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

31Interim Group management report Deutsche Telekom. Interim Group Report 9M 2015. Total revenue Total revenue in our Systems Solutions operating segment in the reporting period amounted to EUR 6.3 billion, the same level as in the prior year. The increase in the Market Unit largely offset the planned decline in revenue in the Telekom IT business area. Revenues of the Market Unit, i.e., essentially business with external customers, were up 3.0 percent compared with the prior-year period to EUR 5.2 billion, with international revenue in particular increasing. The general downward price trend in ICT business was more than offset by the revenue from new contracts. Furthermore, exchange rate effects had a positive impact on the Market Unitʼs revenue. In the Telekom IT business unit, which mainly pools the Groupʼs domestic internal IT projects, revenue was down 13.9 percent to EUR 1.1 billion against the prior-year period. The decrease in revenue primarily reflects the lower internal revenues from the licensing of the Group-wide ERP system and, in particular, the Groupʼs planned savings in IT costs. EBITDA, adjusted EBITDA Adjusted EBITDA in our Systems Solutions operating segment decreased by EUR 70 million or 11.2 percent in the reporting period due to a substantially lower contribution from Telekom IT. Adjusted EBITDA of the Market Unit continued to rise, enabling this unit to make a 15.8 percent higher contribution to earnings than in the previous year. The reasons for this include improved customer profitability and the effects resulting from cost-cutting and efficiency enhancement measures. These positive effects were partially impaired by necessary expenses in connection with the realignment of the business model with the aim of ensuring sustainably profitable growth. The adjusted EBITDA margin of our Systems Solutions operating segment decreased from 9.9 percent in the prior-year period to 8.8 percent. EBITDA decreased by 57.9 percent year-on-year to EUR 118 million due to the effects described under adjusted EBITDA. Special factors were higher than in the prior year, mainly due to restructuring programs, the settlement of differences, and the optimization of transactions. EBIT, adjusted EBIT Adjusted EBIT improved by EUR 50 million for the first nine months of 2015 against the prior-year period. The key factors were the effects described under adjusted EBITDA and lower depreciation, amortization and impairment losses, especially in connection with the licensing of the Group-wide ERP system. The adjusted EBIT margin improved from 1.0 percent in the prior- year period to 1.8 percent. Cash capex Cash capex totaled EUR 0.8 billion in the reporting period. Our level of invest- mentremainshighandisattributabletotherealignmentofthebusinessmodel, which we are developing further in line with the increasing digitization of enterprises. For this reason, we are investing in intelligent network solutions such as connected car, healthcare, and energy, as well as in cutting-edge digital innovation areas like cloud computing and cyber security. Enhanced efficiency, for example as a result of the standardization of the ICT platforms, had an offsetting effect. GROUP HEADQUARTERS & GROUP SERVICES Group Headquarters & Group Services comprises all Group units that cannot be allocated directly to one of the operating segments. For more information, please refer to the section “Group structure” in the 2014 Annual Report, page 67 et seq. millions of € Q1 2015 Q2 2015 Q3 2015 Q3 2014 Change % Q1–Q3 2015 Q1–Q3 2014 Change % FY 2014 TOTAL REVENUE 565 584 555 596 (6.9) % 1,704 1,828 (6.8) % 2,516 Profit (loss) from operations (EBIT) (252) (231) (341) (447) 23.7 % (824) 492 n. a. (109) Depreciation, amortization and impairment losses (144) (138) (174) (163) (6.7) % (456) (464) 1.7 % (671) EBITDA (108) (93) (167) (284) 41.2 % (368) 956 n. a. 562 Special factors affecting EBITDA (86) (17) (34) (139) 75.5 % (137) 1,379 n. a. 1,229 EBITDA (ADJUSTED FOR SPECIAL FACTORS) (22) (76) (133) (145) 8.3 % (231) (423) 45.4 % (667) CASH CAPEX (96) (65) (69) (94) 26.6 % (230) (240) 4.2 % (381) TOTAL REVENUE 565584555596 (6.9) % 1,7041,828 (6.8) % 2,516

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