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Deutsche Telekom - The 2012 financial year

In the rest of Europe, figures more or less matched our expectations. Although revenues and results declined, this was in large part down to regulatory decisions and special taxes, which have taken huge amounts of money out of the markets. By contrast, there was good customer growth: The customer base for mobile contracts increased by another 4 percent, for example. That in itself is far from a matter of course in view of the ongoing economic difficulties in many countries, and we are doing better than most of our competitors in this regard. One notable sign of trust in our subsidiaries is that OTE recently successfully issued 700 million euros of bonds onto the market, and is the first Greek issuer to do so for some time. The trend for systems solutions for corporate customers is encouraging – especially in terms of the adjusted EBITDA, which grew by more than 11 percent in 2012. Incoming orders also performed well, rising by around 18 percent, with the fourth quarter being particularly strong. The most important deal was certainly the early renewal of our contract with Shell, which is worth a total of 1.8 billion euros. We are making a bigger and bigger impact with our cloud solutions, for example with computing capacities, storage services, and software that our customers can book and pay for on demand. Our range of cloud computing services is not just for corporate customers, however. Since last year, our Business Marketplace has also enabled small and medium-sized companies to gain convenient access to innovative cloud services, including accounting software, videoconferencing solutions and additional storage space without the need for additional IT resources. We’ve also further simplified our processes for partner- ships with other companies in 2012 as part of our aim to become more flexible and agile as a Group. Here’s just one example of our success so far: Since October we have been the exclusive partner of the music streaming service Spotify in Germany. All in all – and this is the message for the 2012 financial year – Deutsche Telekom is still in a very solid position. Our operative business outperformed the industry average, our financing is sound and we are able to borrow on excellent terms. In the year just ended we further reduced our financial liabilities by more than 3 billion euros, and we also became more innovative and faster as a company. All this was only possible thanks to our employees’ massive dedication to transforming the Group – be it in product development, sales, service or one of the many other parts of the company. My thanks go to all of them. From this strong foundation, we are now taking the next step. There is a clear overarching direction to our plans for 2013 through 2015: We are investing in order to return to growth in the medium term. In contrast to many of our competitors, we are in fact increasing the level of our investment to almost 30 billion euros over the next three years – focusing on the rollout of high-performance broadband mobile and fixed networks. In Germany, we are building the most modern integrated network possible. We are accelerating LTE rollout in mobile communications, which will allow us to offer the latest generation of high-speed mobile Internet to around 85 percent of the population. At the same time we are expanding our fiber-optic network and making it faster. With the help of vectoring technology, some 65 percent of households will be able to take advantage of speeds of up to 100 megabits per second. Furthermore, we are linking LTE and vectoring together with the aim of enabling download speeds of up to 200 megabits per second and upload speeds of up to 90 megabits per second. Overall, we have earmarked some 6 billion euros for the rollout of the broadband fixed network alone. We assume at this point that the investment-friendly regulatory policy announced by the EU will be swiftly implemented at national level – including the conditions required for the use of vectoring. 30

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