Edgar Filing: DEUTSCHE TELEKOM AG

q209interimreport.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2009

Commission file number 001-14540

Deutsche Telekom AG

(Translation of Registrant’s Name into English)

Friedrich-Ebert-Allee 140,

53113 Bonn,

Germany

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

This report is deemed submitted and not filed pursuant to the rules and regulations of the Securities and Exchange Commission.

Deutsche Telekom at a glance.


				Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Net revenue				16,238	15,125	7.4	32,140	30,103	6.8	61,666
Domestic				6,817	7,184	(5.1)	13,760	14,438	(4.7)	28,885
International				9,421	7,941	18.6	18,380	15,665	17.3	32,781
EBIT (profit from operations)				2,012	1,868	7.7	2,256	4,166	(45.8)	7,040
Special factors affecting EBITa				(246)	(294)	16.3	(1,919)	(25)	n.a.	(1,780)
Adjusted EBITa				2,258	2,162	4.4	4,175	4,191	(0.4)	8,820
Adjusted EBIT margina			(%)	13.9	14.3		13.0	13.9		14.3
Profit (loss) from financial activities				(1,015)	(976)	(4.0)	(1,757)	(1,653)	(6.3)	(3,588)
Profit before income taxes				997	892	11.8	499	2,513	(80.1)	3,452
Depreciation, amortization and impairment losses				(3,015)	(2,698)	(11.7)	(7,713)	(5,355)	(44.0)	(10,975)
EBITDAb				5,027	4,566	10.1	9,969	9,521	4.7	18,015
Special factors affecting EBITDAa,b				(231)	(284)	18.7	(101)	(15)	n.a.	(1,444)
Adjusted EBITDAa,b				5,258	4,850	8.4	10,070	9,536	5.6	19,459
Adjusted EBITDA margina,b		(%)		32.4	32.1		31.3	31.7		31.6
Net profit (loss)				521	394	32.2	(603)	1,318	n.a.	1,483
Special factorsa				(235)	(239)	1.7	(2,014)	(65)	n.a.	(1,943)
Adjusted net profit (loss)a				756	633	19.4	1,411	1,383	2.0	3,426
Earnings per share/ADSc, basic/diluted (€)				0.12	0.09	33.3	(0.14)	0.30	n.a.	0.34
Cash capexd				(2,211)	(1,837)	(20.4)	(4,822)	(3,629)	(32.9)	(8,707)
Net cash from operating activities				3,512	3,682	(4.6)	6,478	7,013	(7.6)	15,368
Free cash flow (before dividend payments)e				1,404	1,963	(28.5)	1,820	3,592	(49.3)	7,033
Equity ratiof	(%)			-	-		31.2	33.6		32.3
Net debte				-	-		44,966	40,559	10.9	38,158

Number of employees at balance sheet date.

	June 30, 2009	Mar. 31, 2009	Change June 30, 2009/ Mar. 31, 2009 %	Dec. 31, 2008	Change June 30, 2009/ Dec. 31, 2008 %	June 30, 2008	Change June 30, 2009/ June 30, 2008 %
Deutsche Telekom Group	261,373	260,798	0.2	227,747	14.8	235,794	10.8
Non-civil servants	229,990	228,928	0.5	195,634	17.6	202,151	13.8
Civil servants (Germany)	31,383	31,870	(1.5)	32,113	(2.3)	33,643	(6.7)

Number of fixed-network and mobile customers.

		June 30, 2009	Mar. 31, 2009	Change June 30, 2009/ Mar. 31, 2009 %	Dec. 31, 2008	Change June 30, 2009/ Dec. 31, 2008 %	June 30, 2008	Change June 30, 2009/ June 30, 2008 %
Fixed-network linesg,h	(millions)	39.6	40.3	(1.7)	41.1	(3.6)	42.8	(7.5)
Broadband linesi,h	(millions)	17.2	17.0	1.2	16.7	3.0	16.0	7.5
Mobile customersj	(millions)	149.8	148.4	0.9	147.6	1.5	141.8	5.6

a For a detailed explanation of the special factors affecting EBIT, adjusted EBIT, the EBIT margin, and the special factors affecting EBITDA, adjusted EBITDA, the adjusted EBITDA margin and special factors affecting profit/loss after income taxes and the adjusted net profit, please refer to “Reconciliation of pro forma figures,” page 63 et seq.

Deutsche Telekom defines EBITDA as profit/loss from operations before depreciation, amortization and impairment losses.

One ADS (American Depositary Share) corresponds to one ordinary share of Deutsche Telekom AG.

Investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 66 et seq.

Based on shareholders’ equity excluding amounts earmarked for dividend payments, which are treated as current liabilities.

Lines in operation. Telephone lines excluding internal use and public telecommunications, including wholesale services. Approximately 160,000 business customers have been included in the Broadband/Fixed Network operating segment since January 1, 2009. The presentation of the number of lines has been adjusted to reflect the business model of the Broadband/Fixed Network operating segment. For the purposes of equal treatment, internal use by the Systems Solutions segment is no longer included in the presentation of the number of lines. Prior-year figures have been adjusted accordingly.

From February 2009, the fixed-network business of OTE Greece and Romtelecom (Romania) is included in the Broadband/Fixed-Network operating segment. Prior-year figures have been adjusted on a pro forma basis.

Broadband lines in operation, including Germany and Southern and Eastern Europe.

Number of customers of the fully consolidated mobile communications companies of the Mobile Communications Europe (including Virgin Mobile) and Mobile Communications USA segments. From February 2009, the mobile communications business of COSMOTE (entity of the OTE group) in Greece, Romania, Bulgaria and Albania is included in the Mobile Communications Europe operating segment. Prior-year figures have been adjusted on a pro forma basis.

Developments in the Group.

Net revenue of the Group increased by 6.8 percent year-on-year in the first half of 2009 to EUR 32.1 billion.

Domestic net revenue amounted to EUR 13.8 billion, less than in the first half of 2008. International net revenue increased year-on-year from EUR 15.7 billion to EUR 18.4 billion and the proportion of net revenue generated outside Germany increased from 52.0 percent to 57.2 percent.

Group EBITDA in the first half of 2009 amounted to EUR 10.0 billion compared with EUR 9.5 billion in the prior-year period. Group EBITDA adjusted for special factors1 increased year-on-year from EUR 9.5 billion to EUR 10.1 billion.

Net loss amounted to EUR 0.6 billion in the first half of 2009, compared with a net profit of EUR 1.3 billion in the first half

of 2008.

Net profit adjusted for special factors1 amounted to EUR 1.4 billion, slightly higher than in the first half of 2008.

Free cash flow2 before dividend payments was at EUR 1.8 billion compared with EUR 3.6 billion in the first half of 2008.

Net debt3 increased by EUR 6.8 billion compared with the end of 2008 to EUR 45.0 billion. Net debt increased by

EUR 4.3 billion due to the first-time full consolidation of OTE.

For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, special factors affecting profit/loss after income taxes and adjusted net profit, please refer to “Reconciliation of pro forma figures,” page 63 et seq.

For the calculation of free cash flow, please refer to “Reconciliation of pro forma figures,” page 66.

For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 67.

T-Share price performance.

Performance of the T-Share, Jan. 1 – June 30, 2009.

			June 30, 2009	June 30, 2008	Dec. 31, 2008
Xetra closing prices	(€)
Exchange price at the balance sheet date			8.40	10.40	10.75
High (in the first six months)			11.39	15.55	11.87
Low (in the first six months)			7.93	10.02	9.00

Weighting of the T-Share in major stock indexes
DAX 30		(%)	5.9	5.1	7.2
Dow Jones Europe STOXX Telecommunications©		(%)	9.1	8.9	10.8

Market capitalization	(billions of €)		36.5	45.4	46.9
Shares issued	(millions)		4,361.32	4,361.32	4,361.32

By the end of the first half of 2009, the equity markets had recovered from their year-to-date lows in March 2009. Although the economies of the major industrialized countries are still in a historic recession, in the second quarter of 2009 the economic indicators sent out the first signs of a turnaround, which was well received on the stock markets. On June 30, 2009 the DAX’s listing was virtually unchanged compared with the start of the year. The leading U.S. share index, the Dow Jones Industrial Average, lost only 6.5 percent, the Dow Jones Europe STOXX 50 edged down just 2.1 percent, and the main Japanese index, the Nikkei 225, was actually trading 10.1 percent higher at the reporting date than at the start of the year.

Most European telecommunications stocks enjoyed a positive trend up to June 30, 2009 compared with their year-to-date lows in March 2009. However, on account of the defensive nature of stocks in this sector, they profited less from the upturn in equity prices than other securities. The Dow Jones Europe STOXX Telecommunications© sector index lost 6.6 percent during the first six months of 2009.

The T-Share posted losses in the second quarter of 2009 following the adjustment of the capital market guidance for 2009 in April and the payment of an attractive dividend of EUR 0.78 in May 2009. The T-Share ended the first half of 2009 with a closing price of EUR 8.40. This was 6 percent higher than its first-half low on June 10, 2009, but 21.9 percent lower than at the start of the year.

Corporate governance.

In the Declaration of Conformity released on December 4, 2008 pursuant to § 161 of the German Stock Corporation Act, the Supervisory Board and Board of Management of Deutsche Telekom AG declared that, in the period since submission of the previous declaration of conformity, Deutsche Telekom AG had complied, without exception, with

the recommendations of the Government Commission for the German Corporate Governance Code published on July 20, 2007 and, without exception, with the recommendations published on August 8, 2008.

The full text of the Declaration of Conformity can be found on the Deutsche Telekom website (www.telekom.com) under Investor Relations in the Corporate Governance section.

Deutsche Telekom AG shares are listed as American Depositary Shares (ADSs) on the New York Stock Exchange (NYSE). As a result, Deutsche Telekom is subject to NYSE listing rules as well as to U.S. capital market legislation, in particular the Sarbanes-Oxley Act of 2002 and associated regulations of the Securities and Exchange Commission (SEC) for listed foreign entities. A general summary of the main differences between German corporate governance rules and those of the NYSE that apply to listed companies is included in Deutsche Telekom’s Annual Report on Form 20-F for the 2008 financial year, which is available on the Deutsche Telekom website (www.telekom.com) under Investor Relations in the Publications section. This summary can also be found on the Deutsche Telekom website (www.telekom.com) under Investor Relations in the Corporate Governance section.

Interim Group management report.

Highlights.

Events in the second quarter of 2009.

Group.

Deutsche Telekom specifies details of new structure.

On April 29, 2009, the Supervisory Board of Deutsche Telekom AG approved the more regional and integrated structure of the Company for the initiated restructuring of its business in Germany, the continuation of the course established in the fall of 2006 with integrated sales and customer service in Germany. Subject to approval by the shareholders and financial authorities, the new structure will be achieved in two stages:

§	T-Mobile International AG was merged into Deutsche Telekom AG effective July 6, 2009. T-Mobile Deutschland GmbH has thus become a direct subsidiary of Deutsche Telekom AG.

§	T-Home and T-Mobile Deutschland GmbH are then to be merged to form a single company which will be a wholly-owned subsidiary of Deutsche Telekom AG.

An extraordinary shareholders’ meeting will be called in late fall of this year in order to gain the approval of shareholders, after which the new structure will be quickly implemented. The three service companies (Deutsche Telekom Kundenservice GmbH, Deutsche Telekom Technischer Service GmbH, and Deutsche Telekom Netzproduktion GmbH) and Telekom Shop Vertriebsgesellschaft mbH will then become wholly-owned subsidiaries of the new company for German operations.

Issuances in the second quarter of 2009.

Deutsche Telekom again issued a benchmark bond through its financing arm Deutsche Telekom International Finance B.V. in the second quarter of 2009 – a U.S. dollar bond for USD 1.5 billion on June 22, 2009. The five-year tranche has a coupon of 4.875 percent, the ten-year tranche a coupon of 6 percent.

In addition, several medium-term notes were issued in the second quarter of 2009. On April 9, 2009, Deutsche Telekom issued a 13-year medium-term note in the amount of GBP 700 million (pounds sterling) with a coupon of 6.5 percent through Deutsche Telekom International Finance B.V. On April 22, 2009, Deutsche Telekom AG also issued a five-year medium-term note in the amount of CHF 400 million (Swiss Franc) with a coupon of 3.75 percent. Furthermore, euro medium-term notes with a total volume of EUR 600 million and terms of five to eight years were issued through Deutsche Telekom International Finance B.V.

Rating change by Fitch.

On April 23, 2009, Fitch Ratings lowered Deutsche Telekom’s long-term rating by one notch from A- to BBB+. The outlook changed from negative to stable. The short-term rating was confirmed at F-2.

Staff reduction, restructuring and recruitment to make the workforce competitive.

In the Group’s domestic companies, socially responsible measures were used to reduce staff numbers further in the first half of 2009, essentially by means of voluntary redundancies, partial and early retirement, and employment opportunities for civil servants and employees offered by Vivento, especially in the public sector. 1,900 staff have already been recruited as part of the 3,500 or so planned new hires, of which 740 are professionals and 1,160 junior staff.

2009 collective negotiations for Telekom Shop Vertriebsgesellschaft.

In the fourth round of negotiations Telekom Shop Vertriebsgesellschaft (TSG) and the service trade union ver.di reached an accord on a collective agreement for the 5,000 or so employees of TSG on June 9, 2009. After a three-month salary freeze, salaries for all employees subject to collective agreements will increase by 2.5 percent from August 2009 and by another 1.8 percent from May 2010. For May to July 2009, the percentage increases will be realized through a one-time payment calculated from each individual’s annual target salary. The new collective agreement has a term of 24 months. Junior sales assistants will receive an additional 1 percent raise from August 2009, i.e., 3.5 percent overall. From May 2010, they will also receive approximately 1 percent on top of the 1.8 percent raise. The specific provision for junior sales assistants sends out a clear signal for TSG employees in the entry-level wage group, which now accounts for almost one third of the sales force.

Deutsche Telekom leads the table.

In a readers’ survey by Europe’s largest trade journal, connect, Deutsche Telekom came out on top in seven categories: mobile network operator, triple play, DSL and telephone, mobile data flat rate, mobile portals, mobile discount and prepaid cards. T-Mobile, for instance, was rated the best network for the tenth time in a row. Deutsche Telekom’s IPTV service came out winner in comparative tests by Computer Bild magazine and Stiftung Warentest, the German consumer testing organization, for example. A survey by the Internet portal www.pcwelt.de of around 1,600 users found that T-Home has the best customer service of all DSL providers. The criteria included telephone hotline quality, e-mail support, fault clearance service, and cost. T-Home was awarded a score of 2.2, the best mark received by any provider, for its customer service (1 being the highest mark possible).

Mobile Communications Europe.

COSMOTE takes over Zapp in Romania.

The COSMOTE group has signed an agreement in Bucharest for the takeover of Telemobil S.A (Zapp). The enterprise value, and therefore the value of the Zapp shares, is estimated at around EUR 61 million. COSMOTE will also take over the financial and other liabilities of Zapp, estimated at EUR 146 million and mainly relating to the roll-out of the 3G and CDMA networks. Zapp is the oldest mobile communications provider in the Romanian market. The 3G network currently covers 23 cities in Romania. Zapp generated revenue of EUR 61 million in 2008 with over 374,000 contract customers. The takeover is subject to approval from the relevant Romanian authorities.

Integrative product innovations help Deutsche Telekom maintain its claim to be the leading provider of products for connected life and work.

The Family calling plan launched on the German market in May 2009 is the first to integrate mobile communications and fixed network. It is ideally tailored to families as a target group and offers a good value flat rate. Family members with up to four cell phones and a fixed-network line can make unlimited calls to each other.

In Croatia, T-Mobile and T-Com jointly launched the Full Internet Tariff product in May 2009, which integrates fixed-network DSL and access to the mobile Internet through HotSpots, giving customers unlimited access to the Internet.

Systematic and necessary expansion and modernization of the network infrastructure as a guarantee for the success of innovative products.

Having acquired a UMTS license in December 2008, T-Mobile Macedonia began to offer its customers 3G applications in June 2009. In the first phase, larger cities have access to the 3G network.

T-Mobile Austria was the first Austrian mobile communications operator to test the next-generation mobile network (NGMN) in a showcase using Long-Term Evolution (LTE), in cooperation with Huawei.

High-performance and intelligent terminal equipment make connected life and work an experience.

In June 2009, T-Mobile exclusively launched the successor model of the thriving Apple iPhone 3G – the iPhone 3G S – in Germany, the Netherlands and Austria. The iPhone 3G S is expected to go on sale in other countries, including countries in which COSMOTE mobile communications companies operate, in the third quarter of 2009.

Since the beginning of June 2009 the T-Mobile Jukebox has given music lovers in Germany and Austria access to around two million songs. The removal of all copy protection means T-Mobile customers can now download the songs without worrying about digital rights management. T-Mobile reached agreements to this effect with virtually all major record companies and key independent labels.

Broadband/Fixed Network.

Super-fast Internet connection for business customers.

With CompanyConnect 10M, Deutsche Telekom is providing its business customers throughout Germany with a professional Internet link over existing copper lines that features symmetrical transmission rates of up to 10 Mbit/s. This is around five times faster that the fastest previous CompanyConnect connection using copper lines. CompanyConnect 10M is ideal for business customers in regions that are not served by fiber networks, for example.

Successful launch of the terminal equipment service package.

The service package, which was launched in April 2009, has been well received by customers. For a low monthly flat rate customers receive the latest terminal equipment and a comprehensive service package, including software updates, remote maintenance and installation support. Deutsche Kundenservice GmbH (DTKS), the Telekom shops and the Telekom online shop have recorded more than 20,000 bookings per week.

Deutsche Telekom greatly expands content range.

Videoload has been offering VideoloadFree since the beginning of June 2009, a free service that is financed by automated, dynamically integrated advertising.

The market leader Softwareload has been available to customers in Switzerland and Austria since April 2009.

The Internet portal wer-kennt-wen.de, one of the largest social networking sites on the German-speaking Internet, began offering its more than six million community members music to download in cooperation with Musicload in June 2009.

Systems Solutions.

MAN concludes service agreement with T-Systems.

MAN AG signed a seven-year agreement with T-Systems in June 2009 to transfer IT services from MAN IT Services GmbH to T-Systems from July 1, 2009. T-Systems will be responsible for central services, such as networks and computing centers. T-Systems will operate the MAN group’s computing centers and the corporate network. The wide area network connects 400 sites in 23 countries. Deutsche Telekom’s corporate customer subsidiary has been engaged to consolidate the IT infrastructure. To this end, T-Systems is transferring all services into two separate high-security computing centers in Munich, which will from now on provide the MAN group with all IT services, as required. T-Systems’ Dynamic Services will adjust bandwidths, computing power and data storage capacity to MAN’s business development.

T-Systems wins contract from Brenntag Asia Pacific.

Brenntag, one of the world’s leading chemical distribution enterprises, has commissioned T-Systems to develop its international network. To expand its footprint, Brenntag will use information and communication technology services from the Deutsche Telekom subsidiary in Singapore, Thailand, India, Australia, Taiwan, Malaysia, Indonesia, Vietnam and the Philippines for the next three years. The IT-based corporate network will manage Brenntag’s communication activities in the Asia-Pacific region. Under the new agreement, Brenntag Asia Pacific is also procuring SAP services dynamically and on demand. T‑Systems will also operate Brenntag’s software systems, in line with its core business.

T-Systems takes over the Spanish IT service provider Metrolico.

T-Systems is boosting its business in Spain and Portugal with its acquisition of the Spanish IT service provider Metrolico from Lico Corporation. Deutsche Telekom’s systems arm is planning to reach third place among the ICT service providers on the Iberian peninsula by 2010. The acquisition is a milestone along that path. Metrolico has an excellent position in the Iberian market in the fields of infrastructure management, maintenance and technical support. A major focus of Metrolico’s business activities lies in the Spanish financial sector.

Overall economic situation/industry situation.

Global economic development and outlook.

The global economy is still enveloped in the worst crisis it has seen for decades, though around the world many indicators show that individual economic heavyweights have bottomed out and are starting to recover. The International Monetary Fund (IMF) expects the global economy to grow by 2.5 percent worldwide next year after shrinking by 1.4 percent this year. Back in April, the IMF was still forecasting growth of just 1.9 percent for 2010, with Asia seeing the fastest development.

As the recession set in later in the euro zone and in Germany, the IMF predicts that these economies will recover later than others. It expects the German economy to shrink by 6.2 percent this year. According to the IMF’s economic report from the beginning of July 2009, a slowdown of 0.6 percent is anticipated for 2010. The euro zone economy is expected to shrink 4.8 percent this year. The IMF predicts a decline of 0.3 percent for the coming year.

Overall economic risks.

Aside from the uneven and sluggish recovery of the national economies, one of the key risks to the global economy is financial market stability. The IMF continues to regard the global economy as unstable, stating that government support for the economy is therefore indispensable for the moment. According to IMF estimates, governments should only scale back their measures to stabilize the economy when a sustained recovery is apparent.

Telecommunications market.

The Federal Statistical Office’s price index for telecommunications services in Germany reflects a further reduction in consumer prices in the first half of 2009. Compared with June 2008, prices fell from 93.3 to 91.3 (on the basis of 100 in 2005). The consumer price index for fixed network and Internet decreased to 93.4 in June 2009, compared with 95.2 in June 2008. The index for mobile communications decreased from 87.3 in June 2008 to 85.2 in June 2009.

Mobile Internet applications are becoming increasingly important at both European and international level. This was confirmed by BITKOM in Berlin based on current forecasts issued by the EITO market research institute (www.eito.com). The market is expected to grow by 10 percent in both 2009 and 2010 despite the current economic crisis. Around EUR 32.6 billion is expected to be spent EU-wide on mobile data services in 2009, and around EUR 36 billion the year after. With EUR 5.6 billion in 2009, the United Kingdom probably accounts for the largest market volume. Germany will take second place with EUR 5.2 billion, followed by Italy, with just under EUR 5.2 billion, and then France with EUR 4.0 billion. Spain, the fifth-largest market, will have a volume of EUR 3.2 billion. According to BITKOM calculations, mobile Internet access and mobile e-mail revenues now top text and multimedia messaging revenues in Germany.

Regulatory situation.

Regulatory order on IP bitstream access.

Following the Federal Administrative Court’s repeal of the regulatory order on IP bitstream access, the Federal Network Agency issued a new regulatory order on June 3, 2009. Deutsche Telekom considers this order to be unlawful and has filed a suit against it. At the request of the Federal Network Agency, Deutsche Telekom had submitted cost records to the Agency as evidence for the prices currently in force for IP bitstream access. On June 6, 2009, the Agency initiated rate approval proceedings that will be ruled on within ten weeks.

Cross-connect cabinets.

In March 2009, Deutsche Telekom was required by the Federal Network Agency to grant the carrier EFN eifel-net access to the unbundled local loop (ULL) in areas with low bandwidth coverage through a new cross-connect cabinet to be erected between the street cabinet and the main distribution frame. On June 15, 2009, the Agency fixed the rates for access to the cross-connect cabinet. Deutsche Telekom has filed a suit and an application for expedited proceedings for a suspension of enforcement against this obligation and the rate ruling with the Cologne Administrative Court.

Further expansion of the DSL network.

As a result of economic developments and regulatory decisions by the Federal Network Agency, Deutsche Telekom has had to reduce its overall capital expenditure on broadband expansion for this year by EUR 100 million to EUR 200 million. In particular, the cutting of key wholesale rates such as the rate for ULLs means that the Deutsche Telekom Group now has less capital at its disposal for investment purposes. At the same time, demand from municipalities has risen sharply year-on-year, also as a result of the Federal Government’s broadband initiative. So far this year, Deutsche Telekom has entered into 426 partnerships with municipalities, i.e., in six months as many as in the whole of 2008.

Key elements and notes paper published by the Federal Network Agency.

With reference to the broadband strategy approved by the Federal Government in February 2009, the Federal Network Agency published two consultation papers on May 13, 2009. 1.) Key elements for progressing modern telecommunications networks and creating powerful broadband infrastructures, and 2.) Notes on the consistent regulation of rates as required under § 27 (2) of the Telecommunications Act (TKG). Deutsche Telekom has submitted a statement of opinion on each of these papers, calling for more restrained regulation so that the change in the intensity of competition and the investment risks associated with the infrastructure can be appropriately taken into consideration. Deutsche Telekom specifically criticizes the fact that the Federal Network Agency is failing to create legal certainty and planning reliability with regard to the future handling of new networks, does not adequately provide for contract concepts on the sharing of risk, and on the whole is looking to maintain strict cost regulation. Furthermore, Deutsche Telekom is calling on the Agency to apply less stringent rate regulation standards to achieve the consistency goal. The Agency will first publish and then evaluate the statements submitted by market participants.

Infrastructure atlas.

As part of its broadband strategy, the Federal Government has also commissioned the Federal Network Agency to draw up an infrastructure atlas to include all privately and publicly sponsored infrastructures in Germany that can be shared for broadband expansion. The atlas will help to leverage synergies in infrastructure roll-out to reach the goals of the broadband strategy. Deutsche Telekom will support this initiative on a voluntary basis by supplying relevant infrastructure data. Provisions governing access, use, and liability in connection with the infrastructure atlas still need to be clarified, however.

Terms and conditions governing the assignment of frequencies.

On June 3, 2009, the Federal Network Agency published its draft of the terms and conditions governing the award of spectrum in the 800 MHz, 1.8 GHz, 2 GHz, and 2.6 GHz bands in the Official Gazette and invited public comments until July 17, 2009. Among other things, the terms and conditions provide for incremental service obligations in the area of the digital dividend, making it impossible to rapidly fill “blank spots” on the German map and thus making the spectrum unattractive from a business point of view. In its comment, Deutsche Telekom spoke out in favor of a needs-based adjustment of the service obligations. In addition, the Federal Network Agency published draft rules on carrying out proceedings for the award of spectrum (auction rules) on July 27, 2009 and invited comments to be submitted until August 26, 2009.

International roaming.

The European Parliament and the Council of Ministers have extended the regulation of international roaming. Consumer rates will gradually be reduced to EUR 0.35 (plus VAT) for outgoing calls and to EUR 0.11 (plus VAT) for incoming calls by 2011. The rates have to be billed to the second, though in the case of outgoing calls this applies after the first 30 seconds. The wholesale price for data roaming will initially be reduced to EUR 1 per megabyte, then to EUR 0.80 in 2010 and EUR 0.50 in 2011. Text message prices were reduced to EUR 0.11 (plus VAT) from July 1, 2009.

Group strategy.

“Focus, fix and grow” – Deutsche Telekom’s strategy is being systematically implemented.

Deutsche Telekom aims to position itself as a market leader for connected life and work. This vision pursues important trends, such as the digitization of many spheres of life, the fragmentation of living and working environments, the personalization of products and services, further growing mobility, ongoing globalization, and international value creation. The Deutsche Telekom Group is meeting these trends and the current macroeconomic and competitive challenges head on with its “Focus, fix and grow” strategy. The four strategic action areas remain unchanged:

Improve competitiveness in Germany and in Southern and Eastern Europe

Grow abroad with mobile communications

Mobilize the Internet

Roll out network-centric ICT

Improve competitiveness.

Deutsche Telekom is responding to the challenges in Germany and in the markets of Southern and Eastern Europe decisively and with a forward-looking approach. The strategic development of the broadband infrastructure, innovative products, continuous improvements in the cost structure and a more integrated structure form the basis for long-term business success.

In Germany, Deutsche Telekom already supplies around 1,000 towns and cities with ADSL2+ and, in the 50 largest cities, it also offers services via its VDSL infrastructure. As it continues to expand the infrastructure, the Deutsche Telekom Group is increasingly looking to cooperation models with local authorities and competitors. This year 426 such models have already been agreed with municipalities to connect around 63,000 more households to the broadband network. Deutsche Telekom is also opening up its VDSL network to competitors, without being obliged to do so by the regulator, and is planning collaborations to expand fiber optic technology in 13 German cities.

The high-performance broadband infrastructure forms the basis for attractive products and high-quality customer service. Entertain, the next generation television service, now also enables access to personal e-mail accounts and was recently extended to include a range of web services. LIGA total!, an exclusive Bundesliga soccer package, will be on offer from August 2009. Also, since April 2009 Deutsche Telekom has been offering a number of terminal devices, like the Entertain set-top box, not just for purchase but also for a fixed monthly service charge. At the same time, the Deutsche Telekom Group’s Save for Service program is continuing to improve cost structures. The target for 2010 was to realize savings of between EUR 4.2 and EUR 4.7 billion per annum. Deutsche Telekom met this target ahead of schedule on June 30, 2009 with cumulative savings of EUR 4.9 billion.

The fixed-network and mobile business will be merged to further strengthen the position in the German market and enable the Group to offer integrated products and services from a single source. Similar changes have also been initiated in Southern and Eastern Europe. For instance, T-Hrvatski Telekom in Croatia is undergoing a strategic and organizational realignment. T-Com and T-Mobile are being consolidated and merged into a single business unit. For T-Hrvatski Telekom, the purpose of the restructuring is to improve customer service and internal efficiency and thus to strengthen its position as market leader.

Grow abroad with mobile communications.

The proportion of net revenue generated abroad has grown rapidly over the last few years. The German home market only accounted for 42.8 percent of all revenue in the first half of 2009. This trend was reinforced by the consolidation of Greek Hellenic Telecommunications S.A. (OTE). Deutsche Telekom and OTE have a joint footprint spanning almost all of Central, Southern and Eastern Europe. The cooperation holds growth potential for both companies and promises procurement and investment synergies, and better cost efficiency.

For Deutsche Telekom, the stake in OTE is a logical further step in its international growth strategy. Deutsche Telekom intends to continue to leverage international economies of scale and synergies and grow further internationally on that basis. This will involve both consolidation in markets in which the Group already has a presence, where this is possible and expedient, and commitments in neighboring markets. For example, COSMOTE, a subsidiary of the Greek group OTE, signed an agreement on the takeover of the Romanian company Telemobil S.A (Zapp) at the end of June 2009. The company has a CDMA license and a 3G license and serves more than 374,000 contract customers, generating revenue of EUR 61 million in 2008. The takeover is awaiting approval from the relevant Romanian authorities.

Mobilize the Internet.

Mobile use of the Internet is the overriding trend in the telecommunications industry. Users can network privately and professionally and access digital content at all times, wherever they may be. Deutsche Telekom is very well positioned in this growth market, not least thanks to a wide range of innovative terminal equipment at attractive prices, intuitive, device-independent user interfaces and a high-performance infrastructure. The number of mobile Internet users served by the Western European companies and in the Czech Republic and Poland rose to over 18 million.

In June 2009, Deutsche Telekom exclusively launched the new iPhone 3G S in the German, Austrian and Dutch markets. The latest generation of the Apple smartphone sets itself apart not only with its familiar simple operation, but also with innovative features, greater processing power, more RAM and faster transmission rates. The T-Mobile G1 also gets top marks. A Simpson Carpenter survey on customer satisfaction in the United Kingdom found that 90 percent of G1 users are very satisfied with the device and the associated calling plans. The latest version of Deutsche Telekom’s web’n’walk platform extends the outstanding user experience of iPhone and Android to other mobile handsets. So-called widgets give direct access to the most popular services on the Internet.

In addition to Internet content, Deutsche Telekom enables easy access to personal image and audio data as well as the latest music and TV content. T-Home and T-Mobile customers can access their content on their television set, mobile handset or computer at any time, with the same user interface for all devices. Deutsche Telekom’s mobile customers also have access to more than two million songs without copy protection through the T-Mobile Jukebox. In addition, T-Mobile launched its reworked mobile TV service in Germany and Austria in the second quarter of 2009. The new platform provides better picture quality and is more user-friendly.

As a leading broadband provider, Deutsche Telekom will continue to benefit hugely from growth in the mobile data business through its own innovative developments and strategic collaborations, all based on its superior infrastructure. Deutsche Telekom is therefore focusing on constantly increasing the speed of its mobile networks and is already successfully testing the fourth generation mobile communications standard (LTE).

Roll out network-centric ICT.

The trend toward convergence of IT, telecommunications services and applications to create an ICT environment continues apace. T-Systems seized on this development early on and built its strategy around providing customized ICT projects and solutions for corporate customers. Numerous multinational groups, such as Shell and Linde, have already put their faith in the knowledge and solution expertise of T-Systems in outsourcing their information and communication technology.

In the second quarter of 2009, T-Systems once again won a number of major international contracts, including for the provision of dynamic SAP services for the Swiss group Interroll, for operating information and communication technology for Mexico’s largest development bank Banobras, and for harmonizing Sanitec’s IT systems in Germany and France. In addition, on July 1, 2009 T-Systems took over MAN’s German and Austrian computing centers and global network connecting 400 sites in 23 countries. From now on, MAN will procure all of its computer, storage and network services as required from T-Systems. The contract is worth EUR 400 million and has a term of seven years.

In May of this year, T-Systems also strengthened its position in Spain and Portugal by acquiring the Spanish IT service provider Metrolico. T-Systems and Metrolico complement each other in the industry and now have a presence in all key strategic sectors in Spain: T-Systems plays a leading role in the public and automotive sectors, while Metrolico’s business areas include the financial sector.

Development of business in the Group.

Net revenue.

In the first half of the 2009 financial year, Deutsche Telekom generated a year-on-year revenue increase of EUR 2.0 billion or 6.8 percent, with a key contribution of EUR 2.4 billion from the first-time full consolidation of OTE. Adjusted for the effects of changes in the consolidated group and positive exchange rate effects (EUR 0.3 billion), net revenue was EUR 0.8 billion down on the prior-year level.

The Mobile Communications Europe operating segment recorded a 3.9-percent increase in revenue year-on-year to EUR 10.6 billion. This increase was also largely due to the full consolidation of OTE, which contributed EUR 1.2 billion to the operating segment’s revenue. Revenue for the first half of 2009 was negatively affected by exchange

rate effects amounting to EUR 0.6 billion, which resulted essentially from the translation of pounds sterling, Polish zlotys, Hungarian forints and Czech korunas to euros. General economic conditions and the continuing high level of competitive pressure also had a negative effect on revenue.

Revenue from the Mobile Communications USA operating segment increased EUR 1.1 billion year-on-year to EUR 8.1 billion in the first half of the year. This revenue growth was primarily the result of exchange rate effects totaling EUR 1.0 billion from the translation of U.S. dollars to euros. Reflecting the effects of the unfavorable development of the economy in general, revenue per contract customer declined, however.

Revenue from the Broadband/Fixed Network operating segment increased EUR 0.7 billion year-on-year to EUR 11.9 billion. The positive effect of EUR 1.4 billion from the full consolidation of OTE for the first time was partially offset by lower revenues in Germany of EUR 0.6 billion, due to line losses and a decrease in usage-related charges, and a decrease in revenues in Eastern Europe due to intense competition in the traditional fixed-network business.

The Systems Solutions operating segment generated revenue of EUR 4.3 billion. Revenue declined by EUR 0.2 billion year-on-year, primarily as a result of lower intragroup revenue. International revenue increased.


	Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Net revenue	15,902	16,238	15,125	7.4	32,140	30,103	6.8	61,666
Mobile Communications Europea,b	5,077	5,500	5,187	6.0	10,577	10,179	3.9	20,663
Mobile Communications USAa	4,137	3,918	3,498	12.0	8,055	6,959	15.7	14,957
Broadband/Fixed Networka,b, c	5,882	6,063	5,561	9.0	11,945	11,238	6.3	22,501
Systems Solutionsa,c	2,106	2,179	2,251	(3.2)	4,285	4,451	(3.7)	9,343
Group Headquarters & Shared Servicesa,b	878	877	915	(4.2)	1,755	1,799	(2.4)	3,573
Intersegment revenued	(2,178)	(2,299)	(2,287)	(0.5)	(4,477)	(4,523)	1.0	(9,371)

Total revenue (including revenue between operating segments).

Including first-time full consolidation of OTE from the beginning of February 2009 in the Mobile Communications Europe, Broadband/Fixed Network and Group Headquarters & Shared Services operating segments. For detailed information, please refer to the interim consolidated financial statements.

As of January 1, 2009, approximately 160,000 business customers in Germany were transferred from the Systems Solutions operating segment (until December 31, 2008 called the Business Customers operating segment) to the Broadband/Fixed Network operating segment. Prior-year figures have been adjusted accordingly.

Elimination of revenue between operating segments.

Contribution of the operating segments to net revenue (after elimination of revenue between segments).

	H1 2009 millions of €	Proportion of net revenue of the Group %	H1 2008 millions of €	Proportion of net revenue of the Group %	Change millions of €	Change %	FY 2008 millions of €
Net revenue	32,140	100.0	30,103	100.0	2,037	6.8	61,666
Mobile Communications Europea	10,201	31.8	9,850	32.7	351	3.6	19,978
Mobile Communications USA	8,047	25.0	6,953	23.1	1,094	15.7	14,942
Broadband/Fixed Networka,b	10,618	33.0	9,954	33.1	664	6.7	19,779
Systems Solutionsb	2,998	9.3	3,042	10.1	(44)	(1.4)	6,368
Group Headquarters & Shared Servicesa	276	0.9	304	1.0	(28)	(9.2)	599

The Broadband/Fixed Network operating segment remained the largest contributor to net revenue in the first half of 2009, with a proportion of 33.0 percent. The Mobile Communications USA operating segment increased its share of net revenue year-on-year, whereas the proportions generated by the other operating segments declined.

Breakdown of revenue by region.

The proportion of net revenue generated outside Germany in the first half of 2009 increased by 5.2 percentage points compared with the prior-year period to reach 57.2 percent, largely due to revenue growth in Europe and North America. In Europe, revenue increased mainly due to the full consolidation of OTE. In North America, revenue was positively impacted by exchange rate effects.


	Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Net revenue	15,902	16,238	15,125	7.4	32,140	30,103	6.8	61,666
Domestic	6,943	6,817	7,184	(5.1)	13,760	14,438	(4.7)	28,885
International	8,959	9,421	7,941	18.6	18,380	15,665	17.3	32,781
Proportion generated internationally (%)	56.3	58.0	52.5		57.2	52.0		53.2
Europe (excluding Germany)	4,684	5,363	4,318	24.2	10,047	8,462	18.7	17,324
North America	4,148	3,928	3,497	12.3	8,076	6,957	16.1	14,931
Other	127	130	126	3.2	257	246	4.5	526

EBIT.

EBIT of the Deutsche Telekom Group decreased by EUR 1.9 billion year-on-year to EUR 2.3 billion due to an impairment loss recognized in the first quarter of 2009 on goodwill of the cash generating unit T-Mobile UK in the Mobile Communications Europe operating segment. While EBIT in the Mobile Communications Europe and Systems Solutions operating segments decreased, the Broadband/Fixed Network and Mobile Communications USA operating segments each reported a year-on-year increase. OTE contributed EUR 0.2 billion to Group EBIT in the first half of 2009.

An impairment loss of EUR 1.8 billion was recognized on goodwill of the cash generating unit T-Mobile UK in the Mobile Communications Europe operating segment in the first quarter of 2009, mainly a consequence of the significant economic slowdown and fierce competition in the United Kingdom. Volume-driven lower roaming revenues and new regulation of roaming and termination charges had a negative impact on revenue. Increased termination charges for the use of third-party mobile communications networks and high customer acquisition and retention expenses raised the cost base.

Exchange rate effects mainly in the United Kingdom, Poland, Hungary and the Czech Republic, higher customer acquisition and retention costs in the Netherlands and Austria, for example, as well as the economic environment also had a negative effect on EBIT in the Mobile Communications Europe operating segment. The full consolidation of OTE for the first time, on the other hand, had a positive impact on the operating segment.

EBIT increased slightly in the Mobile Communications USA operating segment. Adjusted for exchange rate effects, EBIT decreased particularly as a result of the decline in revenues per contract customer.

The Broadband/Fixed Network operating segment reported an increase in EBIT, principally as a result of the full consolidation of OTE for the first time.

EBIT in the Systems Solutions operating segment in the prior-year period was impacted in particular by the gain on the disposal of Media&Broadcast.


	Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
EBITa in the Group	244	2,012	1,868	7.7	2,256	4,166	(45.8)	7,040
Mobile Communications Europeb	(1,166)	917	861	6.5	(249)	1,620	n.a.	3,188
Mobile Communications USA	530	654	584	12.0	1,184	1,086	9.0	2,299
Broadband/Fixed Networkb,c	1,170	760	819	(7.2)	1,930	1,708	13.0	2,759
Systems Solutionsc	11	27	(65)	n.a.	38	418	(90.9)	81
Group Headquarters & Shared Servicesb	(269)	(280)	(305)	8.2	(549)	(582)	5.7	(1,198)
Reconciliation	(32)	(66)	(26)	n.a.	(98)	(84)	(16.7)	(89)

EBIT is profit/loss from operations as shown in the income statement.

Including first-time full consolidation of OTE from February 2009 in the Mobile Communications Europe, Broadband/Fixed Network and Group Headquarters & Shared Services operating segments. For detailed information, please refer to the interim consolidated financial statements.

Profit/loss before income taxes.

Profit before income taxes for the first half of 2009 was EUR 0.5 billion, down EUR 2.0 billion on the prior-year period. Profit before income taxes was impacted in particular by the impairment of goodwill at the cash generating unit T-Mobile UK amounting to EUR 1.8 billion which was reflected in the EBIT of the Mobile Communications Europe operating segment.

Net loss.

Deutsche Telekom generated a net loss of EUR 0.6 billion in the first half of 2009, compared with a net profit of EUR 1.3 billion in the prior-year period due to the aforementioned effects.

EBITDA.

EBITDA in the first half of 2009 amounted to EUR 10.0 billion compared with EUR 9.5 billion in the prior-year period. While EBITDA generated by the Mobile Communications USA and Broadband/Fixed Network operating segments improved, the Systems Solutions and Mobile Communications Europe operating segments reported an EBITDA decrease.

Adjusted EBITDA.

In the first half of 2009, EBITDA was negatively affected by special factors totaling EUR 0.1 billion. These special factors primarily consisted of staff-related and other restructuring measures in the Broadband/Fixed Network and Systems Solutions operating segments. In the prior-year period, special factors only had a minimal effect on EBITDA overall. These consisted primarily of the gain on the disposal of Media&Broadcast in the Systems Solutions operating segment, while expenses in connection with staff-related and other restructuring measures in the Group had an offsetting effect.

EBITDA for the first half of 2009, adjusted for the aforementioned special factors, was EUR 10.1 billion compared with EUR 9.5 billion in the prior-year period. OTE, which was fully consolidated for the first time, contributed EUR 0.9 billion to adjusted Group EBITDA in the reporting period.

In the Mobile Communications Europe operating segment, exchange rate effects mainly in the United Kingdom, Poland, Hungary and the Czech Republic, higher customer acquisition and retention costs in the Netherlands and Austria, for example, and continued fierce competition in Germany had a negative impact on adjusted EBITDA. The first-time full consolidation of OTE had a positive effect.

In the Mobile Communications USA operating segment, adjusted EBITDA increased. Adjusted for exchange rate effects and effects of changes in the consolidated group, however, adjusted EBITDA decreased, in particular due to the decrease in revenue per customer.

Adjusted EBITDA of the Broadband/Fixed Network operating segment increased in the first half of 2009 as a result of the first-time full consolidation of OTE.

In the Systems Solutions operating segment, the increase in adjusted EBITDA was attributable to efficiency measures, which more than offset the decline in revenue.


	Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Adjusted EBITDAa,b in the Group	4,812	5,258	4,850	8.4	10,070	9,536	5.6	19,459
Mobile Communications Europeb	1,551	1,909	1,813	5.3	3,460	3,511	(1.5)	7,160
Mobile Communications USA	1,061	1,176	1,030	14.2	2,237	1,996	12.1	4,240
Broadband/Fixed Networkb, c	2,010	2,056	1,892	8.7	4,066	3,784	7.5	7,385
Systems Solutionsc	211	231	188	22.9	442	392	12.8	826
Group Headquarters & Shared Servicesb	20	(37)	(40)	7.5	(17)	(65)	73.8	(31)
Reconciliation	(41)	(77)	(33)	n.a.	(118)	(82)	(43.9)	(121)

Deutsche Telekom defines EBITDA as profit/loss from operations before depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, and the adjusted EBITDA margin, please refer to “Reconciliation of pro forma figures,” page 63 et seq.

Free cash flow.

Free cash flow decreased in the first half of 2009 from EUR 3.6 billion in the prior-year period to EUR 1.8 billion.

This decrease is mainly attributable to higher expenditures for intangible assets and property, plant and equipment, particularly in connection with the roll-out of the network infrastructure in the United States and the United Kingdom. At the same time, net cash from operating activities decreased mainly as a result of the development of working capital, which was largely influenced in the first half of 2009 by higher cash outflows for restructuring measures. In addition, interest payments and income tax payments increased year-on-year, in particular as a result of the first-time full consolidation of OTE from February 2009.


	Q1 2009 millions of €a	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Cash generated from operations	3,596	4,215	4,375	(3.7)	7,811	8,143	(4.1)	17,625
Interest received (paid)	(630)	(703)	(693)	(1.4)	(1,333)	(1,130)	(18.0)	(2,257)
Net cash from operating activities	2,966	3,512	3,682	(4.6)	6,478	7,013	(7.6)	15,368
Cash outflows for investments in in-tangible assets (excluding goodwill) and property, plant and equipment	(2,611)	(2,211)	(1,837)	(20.4)	(4,822)	(3,629)	(32.9)	(8,707)
Free cash flow before proceeds from disposal of intangible assets (excluding goodwill) and property, plant and equipment	355	1,301	1,845	(29.5)	1,656	3,384	(51.1)	6,661
Proceeds from disposal of intangi-ble assets (excluding goodwill) and property, plant and equipment	61	103	118	(12.7)	164	208	(21.2)	372
Free cash flow before dividend paymentsb	416	1,404	1,963	(28.5)	1,820	3,592	(49.3)	7,033

Figures for the first quarter of 2009 have been adjusted. For explanations, please refer to “Selected explanatory notes/Accounting policies.”

For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 66.

Net debt.

Net debt increased by EUR 6.8 billion compared with the end of 2008 to EUR 45.0 billion. Net debt increased by EUR 4.3 billion due to the first-time full consolidation of OTE. In addition, the dividend payments in particular contributed to the increase in net debt.

	June 30, 2009 millions of €	Mar. 31, 2009 millions of €	Change June 30, 2009/ Mar. 31, 2009 %	Dec. 31, 2008 millions of €	Change June 30, 2009/ Dec. 31, 2008 %	June 30, 2008 millions of €	Change June 30, 2009/ June 30, 2008 %
Bonds	43,157	39,659	8.8	34,302	25.8	32,249	33.8
Liabilities to banks	4,806	4,670	2.9	4,222	13.8	7,415	(35.2)
Liabilities to non-banks from promissory notes	1,029	1,036	(0.7)	887	16.0	738	39.4
Derivative financial liabilities	752	755	(0.4)	1,053	(28.6)	1,339	(43.8)
Lease liabilities	1,965	1,987	(1.1)	2,009	(2.2)	2,056	(4.4)
Other financial liabilities	1,075	1,030	4.4	974	10.4	452	n.a.
Gross debt	52,784	49,137	7.4	43,447	21.5	44,249	19.3
Cash and cash equivalents	5,836	4,113	41.9	3,026	92.9	1,954	n.a.
Available-for-sale/held-for-trading financial assets	562	436	28.9	101	n.a.	104	n.a.
Derivative financial assets	937	1,211	(22.6)	1,598	(41.4)	292	n.a.
Other financial assets	483	544	(11.2)	564	(14.4)	1,340	(64.0)
Net debta	44,966	42,833	5.0	38,158	17.8	40,559	10.9

For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 67.

Development of business in the operating segments.

Mobile Communications Europe and Mobile Communications USA.

Mobile Communications: Customer development and selected KPIs.

	June 30, 2009 millions	Mar. 31, 2009 millions	Change June 30, 2009/ Mar. 31, 2009 %	Dec. 31, 2008 millions	Change June 30, 2009/ Dec. 31, 2008 %	June 30, 2008 millions	Change June 30, 2009/ June 30, 2008 %
Mobile Communications Europea	116.3	115.3	0.9	114.9	1.2	110.3	5.4
T-Mobile Deutschlandb	39.1	39.0	0.3	39.1	0.0	38.4	1.8
T-Mobile UKc	16.6	16.7	(0.6)	16.8	(1.2)	16.8	(1.2)
PTC (Poland)	13.4	13.3	0.8	13.3	0.8	12.8	4.7
T-Mobile Netherlands (NL)d	5.4	5.2	3.8	5.3	1.9	5.3	1.9
T-Mobile Austria (A)	3.4	3.4	0.0	3.4	0.0	3.3	3.0
T-Mobile CZ (Czech Republic)	5.4	5.4	0.0	5.4	0.0	5.3	1.9
T-Mobile Hungary	5.3	5.3	0.0	5.4	(1.9)	5.1	3.9
T-Mobile Croatia	2.9	2.8	3.6	2.7	7.4	2.5	16.0
T-Mobile Slovensko (Slovakia)	2.3	2.3	0.0	2.3	0.0	2.3	0.0
Othere	1.9	1.9	0.0	1.9	0.0	1.7	11.8
COSMOTE Greece	8.8	8.4	4.8	7.9	11.4	6.9	27.5
COSMOTE Romania	6.3	6.1	3.3	5.9	6.8	4.6	37.0
COSMOTE Bulgaria	4.0	4.0	0.0	4.1	(2.4)	3.9	2.6
COSMOTE Albania	1.5	1.4	7.1	1.4	7.1	1.3	15.4
Mobile Communications USAa	33.5	33.2	0.9	32.8	2.1	31.5	6.3
Mobile customers (total)a	149.8	148.4	0.9	147.6	1.5	141.8	5.6

One mobile communications card corresponds to one customer. The total was calculated on the basis of precise figures and rounded to millions. Percentages are calculated on the basis of figures shown. Organic customer growth is reported for better comparability: Customers of COSMOTE (entity of the OTE group) were also included in the historic customer base.

Due to various rulings on the expiry of prepaid credit and the limited validity of prepaid cards, T-Mobile Deutschland changed its terms of contract and therefore its deactivation policy in the first quarter of 2007 in favor of its prepay customers. These customers can now use their prepaid credit longer than before. As a result of the change in the terms of contract, prepaid contracts no longer end automatically, but run for an unlimited duration and can be terminated by the customer at any time and by T-Mobile with one month’s notice. T-Mobile Deutschland reserves the right to make use of this right of termination and to deactivate cards in the system.

Including Virgin Mobile.

The consolidation of Online (formerly Orange Nederland Breedband B.V.) in the second quarter of 2008 has no effect on the number of customers of the T-Mobile Netherlands group, as only mobile communications customers are shown.

“Other” includes T-Mobile Macedonia and T-Mobile Crna Gora (Montenegro).

Mobile Communications Europe.

In the face of fierce competition, the European mobile companies held their own in the first half of 2009 and again recorded slight customer growth despite the strained economic situation. The total number of customers in Europe rose to 116.3 million, an increase of 1.2 percent compared with the end of 2008. Apart from a few exceptions, all of Deutsche Telekom’s mobile communications companies in Europe succeeded in expanding their customer base. The slight decrease in customer numbers at T-Mobile UK compared with the first quarter of 2009 and also the end of 2008 is mainly attributable to the decline in the number of Virgin Mobile customers, who are assigned to the prepay segment at T-Mobile UK. In Hungary, the total number of customers decreased as a result of the weaker prepay business, which was only partially offset by the acquisition of contract customers. At COSMOTE Bulgaria, customer figures edged down in both the prepay and contract customer segments compared with year-end levels.

Most companies recorded a slight downward trend in the prepay segment in the first half of the year compared with the end of 2008, though this was offset in full by encouraging growth in the contract customer segment at all companies except for T-Mobile UK, T-Mobile Hungary, and COSMOTE Bulgaria.

The higher-value contract customer business continued to develop positively in the first six months of 2009. Almost all of Deutsche Telekom’s mobile communications companies contributed to this growth in both absolute terms and as a proportion of the total customer base. Excluding COSMOTE, the percentage share of contract customers increased to 42 percent in Europe compared with the year-end. This success is due to the focused customer acquisition strategy – marketing calling plans with minute buckets and new, higher-performance hardware offered in conjunction with a fixed-term contract. The increasingly appealing mobile Internet offers, including the corresponding smartphones, also attracted new groups of customers. By rolling out the T-Mobile G1 and the Apple iPhone 3G, which as the revamped Apple iPhone 3G S is now even more efficient and attractive than before, T-Mobile achieved considerable success in the contract customer business.

Mobile Communications USA.

The Mobile Communications USA operating segment added 325,000 net customers in the second quarter of 2009, compared to 668,000 in the second quarter of 2008 and 415,000 in the first quarter of 2009. New contract customers accounted for 17 percent of the new customers in the second quarter of 2009, compared to 80 percent in the second quarter of 2008 and 39 percent in the first quarter of 2009. The lower amount of contract customers in the second quarter of 2009 compared to the second quarter of 2008 can be attributed to an increase in contract churn, including FlexPaysm, and a year-on-year decrease in contract gross customer additions. Lower gross customer additions were the primary contributor to the decrease in net customer additions in the second quarter of 2009 compared to the first quarter of 2009, as strong growth in lower-ARPU products was reduced by lower gross customer additions of branded products.

Mobile Communications Europe: Development of operations.


			Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Total revenuea			5,077	5,500	5,187	6.0	10,577	10,179	3.9	20,663
Of which: T-Mobile Deutschland			1,874	1,879	1,953	(3.8)	3,753	3,837	(2.2)	7,770
Of which: T-Mobile UK			836	886	1,016	(12.8)	1,722	2,074	(17.0)	4,051
Of which: PTC			416	440	580	(24.1)	856	1,104	(22.5)	2,260
Of which: T-Mobile NL			444	465	447	4.0	909	863	5.3	1,806
Of which: T-Mobile A			267	255	270	(5.6)	522	544	(4.0)	1,085
Of which: T-Mobile CZ			275	310	332	(6.6)	585	643	(9.0)	1,329
Of which: T-Mobile Hungary			218	235	282	(16.7)	453	540	(16.1)	1,117
Of which: T-Mobile Croatia			134	139	148	(6.1)	273	277	(1.4)	616
Of which: T-Mobile Slovensko			140	141	141	0.0	281	269	4.5	571
Of which: Otherb			55	61	64	(4.7)	116	117	(0.9)	248
Of which: COSMOTE Greecec			286	506	-	n.a.	792	-	n.a.	-
Of which: COSMOTE Romaniac			77	96	-	n.a.	173	-	n.a.	-
Of which: COSMOTE Bulgariac			81	104	-	n.a.	185	-	n.a.	-
Of which: COSMOTE Albania			26	36	-	n.a.	62	-	n.a.	-

EBIT (profit (loss) from operations)d			(1,166)	917	861	6.5	(249)	1,620	n.a.	3,188
EBIT margin	(%)		(23.0)	16.7	16.6		(2.4)	15.9		15.4

Depreciation, amortization and impairment lossesd			(2,711)	(992)	(941)	(5.4)	(3,703)	(1,881)	(96.9)	(3,875)
EBITDAe			1,545	1,909	1,802	5.9	3,454	3,501	(1.3)	7,063
Special factors affecting EBITDAe			(6)	0	(11)	n.a.	(6)	(10)	40.0	(97)
Adjusted EBITDAa,e			1,551	1,909	1,813	5.3	3,460	3,511	(1.5)	7,160
Of which: T-Mobile Deutschland			685	720	773	(6.9)	1,405	1,465	(4.1)	3,028
Of which: T-Mobile UK			113	153	196	(21.9)	266	426	(37.6)	888
Of which: PTC			110	170	214	(20.6)	280	398	(29.6)	785
Of which: T-Mobile NL			64	103	114	(9.6)	167	176	(5.1)	352
Of which: T-Mobile A			53	70	65	7.7	123	141	(12.8)	285
Of which: T-Mobile CZ			127	181	158	14.6	308	316	(2.5)	634
Of which: T-Mobile Hungary			95	104	133	(21.8)	199	245	(18.8)	481
Of which: T-Mobile Croatia			57	64	64	0.0	121	117	3.4	271
Of which: T-Mobile Slovensko			68	69	68	1.5	137	129	6.2	230
Of which: Otherb			26	30	31	(3.2)	56	55	1.8	114
Of which: COSMOTE Greecec			99	178	-	n.a.	277	-	n.a.	-
Of which: COSMOTE Romaniac			13	14	-	n.a.	27	-	n.a.	-
Of which: COSMOTE Bulgariac			27	47	-	n.a.	74	-	n.a.	-
Of which: COSMOTE Albania			16	21	-	n.a.	37	-	n.a.	-
Adjusted EBITDA margine		(%)	30.5	34.7	35.0		32.7	34.5		34.7

Cash capexf			(642)	(395)	(318)	(24.2)	(1,037)	(789)	(31.4)	(1,897)

Number of employeesg			35,481	38,658	28,968	33.5	37,070	29,138	27.2	29,237

The presentation includes the first-time full consolidation of OTE from February 2009 in the Mobile Communications Europe, Broadband/Fixed Network, and Group Headquarters & Shared Services operating segments.

The amounts stated for the national companies generally correspond to their respective unconsolidated financial statements without taking into consideration consolidation effects at operating segment level. In the presentation of the COSMOTE countries, the internal relationships between COSMOTE and the respective Germanos sales company in the country were eliminated.

“Other” includes revenues and EBITDA generated by T-Mobile Macedonia and T-Mobile Crna Gora (Montenegro).

Including the relevant Germanos (sales) companies in the Greek, Romanian, and Bulgarian markets.

Including an impairment loss of EUR 1.8 billion recognized on the goodwill of the cash generating unit T-Mobile UK in the first quarter of 2009.

Investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

Average number of employees.

Mobile Communications USA: Development of operations.


			Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Total revenue			4,137	3,918	3,498	12.0	8,055	6,959	15.7	14,957

EBIT (profit from operations)			530	654	584	12.0	1,184	1,086	9.0	2,299
EBIT margin	(%)		12.8	16.7	16.7		14.7	15.6		15.4

Depreciation, amortization and impairment losses			(531)	(522)	(430)	(21.4)	(1,053)	(890)	(18.3)	(1,884)
EBITDAa			1,061	1,176	1,014	16.0	2,237	1,976	13.2	4,183
Special factors affecting EBITDAa			-	-	(16)	n.a.	-	(20)	n.a.	(57)
Adjusted EBITDAa			1,061	1,176	1,030	14.2	2,237	1,996	12.1	4,240
Adjusted EBITDA margina		(%)	25.6	30.0	29.4		27.8	28.7		28.3

Cash capexb			(865)	(785)	(661)	(18.8)	(1,650)	(1,141)	(44.6)	(2,540)

Number of employeesc			37,720	37,863	35,834	5.7	37,791	35,143	7.5	36,076

Including first-time consolidation of SunCom from February 22, 2008.

Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, and the adjusted EBITDA margin, please refer to “Reconciliation of pro forma figures,” page 63 et seq.

Investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

Average number of employees.

Mobile Communications (total): Development of operations.


			Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Total revenue			9,206	9,413	8,678	8.5	18,619	17,123	8.7	35,586

EBIT (profit (loss) from operations)a			(635)	1,570	1,446	8.6	935	2,706	(65.4)	5,487
EBIT margin	(%)		(6.9)	16.7	16.7		5.0	15.8		15.4

Depreciation, amortization and impairment lossesa			(3,242)	(1,514)	(1,371)	(10.4)	(4,756)	(2,771)	(71.6)	(5,759)
EBITDAb			2,607	3,084	2,817	9.5	5,691	5,477	3.9	11,246
Special factors affecting EBITDAb			(6)	0	(27)	n.a.	(6)	(30)	80.0	(154)
Adjusted EBITDAb			2,613	3,084	2,844	8.4	5,697	5,507	3.5	11,400
Adjusted EBITDA marginb		(%)	28.4	32.8	32.8		30.6	32.2		32.0

Cash capexc			(1,508)	(1,180)	(979)	(20.5)	(2,688)	(1,930)	(39.3)	(4,437)

Number of employeesd			73,201	76,521	64,802	18.1	74,861	64,281	16.5	65,313

This table shows consolidated figures for the Mobile Communications Europe and Mobile Communications USA operating segments, which are provided here for information purposes.

The presentation includes the first-time full consolidation of OTE from the beginning of February 2009 in the Mobile Communications Europe, Broadband/Fixed Network, and Group Headquarters & Shared Services operating segments. For detailed information, please refer to the interim consolidated financial statements.

Including an impairment loss of EUR 1.8 billion recognized on the goodwill of the cash generating unit T-Mobile UK in the first quarter of 2009.

Investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

Average number of employees.

Mobile Communications Europe: Total revenue.

Total revenue in the Mobile Communications Europe operating segment increased year-on-year by EUR 0.4 billion or 3.9 percent in the first six months of 2009. This positive development was driven to a considerably extent by the COSMOTE mobile companies, which were consolidated in the Mobile Communications Europe operating segment in early February 2009. Adjusted for the inclusion of COSMOTE, revenue decreased compared with the first half of 2008, mainly on account of negative exchange rate effects. The strained economic situation and the still intense competition also reduced operating revenue, adjusted for exchange rate effects, in the Mobile Communications Europe segment (excluding COSMOTE) in the first half of 2009.

Of the Western European companies, T-Mobile Netherlands made the largest contribution to revenue growth, mainly due to revenue from its Online operations, which were consolidated for the first time in the second quarter of 2008. Among the companies in Southern and Eastern Europe, the COSMOTE mobile companies posted double-digit percentage growth in the second quarter of 2009 compared with the first quarter of this year. This is primarily attributable to the fact that these companies were fully consolidated for the first time at the beginning of February 2009. Higher customer market shares in Greece and Romania also had a positive impact on total revenue.

PTC’s revenue adjusted for exchange rate fluctuations remained at virtually the same level as in the previous year. Revenue at T-Mobile UK decreased year-on-year in the first half of 2009, due mainly to a strong negative currency translation effect from the pound sterling. Adjusted for exchange rate effects, the decline in total revenue and also in high-value service revenues nevertheless slowed in the second quarter of 2009 as compared with the prior year. Regulatory decisions and fierce competition again impacted revenue at T-Mobile UK in the second quarter of 2009.

The decline in revenue at T-Mobile Deutschland is mainly attributable to lower national roaming revenues with O2. The more restrictive regulatory environment, in particular lower termination charges from April 1, 2009, and intense competition also contributed to this decline. At T-Mobile Austria, the decrease in revenue was a result of ongoing intense price competition and price cuts imposed by regulation. However, a targeted focus on acquiring contract customers partially offset the decrease in revenue at both companies.

Mobile Communications Europe: EBITDA, adjusted EBITDA.

In the first half of 2009, adjusted EBITDA in the Mobile Communications Europe operating segment decreased year-on-year by EUR 0.1 billion or 1.5 percent. Adjusted for the positive contribution of the first-time consolidation of the COSMOTE mobile companies, segment EBITDA decreased by EUR 0.5 billion or 13.3 percent. One of the main causes of this decline was the exchange rate movements in the Polish zloty, the pound sterling, the Hungarian forint, and the Czech koruna. The year-on-year decrease in EBITDA, adjusted for exchange rate effects, is mainly attributable to the reduction in EBITDA at T-Mobile UK, T-Mobile Deutschland, and PTC. The measures initiated in April 2009 to reduce selling expenses and overheads in Poland and the United Kingdom nevertheless started to show a positive effect on EBITDA in the second quarter of 2009. In Germany, T-Mobile reported a decrease in EBITDA on account of a very competitive market, lower national roaming revenues with O2, and higher selling expenses. The continuing intense price competition, price cuts imposed by regulation and higher customer acquisition and retention expenses led to a reduction in EBITDA at T-Mobile Austria.

By contrast, the national companies in Croatia, Slovakia, and Montenegro all posted EBITDA growth. The COSMOTE mobile companies also contributed a substantial share to EBITDA. Measured in Czech korunas, T-Mobile CZ’s adjusted EBITDA improved year-on-year in the first half of 2009, predominantly attributable to non-recurring effects.

Mobile Communications Europe: EBIT.

EBIT (profit/loss from operations) in the Mobile Communications Europe operating segment declined by EUR 1.9 billion year-on-year in the first half of 2009. This includes the impairment loss of EUR 1.8 billion recognized on the goodwill of the cash generating unit T-Mobile UK in the first quarter of 2009. EBIT was also reduced by the same negative factors that impacted EBITDA. On the other hand, lower depreciation, amortization and impairment losses, particularly at T-Mobile Deutschland, PTC, T-Mobile Netherlands, T-Mobile Austria, and T-Mobile Hungary, offset the EBIT decline.

Mobile Communications Europe: Cash capex.

Cash capex in the Mobile Communications Europe operating segment rose by EUR 0.2 billion year-on-year to EUR 1.0 billion. This increase was largely due to the first-time inclusion of the COSMOTE mobile companies. While capital expenditure increased in Germany, the United Kingdom, Austria, and the Czech Republic, it decreased in Hungary, the Netherlands, Poland, and Montenegro.

Mobile Communications Europe: Personnel.

The average number of employees rose strongly year-on-year in the first half of 2009, due for the most part to the first-time inclusion of the COSMOTE mobile companies. A large number of hirings at PTC to cater for the strategic alignment of the company’s direct sales channels and the associated shop roll-out in the third and fourth quarters of 2008 also contributed. The workforce at T-Mobile CZ also grew due to the transfer of temporary customer care staff to permanent contracts. T-Mobile UK, on the other hand, saw its headcount shrink as a result of outsourcing in the technology area.

Mobile Communications USA: Total revenue.

Partly due to the strength of the dollar against the euro, revenue for the Mobile Communications USA operating segment grew by 15.7 percent year-on-year to EUR 8.1 billion in the first half of 2009. In U.S. dollars the operating segment only increased its revenue by 0.8 percent year-on-year. The first-time consolidation of SunCom in the middle of the first quarter of 2008 was the main driver behind revenue growth in U.S. dollars. This effect was offset by a fall in average revenue per user (ARPU) year-on-year related to a change in customer mix to lower ARPU products and lower voice revenues including lower customer roaming revenues.

Mobile Communications USA: EBIT, EBITDA, adjusted EBITDA.

EBIT (profit from operations) and adjusted EBITDA grew in euros year-on-year by 9.0 percent and 12.1 percent, respectively. Currency fluctuations increased total revenues year-on-year. Expenses also increased year-on-year due to currency fluctuations and higher costs related to the 3G network. This increase was partially offset by cost saving initiatives, lower commission costs and lower subsidy losses per handset. In U.S. dollars, adjusted EBITDA declined slightly year-on-year. The adjusted EBITDA margin declined to 27.8 percent in the first half of 2009 from 28.7 percent in the first half of 2008 primarily driven by a decrease in ARPU.

Mobile Communications USA: Cash capex.

The continued focus on the improvement of network quality and coverage as well as the roll-out of the UMTS/HSDPA network caused 2G and 3G incurred capex to increase year-on-year. Cash capex increased year-on-year from EUR 1.1 billion to EUR 1.7 billion in the first half of 2009, in particular due to currency fluctuations. In U.S. dollar terms, cash capex saw a smaller increase year-on-year.

Mobile Communications USA: Personnel.

The average number of employees rose year-on-year; this is attributed primarily to retail distribution growth.

Broadband/Fixed Network.

Broadband/Fixed Network: Customer development and selected KPIs.

	June 30, 2009 millions	Mar. 31, 2009 millions	Change June 30, 2009/ Mar. 31, 2009 %	Dec. 31, 2008 millions	Change June 30, 2009/ Dec. 31, 2008 %	June 30, 2008 millions	Change June 30, 2009/ June 30, 2008 %
Broadband
Lines (total)a,c	17.2	17.0	1.2	16.7	3.0	16.0	7.5
Of which: retail	14.5	14.2	2.1	13.6	6.6	12.4	16.9

Domestica	13.6	13.5	0.7	13.3	2.3	13.1	3.8
Of which: retail	11.2	11.0	1.8	10.6	5.7	9.9	13.1
Internationala,c,d	3.6	3.5	2.9	3.3	9.1	2.9	24.1
Of which: Magyar Telekom	0.9	0.9	0.0	0.9	0.0	0.8	12.5
Of which: T-Hrvatski Telekom	0.5	0.5	0.0	0.5	0.0	0.4	25.0
Of which: Slovak Telekom	0.4	0.4	0.0	0.3	33.3	0.3	33.3
Of which: OTE Greecec	1.0	1.0	0.0	1.0	0.0	0.9	11.1
Of which: Romtelecomc	0.7	0.7	0.0	0.7	0.0	0.5	40.0

Fixed Network
Lines (total)a,b,c	39.6	40.3	(1.7)	41.1	(3.6)	42.8	(7.5)
Domestica,b	27.2	27.7	(1.8)	28.3	(3.9)	29.5	(7.8)
Internationala,c,d	12.4	12.6	(1.6)	12.8	(3.1)	13.2	(6.1)
Of which: Magyar Telekom	2.5	2.5	0.0	2.6	(3.8)	2.7	(7.4)
Of which: T-Hrvatski Telekom	1.5	1.5	0.0	1.6	(6.3)	1.6	(6.3)
Of which: Slovak Telekom	1.1	1.1	0.0	1.1	0.0	1.1	0.0
Of which: OTE Greecec	4.4	4.5	(2.2)	4.6	(4.3)	4.8	(8.3)
Of which: Romtelecomc	2.9	3.0	(3.3)	3.0	(3.3)	3.0	(3.3)

Wholesale/resale
Resale/IP-BSAc,d,e	2.2	2.5	(12.0)	2.8	(21.4)	3.5	(37.1)
Of which: domestic	2.0	2.2	(9.1)	2.5	(20.0)	3.2	(37.5)
ULLsc,d,f	9.6	9.4	2.1	9.0	6.7	8.0	20.0
Of which: domestic	8.7	8.6	1.2	8.3	4.8	7.5	16.0
IP-BSA SAc,d,g	0.5	0.3	66.7	0.2	n.a.	-	n.a.
Of which: domestic	0.4	0.3	33.3	0.2	n.a.	-	n.a.

Totals were calculated on the basis of precise figures and rounded to millions. Percentages are calculated on the basis of figures shown.

Lines in operation excluding internal use and public telecommunications, including wholesale services.

As of January 1, 2009, approximately 160,000 business customers in Germany were transferred from the Systems Solutions operating segment to the Broadband/Fixed Network operating segment. The presentation of the number of lines has been adjusted to reflect the business model of the Broadband/Fixed Network operating segment. For the purposes of equal treatment, internal use by the Systems Solutions segment is no longer included in the presentation of the number of lines. Prior-year figures have been adjusted accordingly.

International comprises Southern and Eastern Europe with T-Hrvatski Telekom, Slovak Telekom, and Magyar Telekom including the subsidiaries Makedonski Telekom AD and Crnogorski Telekom, as well as the fixed-network business of OTE Greece and Romtelecom that was consolidated from February 2009.

Definition of resale/bundled IP-BSA: Sale of broadband lines based on DSL technology to alternative providers outside the Deutsche Telekom Group including bundled IP-Bitstream Access. In the case of IP-BSA, Deutsche Telekom leases DSL lines to the competitor and transports the datastream carried over the lines via its concentrator network to the associated broadband point of presence where the datastream is handed over to the competitor.

Unbundled local loop (ULL) lines in Germany and abroad: Wholesale service that can be leased by other telecommunications operators without upstream technical equipment in order to offer their own customers a telephone or DSL line.

Definition of IP-BSA Stand Alone (IP-BSA SA): A wholesale product not bundled with a Deutsche Telekom PSTN line, allowing competitors to offer an all-IP product range.

In the Broadband/Fixed Network operating segment, the number of broadband lines, including resale, rose by 1.2 million year-on-year to 17.2 million in the first six months of 2009.

The international broadband market also grew in the first half of 2009. With a total of 3.6 million broadband lines, including resale/IP-BSA, the Broadband/Fixed Network operating segment achieved a year-on-year increase outside Germany of 638,000 lines. This includes 379,000 broadband lines from the fixed-network business of OTE Greece and Romtelecom (Romania).

The excellent prior-year performance of the Broadband/Fixed Network operating segment, which operates under the T-Home brand in the German broadband market, was once again clearly exceeded in the first half of 2009. The market share of existing broadband customers has remained constant at 46 percent for the last ten quarters. T-Home attracted more than half of new customers in the German broadband market, where growth is slowing. With absolute growth of around 246,000 retail broadband lines in the second quarter of 2009, the number of lines in Germany increased to a total of 11.2 million due to attractive bundled models, regional special offers in urban areas, and improved customer service. In addition, T-Home is increasingly migrating customers to higher-value product groups.

The number of Entertain lines in Germany increased to around 561,000 by the end of the first six months of 2009. By that point in time, over 720,000 Entertain lines had been sold.

The number of fixed-network lines decreased by 7.5 percent year-on-year in the first half of 2009 to 39.6 million. Fixed-network line losses in Germany totaled 473,000 in the second quarter of 2009, 129,000 fewer than in the first quarter of 2009. These include customers who previously obtained their broadband connection via a fixed-network-based DSL resale line from Deutsche Telekom and are now migrating to a ULL-based IP line with another provider. The other line losses are mainly attributable to customers switching to other cable, fixed-network, and mobile operators.

Demand for unbundled local loop lines (ULLs) in Germany increased by 137,000 in the second quarter of 2009 to a total of 8.7 million lines. This smaller increase compared with the first quarter of 2009 was mainly the result of weaker market growth, strong competition from cable operators in the second quarter of 2009, and the activation of lines using the infrastructure of other providers. The decline in resale/IP-BSA lines of 257,000 in the second quarter of 2009 to 2.0 million was partially offset by migration to IP-BSA Stand Alone lines. In the second quarter of 2009, Deutsche Telekom provided 108,000 of the new IP-BSA Stand Alone lines introduced in the middle of last year without a PSTN line (unbundled), bringing the total to 425,000.

Broadband/Fixed Network: Development of operations.


			Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Total revenue			5,882	6,063	5,561	9.0	11,945	11,238	6.3	22,501
Domestic			4,836	4,745	4,998	(5.1)	9,581	10,124	(5.4)	20,226
Of which: network communications			1,512	1,440	1,709	(15.7)	2,952	3,511	(15.9)	6,737
Of which: IP/Internet			1,445	1,482	1,370	8.2	2,927	2,702	8.3	5,531
Of which: other fixed-network services			319	302	338	(10.7)	621	679	(8.5)	1,391
Of which: wholesale services			1,264	1,235	1,300	(5.0)	2,499	2,654	(5.8)	5,355
International			1,063	1,343	575	n.a.	2,406	1,139	n.a.	2,329

EBIT (profit from operations)			1,170	760	819	(7.2)	1,930	1,708	13.0	2,759
EBIT margin	(%)		19.9	12.5	14.7		16.2	15.2		12.3

Depreciation, amortization and impairment losses			(1,005)	(1,115)	(890)	(25.3)	(2,120)	(1,797)	(18.0)	(3,636)
EBITDAa			2,175	1,875	1,709	9.7	4,050	3,505	15.5	6,395
Special factors affecting EBITDAa			165	(181)	(183)	1.1	(16)	(279)	94.3	(990)
Adjusted EBITDAa			2,010	2,056	1,892	8.7	4,066	3,784	7.5	7,385
Domestic			1,612	1,584	1,645	(3.7)	3,196	3,298	(3.1)	6,417
International			400	470	248	89.5	870	487	78.6	970
Adjusted EBITDA margina		(%)	34.2	33.9	34.0		34.0	33.7		32.8
Domestic		(%)	33.3	33.4	32.9		33.4	32.6		31.7
International		(%)	37.6	35.0	43.1		36.2	42.8		41.6

Cash capexb			(899)	(796)	(584)	(36.3)	(1,695)	(1,211)	(40.0)	(3,150)

Number of employeesc			112,613	119,488	101,339	17.9	116,051	102,696	13.0	100,671
Domestic			80,923	79,932	85,754	(6.8)	80,428	86,995	(7.5)	85,192
International			31,690	39,556	15,585	n.a.	35,623	15,701	n.a.	15,479

Since January 1, 2009, around 160,000 business customers of the Systems Solutions operating segment (until December 31, 2008 called the Business Customers operating segment) have been included in the Broadband/Fixed Network operating segment. Prior-year comparatives have been adjusted.

The presentation includes the first-time full consolidation of OTE from the beginning of February 2009 in the Mobile Communications Europe, Broadband/

Fixed Network, and Group Headquarters & Shared Services operating segments.

Investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

Average number of employees.

Since the Broadband/Fixed Network operating segment focuses on complete packages and the development of IP products, the previous presentation of revenue was no longer appropriate for T-Home in Germany’s previous business model. For this reason, revenue was reallocated as of January 1, 2009. All prior-year figures were adjusted for better comparability.

Broadband/Fixed Network: Total revenue.

Total revenue increased by EUR 0.7 billion compared with the prior-year period to EUR 11.9 billion, primarily due to the first-time consolidation in February 2009 of the fixed-network business of OTE Greece and Romtelecom. OTE Greece and Romtelecom contributed EUR 1.4 billion to this increase.

Broadband/Fixed Network: Total domestic revenue.

Total domestic revenue in the first half of 2009 was down 5.4 percent year-on-year at EUR 9.6 billion. This decline is attributable to continuing line losses resulting from increased competition, strong take-up of complete packages (telephony and Internet) with a flat-rate component, and falling usage-related charges. Other factors included decreases in resale and network services and in interconnection revenues. Volume growth in the broadband business and in unbundled local loop lines only partially offset the decline in revenue.

Revenue in the Business Customers unit decreased year-on-year in the first six months of 2009, principally due to the erosion of market prices and competition in the voice business.

In the network communications area, volume-based line losses due to intense competition and the migration to complete packages resulted in a year-on-year revenue decrease of 15.9 percent in the first half of 2009 to EUR 3.0 billion. In addition, flat rates reduced call revenues due to the decreasing proportion of billed minutes in the traditional fixed-network business.

Revenue in the IP/Internet area increased by 8.3 percent in the first half of 2009 to EUR 2.9 billion. This was primarily attributable to volume growth in DSL complete packages.

Other fixed-network services, including data communications, value-added services, and terminal equipment, recorded a revenue decline of 8.5 percent to EUR 0.6 billion in the first six months of 2009. This decrease, which was mainly seen in data communications, is principally due to migration to IP products.

Revenue from terminal equipment declined as a result of volume and – in some cases – price factors, especially following the introduction of terminal equipment service packages.

Revenue from wholesale services decreased by 5.8 percent in the first half of 2009 to EUR 2.5 billion. The main reasons for the decrease were lower revenue from network services due to declining demand for co-location rooms, lower volumes on the < 2 Mbit/s platform and fewer carrier leased lines, and lower interconnection call revenue following a reduction in origination services. Furthermore, the decline in revenue from resale/IP-BSA lines due to volume and price factors added to the decrease. The volume growth in unbundled local loop lines did not fully offset the trend. Revenue was impacted by regulatory price cuts in areas such as carrier leased lines and unbundled local loop lines.

Broadband/Fixed Network: Total international revenue.

Revenue in Southern and Eastern Europe rose by EUR 1.3 billion to EUR 2.4 billion compared with the prior-year period due to the first-time consolidation of the fixed-network business of OTE Greece and Romtelecom as of February 2009. Revenue in Eastern Europe decreased by 8.7 percent year-on-year to EUR 1.0 billion. This was due to foreign currency effects primarily in Hungary, as well as to competition in the traditional fixed network, and fixed-mobile substitution. The dynamic broadband growth, which reached at least double-digit figures in all countries, did not fully compensate for the decrease in the traditional fixed-network business.

Broadband/Fixed Network: EBITDA, adjusted EBITDA.

Adjusted EBITDA of the Broadband/Fixed Network operating segment was up 7.5 percent year-on-year to EUR 4.1 billion, mainly due to the first-time consolidation of the fixed-network business of OTE Greece and Romtelecom, which contributed EUR 0.4 billion to adjusted EBITDA. The adjusted EBITDA margin increased by 0.3 percentage points to 34.0 percent. Due to excellent cost discipline, T-Home in Germany recorded adjusted EBITDA of EUR 3.2 billion in the first six months of 2009 and improved the EBITDA margin by 0.8 percentage points compared with the prior-year period to 33.4 percent. Lower revenue-driven costs and reduced costs for rental, maintenance and personnel, made up for a major part of the decrease in revenue in the traditional fixed-network business.

In Southern and Eastern Europe, adjusted EBITDA rose by EUR 0.4 billion to EUR 0.9 billion due to the first-time consolidation of OTE. In Eastern Europe, adjusted EBITDA decreased slightly to EUR 0.4 billion on account of the decline in revenue.

In the first half of 2009, international EBITDA includes a one-time positive effect from the first quarter of 2009 amounting to EUR 0.2 billion due to the Greek government’s contribution to the costs of a voluntary early retirement program. This positive effect was offset by the recognition of a provision for entitlements to early retirement at OTE Greece of almost the same amount in the second quarter of 2009.

Broadband/Fixed Network: EBIT.

In the first half of 2009, EBIT (profit from operations) increased by 13.0 percent year-on-year to EUR 1.9 billion, mainly as a result of the first-time consolidation of OTE and Romtelecom. OTE and Romtelecom’s EBIT includes depreciation, amortization, and impairment losses of EUR 0.3 billion and a one-time positive effect due to the Greek government’s contribution to the cost of a voluntary early retirement program at OTE and, as offsetting effect, the recognition of a provision for entitlements to early retirement in the second quarter of 2009.

Broadband/Fixed Network: Cash capex.

Cash capex increased year-on-year by EUR 0.5 billion to EUR 1.7 billion in the first half of 2009. EUR 0.3 billion of this increase was attributable to investments in Germany for transmission paths, the IP platform and IT systems, and just under EUR 0.2 billion to the first-time consolidation of OTE.

Broadband/Fixed Network: Personnel.

Overall, the average number of employees increased to 116,051 in the first half of 2009, largely due to the first-time consolidation of OTE Greece and Romtelecom.

In Germany, the number of employees as of the reporting date decreased by 5,531 compared with the first half of the prior year owing to staff reduction measures. In Southern and Eastern Europe, employee numbers rose by 24,071 at the reporting date, in particular as a consequence of the first-time consolidation of the OTE fixed-network entities in Greece and Romania. In Eastern Europe, employee numbers declined year-on-year due to improved performance processes.

Systems Solutions.

Systems Solutions: Selected KPIs.

		June 30, 2009	Mar. 31, 2009	Change June 30, 2009/ Mar. 31, 2009 %	Dec. 31, 2008	Change June 30, 2009/ Dec. 31, 2008 %	June 30, 2008	Change June 30, 2009/ June 30, 2008 %
Computing & Desktop Services
Number of servers managed and serviced (units)		54,626	53,536	2.0	56,734	(3.7)	41,618	31.3
Number of workstations managed and serviced (millions)		1.51	1.50	0.7	1.51	0.0	1.48	2.0
Systems Integrationa
Hours billedb	(millions)	4.8	2.6	n.a.	10.7	n.a.	5.6	(14.3)
Utilization ratec	(%)	80.7	80.6	0.1p	80.9	(0.2)p	80.3	0.4p

Percentages calculated on the basis of figures shown.

Domestic: excluding changes in the composition of the Group.

Cumulative figures at the balance sheet date.

Ratio of average number of hours billed to maximum possible hours billed per period.

Development of business.

The systems solutions market for ICT services was impacted by fierce competition in the first half of 2009, in addition to the effects of the ongoing financial and economic crisis. Despite an encouraging number of new agreements, new orders were down 20.9 percent year-on-year in the first six months. It should be noted that the prior-year figure included a major contract with Shell. In addition, companies in various sectors, especially the automotive industry, are showing a certain restraint in the current economic environment. It is therefore all the more encouraging that T-Systems was able to win major deals such as the contract with MAN. T-Systems also won attractive orders internationally, for example from Banobras, Mexico’s largest development bank.

Systems Solutions: Development of operations.


			Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Total revenue			2,106	2,179	2,251	(3.2)	4,285	4,451	(3.7)	9,343
Computing & Desktop Services			900	933	886	5.3	1,833	1,784	2.7	3,877
Systems Integration			400	404	447	(9.6)	804	870	(7.6)	1,741
Telecommunications			806	842	918	(8.3)	1,648	1,797	(8.3)	3,725

EBITa (profit (loss) from operations)			11	27	(65)	n.a.	38	418	(90.9)	81
Special factors affecting EBITa			(23)	(31)	(58)	46.6	(54)	409	n.a.	12
Adjusted EBITa			34	58	(7)	n.a.	92	9	n.a.	69
Adjusted EBIT margina	(%)		1.6	2.7	(0.3)		2.1	0.2		0.7

Depreciation, amortization and impairment losses			(177)	(173)	(195)	11.3	(350)	(383)	8.6	(781)
EBITDAb			188	200	130	53.8	388	801	(51.6)	862
Special factors affecting EBITDAb			(23)	(31)	(58)	46.6	(54)	409	n.a.	36
Adjusted EBITDAb			211	231	188	22.9	442	392	12.8	826
Adjusted EBITDA marginb		(%)	10.0	10.6	8.4		10.3	8.8		8.8

Cash capexc			(161)	(171)	(187)	8.6	(332)	(321)	(3.4)	(823)

Number of employeesd			44,449	44,863	45,745	(1.9)	44,656	46,149	(3.2)	46,095

EBIT is profit/loss from operations as shown in the consolidated income statement. For a detailed explanation of the special factors affecting EBIT, adjusted EBIT, and the adjusted EBIT margin, please refer to “Reconciliation of pro forma figures,” page 63 et seq.

Investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

Average number of employees.

Systems Solutions: Total revenue.

Total revenue generated by the Systems Solutions operating segment in the first half of 2009 amounted to EUR 4.3 billion, a year-on-year decrease of 3.7 percent. This is due to a decline in both external and internal revenue. International revenue, by contrast, increased by 3.5 percent and continued the positive development in prior quarters. This positive development is partly attributable to agreements from 2008, for example with Shell and Old Mutual Group. In Germany, revenue declined by 6.6 percent, mainly due to lower revenues generated within the Group, which decreased by 8.7 percent.

Systems Solutions: Net revenue.

T-Systems generated revenue of EUR 3.0 billion in the first half of 2009 from business with customers outside the Deutsche Telekom Group, a year-on-year decrease of 1.4 percent. Net revenue from Computing & Desktop Services increased by 2.7 percent, primarily due to the positive development outside of Germany, such as the deal with Shell. At Systems Integration, positive agreements concluded in 2008 and the first few months of 2009 were not sufficient to compensate for the sustained price-driven decrease in revenue. In telecommunications, prices for voice and data business also continued to fall.

Systems Solutions: EBITDA, adjusted EBITDA.

In the first half of 2009, the Systems Solutions operating segment generated EBITDA of EUR 0.4 billion. Figures for the prior year included the proceeds from the sale of the broadcasting and media arm Media&Broadcast, which explains the year-on-year decrease of EUR 0.4 billion. The decline in revenue did not have a negative effect on

EBITDA. Adjusted EBITDA increased by 12.8 percent due to the successful efficiency enhancement program which more than offset the effects of the revenue decrease. The adjusted EBITDA margin increased to 10.3 percent, well above the prior-year figure.

Systems Solutions: EBIT, adjusted EBIT.

EBIT (profit from operations) in the reporting period amounted to EUR 38 million. The figure for the prior-year period included the proceeds from the sale of Media&Broadcast. This explains the year-on-year decrease of EUR 0.4 billion. Adjusted EBIT increased significantly to EUR 92 million, well above the prior-year figure. In addition, the EBIT margin rose considerably as a result of the ongoing efficiency enhancement program and staff-related measures undertaken in the previous year at T-Systems.

Systems Solutions: Cash capex.

At EUR 0.3 billion, cash capex in the reporting period increased by 3.4 percent year-on-year. This rise was primarily attributable to increased investment activities as a result of new agreements.

Systems Solutions: Personnel.

The average headcount at T-Systems declined by 1,493 to 44,656, a decrease of 3.2 percent compared with the same period last year. In Germany, the average number of employees declined by 2,902 year-on-year to 25,696, a decrease of 10.1 percent, mainly due to the workforce restructuring program. The average headcount abroad rose by 1,409, an increase of 8.0 percent. This was mainly attributable to the expansion of activities outside of Germany, the hiring of employees in connection with major outsourcing deals, and the expansion of nearshore capacities.

Group Headquarters & Shared Services.

Group Headquarters & Shared Services performs strategic and cross-divisional management functions for the Deutsche Telekom Group and is responsible for operating activities that are not directly related to the core business of the operating segments. The Shared Services unit mainly consists of the Real Estate Services unit, whose activities include the management of Deutsche Telekom AG’s real estate portfolio in Germany; DeTeFleetServices GmbH, a full-service provider of fleet management and mobility services; and Vivento. In addition, Group Headquarters & Shared Services includes the shared services and headquarters functions of Magyar Telekom and, since February 2009, some of the shared services functions of OTE.

In the first six months of the 2009 financial year Vivento, Deutsche Telekom’s personnel service provider, systematically continued its activities to secure additional external employment opportunities for civil servants and employees, predominantly in the public sector, as well as sustainable placement management to support staff restructuring in the Group. In addition, Vivento is offering more Group employees temporary and permanent employment opportunities at Vivento Customer Services GmbH with the aim of further improving the deployment of personnel resources.

The workforce at Vivento totaled around 8,700 employees as of June 30, 2009. This included around 3,700 employees deployed externally, mainly in the public sector, for example at the Federal Employment Agency. External deployment at normal market terms and conditions is intended to partially refinance the personnel costs of deployed employees. Another 2,100 or so people were employed in jobs within the Group, especially in call centers, and around 2,900 employees were placed in Vivento’s operational and strategic units or continued to be managed by Vivento. Vivento took on around 1,700 employees from the Group in the first half of 2009, while around 1,200 employees left Vivento in the reporting period to pursue new opportunities. The employment rate remained high in the first half of 2009 with around 77 percent of the approximately 8,400 employees (excluding management) in employment or undergoing training.

Group Headquarters & Shared Services: Development of operations.


			Q1 2009 millions of €	Q2 2009 millions of €	Q2 2008 millions of €	Change %	H1 2009 millions of €	H1 2008 millions of €	Change %	FY 2008 millions of €
Total revenue			878	877	915	(4.2)	1,755	1,799	(2.4)	3,573

EBIT (loss from operations)			(269)	(280)	(305)	8.2	(549)	(582)	5.7	(1,198)
EBIT margin	(%)		(30.6)	(31.9)	(33.3)		(31.3)	(32.4)		(33.5)

Depreciation, amortization and impairment losses			(283)	(224)	(250)	10.4	(507)	(427)	(18.7)	(831)
EBITDAa			14	(56)	(55)	(1.8)	(42)	(155)	72.9	(367)
Special factors affecting EBITDAa			(6)	(19)	(15)	(26.7)	(25)	(90)	72.2	(336)
Adjusted EBITDAa			20	(37)	(40)	7.5	(17)	(65)	73.8	(31)
Adjusted EBITDA margina		(%)	2.3	(4.2)	(4.4)		(1.0)	(3.6)		(0.9)

Cash capexb			(108)	(122)	(100)	(22.0)	(230)	(203)	(13.3)	(435)

Number of employeesc