number of our bundled wholesale lines declined by 0.2 million in the first three quarters of 2011 to 0.8 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 in order to optimize their own service for their end customers. Hence we recorded a growth of 0.2 million in unbundled products, to 1.2 million.