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Deutsche Telekom AG - Interim Group report - January 1 to September 30, 2015 - Development of business in the Group

10 Interim Group management report Deutsche Telekom. Interim Group Report 9M 2015. Judgment of the European Court of Justice on Safe Harbor. In its judgment of October 6, 2015, the European Court of Justice (ECJ) ruled that the transfer of data between the European Union and the United States on the basis of the Safe Harbor Agreement in its current form is not permissible. It states that the level of protection for personal data in the United States is inadequate because the data of European customers is not sufficiently protected from access by U.S. security agencies. According to the judgment, legal protection in the United States for the affected European citizens is limited and can only be guaranteed effectively to some extent. The data protection authorities now have to develop a binding position on how data transfers to the United States on the basis of standard contractual clauses and binding corporate rules will be treated in the future. REGULATION Final Federal Network Agency rulings on interconnection charges in Germany published. On April 1 and April 24, 2015, the Federal Network Agency published its final rulings on fixed-network and mobile termination rates, thereby finally setting the charges that had already been provisionally approved as of December 1, 2014. AWARDING OF FREQUENCIES Below we describe the most important current developments regarding the awarding of frequencies: ƒƒ On May 27, 2015, the Federal Network Agency in Germany began the auction of the 0.9 and 1.8 GHz frequency rights from the GSM licenses of German network operators as well as of further spectrum from the 0.7 GHz (Digital Dividend II) and 1.5 GHz ranges. Following 16 days and 181 rounds of bidding, the process came to a close on June 19, 2015. Telekom Deutschland reached its spectrum targets and acquired 100 MHz of the available 270 MHz in the four bands for a price of just under EUR 1.8 billion. ƒƒ In Albania, Telekom Albania – formerly AMC – a subsidiary of our Greek subsidiary OTE, applied for the renewal of its GSM license with frequen- cies in the 0.9 and 1.8 GHz ranges, which expired in August 2014. Since all requirements were met, the renewal of the license was approved in January 2015. Furthermore, in April 2015, the Albanian regulatory authority AKEP started a process for awarding frequencies in the 1.8 GHz range, in which Telekom Albania successfully participated. In May 2015, AKEP then awarded frequencies in the 2.6 GHz range. In this process, Telekom Albania acquired two lots of 20 MHz for the equivalent of around EUR 3 million. It used the acquired spectrum to successfully launch 4G/LTE services on the market in September 2015. ƒƒ In Poland, the regulator UKE began the process for awarding frequencies from the 0.8 and 2.6 GHz ranges in the form of a simultaneous multi-round auction on February 10, 2015. Because there was no foreseeable end to the bidding phase by September 2015, the Polish Ministry for Administration and Digitizationdecidedtochangetherulestoallowtheauctiontobecompleted. Under the new rules, the previous bidding process was continued until October 9, 2015. On October 15, 2015, a final auction round was held with sealed bids. T-Mobile Polska was the highest bidder with bids totaling around EUR 0.5 billion for one lot of 2 x 5 MHz frequency blocks in the 0.8 GHz range and for three lots of 2 x 5 MHz blocks in the 2.6 GHz range. It was also the second highest bidder for another 2 x 5 MHz blocks in each of the two ranges. On October 19, 2015, the regulatory authority offered T-Mobile Polska the frequency blocks it had successfully bid on for pur- chase and inquired whether it was also willing to purchase the two blocks for which it was the second highest bidder. T-Mobile Polska accepted the blocks it had acquired as the highest bidder on October 26, 2015 and also signaled its willingness to purchase the two blocks for which it had been the second highest bidder. Although the award process is set to be completed by the end of the year, later legal disputes over the process and its result cannot be ruled out due to the change in the auction rules. ƒƒ There were further delays in the preparations for the frequency auction in Montenegro, where the publication of a draft version of the award rules is now expected by the end of 2015, and a decision on the final terms and conditions and the start of the bidding phase are expected for the first half of 2016. ƒƒ On April 8, 2015, the U.S. telecommunications regulator, the Federal Communications Commission (FCC), officially assigned to T-Mobile US the AWS-3 spectrum it had acquired at auction for EUR 1.6 billion in January 2015. ƒƒ In Hungary the regulatory authority NMHH announced its intention to issue new regulations on usage rights of spectrum in the 3.4 to 3.6 and 3.6 to 3.8 GHz ranges. The frequencies for digital mobile communications are expected to be released and auctioned by the end of this year. DEVELOPMENT OF BUSINESS IN THE GROUP RESULTS OF OPERATIONS OF THE GROUP NET REVENUE In the first nine months of the 2015 financial year, we generated net revenue of EUR 51.4 billion, clearly up EUR 5.7 billion or 12.5 percent on the same period intheprioryear.Inadditiontoexchangerateeffects,ourUnitedStatesoperating segment in particular contributed to this revenue trend thanks to continued strong customer additions as a result of its Un-carrier initiatives. Our Germany operating segment held its own, particularly in the mobile market, recording an overall increase of 1.4 percent. In our Europe operating segment, we recorded a moderate revenue decline of 1.7 percent. Despite the consistent focus on growth areas in our national companies, revenue decreased due to competition-induced price reductions, in particular in mobile communications, and regulatory decisions. Revenue generated by our Systems Solutions operating segment was almost unchanged against the prior year, despite the realignment of the business model and the general downward trend in prices for IT and communications services. Excluding the positive exchange rate effects of EUR 3.6 billion in total – in particular from the translation of U.S. dollars into euros – and positive effects from changes in the composition of the Group of EUR 0.1 billion, revenue increased by EUR 2.1 billion or 4.2 percent year-on-year. For details on the revenue trends in our Germany, United States, Europe, and Systems Solutions operating segments as well as in the Group Headquarters & Group Services segment, please refer to the section “Development of business in the operating segments,” page 16 et seq.

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