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

34 Interim Group management report Deutsche Telekom. Interim Group Report 9M 2015. On October 27, 2015, the EU Regulation concerning the single market for electronic communications, which contains provisions on net neutrality and international roaming, was adopted by the EU Parliament and the European Council. ƒƒ Net neutrality. The regulation concerning the single market for electronic communications allows for the provision of “specialized services” with assured quality, and Internet access services on a shared IP network. However, the permissibility of special services is linked to the fact that an assured quality is required for the provision of the service. Equal treat- ment of all data traffic will be established as a principle, with exceptions to traffic management being permitted in limited cases, for instance to ensure the objectively different technical requirements of different service categories and to prevent potential overloads in the network. Zero-rating, i.e., not charging for certain amounts of data traffic in connection with volume-based rate plans, remains permissible, with corresponding offers being subject to control by the Federal Network Agency. The regulation provides regulatory authorities with extensive powers to monitor and intervene, and includes provisions on fines. ƒƒ International roaming. With regard to international roaming, the regulation on the single market for electronic communications provides for an initial reduction of roaming rates as of April 30, 2016 to the level of national rates plus a strictly limited surcharge. From June 15, 2017, surcharges for roaming services within the EU will then be eliminated entirely (Roam like at Home), unless permitted under a still to be specified fair usage policy. The deadline of June 15, 2017 will be postponed if it is not possible to first bring in line the corresponding wholesale regulations at EU level in time. The introduction of Roam Like at Home, will give rise to corresponding revenue losses as well as substantial implementation costs. At EU level, work on the new Payment Service Directive 2 is largely complete; it will replace Payment Service Directive 1 from 2007. As it currently stands, billing models for voice and non-voice services will cap the amounts that can be charged for third-party services through telephone bills. The Directive is expected to enter into force in the second half of 2015 and to have a two- year deadline for enforcement in the member states. Depending on the transposition into national law, this will lead to restrictions in business models for billing third-party services and to costs for implementing compliance with the thresholds. Application for further vectoring roll-out. On February 23, 2015, we applied to the Federal Network Agency to be exempted from the obligation to give competitors access to the main distribution frames for the activation of VDSL lines. If the authority approves this request, we can create the necessary conditions to provide approximately 6 million more households with speeds of up to 100 Mbit/s. Going forward, transmission rates of up to 250 Mbit/s (super vectoring) will even be possible. In total, around 80 percent of house- holds would be able to benefit from high-speed lines by the end of 2018. We expect the regulatory process to be completed before the end of the fourth quarter of 2015. However, the regulatory requirements for concrete implementation will not be met until the reference offer has been adjusted, which is expected to take place in the third quarter of 2016. In its draft remedies decision for the bitstream market dated April 29, 2015, theFederalNetworkAgencyprovidesforex-anteregulationforlayer 2bitstream access products in addition to the current ex-post regulation for layer 3 bit- stream access products. We plan to offer a layer 2 bitstream access product as of January 1, 2016. If the Federal Network Agency were to set out narrow and rigid ex-ante regulation of layer 2 bitstream access products, this would give rise to the risk that innovative price models such as contingent models would no longer be attractive for us. Federal Network Agency proceedings on MagentaZuhause Hybrid. On July 6, 2015, 1&1 Telecom GmbH applied to the Federal Network Agency to be provided with a wholesale service that would enable the replication of our MagentaZuhause Hybrid product. This also includes access to LTE capacities used in connection with the hybrid product. Alternatively, they also requested a prohibition on the marketing of our retail product until a corresponding wholesale service is made available. Although there are good arguments on our side when we claim that competitors can replicate our hybrid product without a wholesale service to be provided by Telekom Deutschland, we cannot rule out the regulatory risk of the Federal Network Agency approving 1&1ʼs request at least to some extent. ASSESSMENT OF THE AGGREGATE RISK POSITION At the time of preparing this report, neither our risk management system nor our management could identify any material risks to the continued existence of Deutsche Telekom AG or a significant Group company as a going concern.

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