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

43Interim Group management report Risks and opportunities. This section provides important additional information and explains recent changes in the risks and opportunities as described in the combined management report for the 2010 financial year. Readers are also referred to the Disclaimer at the end of this report. Risks related to the sale of T-Mobile USA. The U.S. Department of Justice (DOJ) initiated legal proceedings against the transaction at the U.S. District Court in Washington, District of Columbia. The successful closing of the sale of T-Mobile USA to AT&T is therefore subject to the rejection of the case by the court or a settlement. The judge assigned to the case has set the start of the hearing for February 13, 2012. Sprint Nextel Corporation und Cellular South, Inc. have also filed complaints against the transaction in the same U.S. District Court. On November 2, 2011, the judge decided to partially allow the com- plaints to go forward in selected areas, however no trial date has been set. The review by the Federal Communications Commission (FCC) is continuing at the same time. The uncertainty regarding the closing of the deal may also impact T-Mobile USA’s business operations in the course of the year. We have commit­ ted to have T-Mobile USA operate in the ordinary course until the transaction is closed. The consummation of the planned sale may reduce the size of our global mobile telecommunications business, which may have adverse effects on our economies of scale and the diversification of our business. The portion of the consideration for T-Mobile USA to be paid in AT&T common stock may be reduced in return for a higher cash portion. For further details on the T-Mobile USA deal, please refer to the disclosures in the notes to the interim consolidated financial statements under “Non-current assets and disposal groups held for sale.” Economic situation in Greece. The recession in Greece is continuing. Cuts in tax policy and government spending are additionally impacting on economic development. The continued rise in unemployment, falling incomes, and gen- eral uncertainty are negatively affecting private consumption. Further cuts in government spending and a sustained drop in private consumption may con- tinue to negatively affect telecommunications consumption. The possibility of a debt haircut has become less certain in view of the current political situation, which may have repercussions for our future business development and inter- est rates, especially in Greece. Litigation. Payment of damages from KfW Bankengruppe. In a class action lawsuit by shareholders in the United States, Deutsche Telekom was accused of providing false information in the prospectus in the course of the third public offering in 2000 and of not providing sufficient information about the shares offered. In 2005, Deutsche Telekom had paid out some USD 120 million in a settlement to shareholders in the United States, with part of this amount being refunded from insurance. The settlement was expressly made without acknowl- edgement of guilt or misconduct. Deutsche Telekom demanded repayment of the settlement amount plus costs from KfW Bankengruppe. The Federal Court of Justice ruled to Deutsche Telekom’s benefit. To determine the precise amount of the damages to be paid to Deutsche Telekom AG, the proceedings have been referred back to the Cologne Higher Regional Court. It is expected that Deutsche Telekom will have to repay part of these damages to the insurance company due to the payment previously received. Lawsuit on prospectus liability. In the proceedings pending before Frankfurt/ Main Higher Regional Court, the continuation of the oral hearing is scheduled for the first half of 2012. Claims for damages due to price squeeze. Competitors have claimed for damages from Deutsche Telekom on the grounds of a price squeeze between local-network wholesale and retail prices that the European Commission had identified in 2003 as part of a ruling to impose fines. This ruling, which imposed a fine of EUR 12.6 million plus interest, became final and non-appealable in October 2010 following the end of court proceedings. The amount of the loss suffered by competitors was not the subject of the case brought before the European Court of Justice. Vodafone (formerly Arcor) is seeking damages of EUR 223 million plus interest. The claims for damages filed against Telekom Deutschland GmbH by other competitors are: by Versatel for approximately EUR 70 million, by EWE Tel for approximately EUR 82 million, by NetCologne for approximately EUR 73 million, by M-net for EUR 27.3 million, and by HanseNet for EUR 126.4 million, plus interest in each case. Review of contracts in the F.Y.R.O. Macedonia and Montenegro. The audit of the financial statements of Magyar Telekom for the 2005 financial year identified contracts for which it was not possible at the time to fully ascertain an appropriate business background. As reported previously, Magyar Telekom’s and Deutsche Telekom’s legal representatives are currently in talks with the U.S. authorities (Department of Justice (DOJ) and Securities and Exchange Commission (SEC)) about the status of the investigation and the possibility of bringing the proceedings to a close. Magyar Telekom and Deutsche Telekom have already reached an agreement with the representatives of the SEC on the terms and conditions for bringing the proceedings to a close by way of settle- ment; these are still subject to the final approval by the SEC. A provision in the amount of EUR 69 million has been recognized by Magyar Telekom in light of the agreement and the continued discussions with the DOJ. The ultimate out- come of these ongoing negotiations cannot be foreseen. It is also not foresee- able at present whether the U.S. authorities will take action and, if so, what kind, if final agreements cannot be reached to conclude their proceedings.