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

23Interim Group management report Development of business. The slight increase in external revenue in our Systems Solutions operating segment did not offset the decline in revenue generated internally with Deutsche Telekom entities. External revenue increased due to a number of major deals brokered in 2011, including with Daimler, as well as several smaller contracts in the growth area of cloud computing. In the first quarter of 2012, T-Systems again signed a number of new, strate- gically significant agreements in the ICT corporate customer market. They include, for example, the largest cloud deal to date, which was concluded with the British American Tobacco (BAT) group, and the outsourcing agreement with the insurance group Old Mutual. T-Systems also expanded its dynamic resources in the first quarter of 2012 (please also refer to the 2011 Annual Report, page 105 et seq.). The fact that order entry nevertheless declined by 32.8 percent year-on-year was in part due to strong competition in the ICT market. In addition, the figures in the first quarter of 2011 included the comprehensive outsourcing agreement with Everything Everywhere totaling approximately EUR 500 million. The number of servers managed in the reporting period increased against the prior-year period. Demand increased in the wake of the new deals signed in 2011, however this was partially offset by improved capacity utilization of high- performance servers. The consolidation of data centers was also continued. The number of workstations managed stood at the same level as in the first quarter of 2011. Development of operations. Q1  2012  millions of € Q1 2011 millions of € Change millions of € Change % FY 2011 millions of € Total revenue 2,245 2,260 (15) (0.7) 9,249 Loss from operations (EBIT) (35) (11) (24) n.a. (43) Special factors affecting EBIT (79) (40) (39) (97.5) (295) EBIT (adjusted for special factors) 44 29 15 51.7 252 EBIT margin (adjusted for special factors) % 2.0 1.3 2.7 Depreciation, amortization and impairment losses (148) (160) 12 7.5 (640) EBITDA 113 149 (36) (24.2) 597 Special factors affecting EBITDA (79) (40) (39) (97.5) (275) EBITDA (adjusted for special factors) 192 189 3 1.6 872 EBITDA margin (adjusted for special factors) % 8.6 8.4 9.4 Cash capex (131) (123) (8) (6.5) (553) Total revenue. Total revenue in our Systems Solutions operating segment in the reporting period amounted to EUR 2.2 billion, a year-on-year decrease of 0.7 percent. This decrease is solely attributable to a decrease of 3.7 percent in internal revenue from Deutsche Telekom entities following IT cost saving initiatives taken at Group level. External revenue increased by 0.6 percent. Net revenue. The operating segment generated net revenue of EUR 1.6 billion, 0.6 percent more than in the prior year. This is mainly attributable to the growing Computing Services business, which benefited in particular from the development in cloud computing. EBITDA, adjusted EBITDA. Adjusted EBITDA in our Systems Solutions operating segment increased by 1.6 percent in the reporting period as a result of the restructuring and efficiency enhancement program launched. The adjusted EBITDA margin improved from 8.4 to 8.6 percent. EBITDA decreased by 24.2 percent due to provisions recognized in the first quarter of 2012 for the planned early retirement arrangements for civil servants. EBIT, adjusted EBIT. Adjusted EBIT for the first quarter of 2012 was EUR 15 million higher than in the prior-year period. Among other factors, this increase is attributable to lower depreciation and amortization year-on-year in view of reduced invest- ments in the prior year. The adjusted EBIT margin increased from 1.3 percent to 2.0 percent in the reporting period. Cash capex. At EUR 0.1 billion, cash capex in the reporting period increased slightly year- on-year. The increase is primarily due to higher capex in connection with deals signed. This effect was partially offset by the build-out of the dynamic computing platform. Systematic measures to increase efficiency (such as the increasing standardization of the ICT platforms) also reduced capital expenditure.

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