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Deutsche Telekom AG - Interim Group report - January 1 to March 31, 2012

15Interim Group management report Business Customers. Fixed-network lines in the Business Customers area remained at the prior- year level in the reporting period. The trend in Internet usage is toward high bandwidths with all-round service. Accordingly, we recorded an upward growth trend in our CompanyConnect dedicated Internet connections. In the field of data communications, we significantly increased the number of networks and connections with Internet-based data networks (IP VPNs) and high-bandwidth location networking. With a clear focus on calling plans with integrated data flat rates for the mobile Internet, the new set of mobile calling plans we introduced in February 2011 helped to increase subscriber numbers compared with the prior year. Subscriber numbers continued to rise compared with the prior-year quarter in the area of machine-to-machine mobile communication as well as among contract customers, due not least to the marketing kick-off in February 2012 of new, attractive mobile calling plans for business customers with and without data flat rates. Wholesale. The number of unbundled local loop lines (ULLs) was virtually unchanged from year-end 2011. The number of bundled wholesale lines declined only slightly in the first quarter of 2012. This trend is expected to continue in the next few years, due in particular to the fact that our competitors are switching from bundled to unbundled wholesale products. Development of operations. Q1  2012  millions of € Q1 2011 millions of € Change millions of € Change % FY 2011 millions of € Total revenuea 5,658 5,794 (136) (2.3) 23,201 Consumers 2,997 3,097 (100) (3.2) 12,497 Business Customers 1,418 1,415 3 0.2 5,615 Wholesale 1,034 1,067 (33) (3.1) 4,209 Value-Added Services 97 107 (10) (9.3) 421 Other 112 108 4 3.7 459 Profit from operations (EBIT) 887 1,225 (338) (27.6) 4,359 EBIT margin % 15.7 21.1 18.8 Depreciation, amortization and impairment losses (1,119) (1,056) (63) (6.0) (4,408) EBITDA 2,006 2,281 (275) (12.1) 8,767 Special factors affecting EBITDA (296) (69) (227) n.a. (707) EBITDA (adjusted for special factors) 2,302 2,350 (48) (2.0) 9,474 EBITDA margin (adjusted for special factors) % 40.7 40.5 40.8 Cash capex (823) (820) (3) (0.4) (3,649) a The activities and functions of the Digital Services growth area and of the Internet service provider STRATO (Consumers) that were previously reported under the Germany operating segment, have been assigned to Group Headquarters & Shared Services from January 1, 2012 and reported as part of the DBU (Digital Business Unit). The prior-year figures have been adjusted for better comparability. Total revenue. The rate of the revenue decrease slowed compared with the prior-year period to 2.3 percent, an improvement of 1.8 percentage points compared with the 4.1-percent decrease from 2010 to 2011. Revenue growth in the fixed network was a result of the successful marketing of Entertain. However, this positive trend did not offset the negative effects on revenue. Added to this were price effects resulting from regulatory decisions – for example, the reduction in interconnection rates in July 2011. In mobile communications, data revenues increased thanks to smartphone sales. Revenue from mobile voice telephony decreased as a result of the demand for favorably priced calling plans with flat-rate components. The main reason for the decline in the Consumers area was the downward trend in voice telephony business, in particular in the fixed network. The de- crease was partially offset by growth in TV (up 29.2 percent). The growth in mobile data revenues (up 27.5 percent) almost succeeded in compensating for the decline in revenue, principally in traditional voice telephony. In the Business Customers area, total revenue remained stable. Growth in revenue from mobile data, broadband, and terminal equipment offset the decline in revenue from traditional voice telephony both in fixed-network and mobile communications. The decline in Wholesale revenue – down 3.1 percent to EUR 1.0 billion – was primarily attributable to the following factors: regulatory price cuts for digital leased lines, unbundled local loop lines, and interconnection calls (from July 1, 2011) and the declining use of interconnection calls. Declining revenues from Value-Added Services resulted from a weaker use of premium rate call numbers such as directory inquiry services and of public telephones.