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Deutsche Telekom AG - Interim Group report - January 1 to September 30, 2015

28 Interim Group management report Deutsche Telekom. Interim Group Report 9M 2015. Greece. Revenue we generated in Greece totaled EUR 2.1 billion in the first nine months of 2015, which was on a par with the prior-year level. Even after reaching an agreement with the European institutions and despite efforts to introduce reforms, Greeceʼs economic situation remains strained. The positive contribution from the fixed-network business offset the decline in revenue from the mobile business. There was a significantly positive trend in fixed-network revenue as a result of revenue increases in broadband and TV business. Our attractive TV content was very well received by customers. In connection with the focus on rolling out DSL lines, we also recorded brisk growth in the number of broadband customers. The B2B/ICT business with business customers also made a positive contribution. Overall, we managed to offset the decline in revenue from voice services, which are particularly adversely affected by line losses in traditional telephony. Mobile business decreased year-on-year by 2.2 percent. Double-digit revenue growth in the data business partially offset the declines in voice revenues arising from the increasing popularity of flat rates and the associated low pricing. Text messaging revenues in the prepay segment also decreased year- on-year – increasingly due to the subscription to text messaging rate options and lower usage. In the first nine months of 2015, adjusted EBITDA in Greece stood at EUR 827 million, down 2.1 percent against the prior-year period. Apart from the fact that revenue remained unchanged against the prior-year level, higher direct costs attributable in part to higher expenses for terminal equipment and in part to regulation-induced increases in interconnection costs were not completely offset by lower indirect costs. Hungary. In the first nine months of 2015, revenue increased by 4.0 percent year-on-year to EUR 1.1 billion. Adjusted for exchange rates, revenue increased by 3.8 percent. This growth is largely attributable to the positive trend in fixed- network business, especially due to the 11.8 percent increase in revenue from broadband and TV business. The proportion of total fixed-network revenue accounted for by broadband/TV business increased by 4 percentage points year-on-year. In line with our strategy of rolling out a pan-European network in our integrated national companies, the marketing of IP-based broadband lines was stepped up. As a result, the number of broadband lines, for example, increased year-on-year, especially for VDSL lines. TV business also profited from this, attracting customers with its innovative TV services across all screens. The energy resale business also recorded year-on-year revenue growth. In addition, the B2B/ICT business with business customers also made a positive contribution to revenue, enabling us to more than offset the overall decline in voice revenue in traditional telephony. Mobile business also had a positive effect on total revenue. The upward trend in mobile data business continued in the third consecutive quarter, resulting in a year-on-year increase of some 15 percent. This development is, among other factors, the result of our high-speed mobile network, the huge reach, and the successful marketing of innovative products, which is reflected both in usage behavior and by the fact that smartphones accounted for a high proportion of all terminal devices sold. This can also be seen in terminal equipment sales, which made a positive revenue contribution to total mobile revenues, such that we were able to fully offset the mainly regulation-induced decline in service revenues. Adjusted EBITDA amounted to EUR 373 million in the first nine months of the year, representing a year-on-year increase of 7.8 percent, mainly due to the positive effects from increased revenue. This offset increased direct costs, especially for purchased goods and services. Austria. In Austria, we generated revenue of EUR 609 million in the first nine months of 2015, a year-on-year increase of 1.0 percent. This is due on the one hand to the positive trend in voice revenues. On the other hand, revenues from mobile data business once again increased substantially, especially from contract customers, such that the proportion of total revenues accounted for by data revenues increased compared with the prior-year period. This increase was mainly due to the successful launch of the new rate plan model last year, followed by ongoing high demand for smartphones. Both factors resulted in a sharp increase in the usage of data services. We were thus able to offset the declines resulting from the regulation-induced reduction in roaming charges. Adjusted EBITDA increased by 14.0 percent year-on-year in the first three quarters of 2015 to EUR 195 million. In addition to positive effects from the increase in revenues, lower indirect costs due in particular to personnel costs contributed to this result. Savings in direct costs also made a positive contribution to adjusted EBITDA, primarily as a result of lower costs for purchased goods and services. EBIT EBIT in our Europe operating segment totaled EUR 1.2 billion in the first nine months of 2015, down 11.4 percent year-on-year, mainly due to the decline in EBITDA. A moderate decrease in the level of depreciation and amortization had a positive impact on the EBIT trend. Cash capex In the first nine months of 2015, our Europe operating segment reported cash capex of EUR 1.2 billion, i.e., down by 18.6 percent, mainly due to the acquisition of mobile licenses in the Czech Republic, Poland, and Slovakia in the prior year. We acquired spectrum in the first three quarters of 2015, e.g., in Albania, but to a lesser extent.

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