As filed with the Securities and Exchange Commission on March 14, 2006 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Form 20-F ፤ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 Commission file number 1-14540 Deutsche Telekom AG (Exact Name of Registrant as Specified in its Charter) Federal Republic of Germany (Jurisdiction of Incorporation or Organization) Friedrich-Ebert-Allee 140, 53113 Bonn, Germany (Address of Registrant’s Principal Executive Offices) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered American Depositary Shares, each representing New York Stock Exchange one Ordinary Share Ordinary Shares, no par value New York Stock Exchange* Securities registered or to be registered pursuant to Section 12(g) of the Act: NONE (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE (Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: Ordinary Shares, no par value: 4,198,077,903 (as of December 31, 2005) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Ye s ፤ No អ If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Ye s អ No ፤ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Ye s ፤ No អ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer ፤ Accelerated filer អ Non-accelerated filer អ Indicate by check mark which financial statement item the registrant has elected to follow. Item 17 អ Item 18 ፤ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Ye s អ No ፤ *Not for trading, but only in connection with the registration of American Depositary Shares. TABLE OF CONTENTS Page PART I Item 1. Identity of Directors, Senior Management and Advisors .................... 4 Item 2. Offer Statistics and Expected Timetable ................................ 4 Item 3. Key Information ................................................. 4 Selected Financial Data .......................................... 4 Risk Factors .................................................. 7 Item 4. Information on the Company ........................................ 16 Introduction .................................................. 16 Historical Background ........................................... 16 Strategy ..................................................... 18 Significant Subsidiaries ........................................... 20 Segment Revenue Breakdown ..................................... 21 Description of Business .......................................... 22 Broadband/Fixed Network ...................................... 22 Mobile Communications ........................................ 39 Business Customers ........................................... 51 Group Headquarters and Shared Services ........................... 61 Innovation Management (Research and Development) .................... 64 Acquisitions and Divestitures ...................................... 66 Regulation ................................................... 67 Regulation in Germany ......................................... 67 The E.U. Regulatory Framework .................................. 78 International Regulation ........................................ 84 International Mobile Regulation .................................. 91 Description of Property, Plant and Equipment .......................... 101 Item 4A. Unresolved Staff Comments ........................................ 103 Item 5. Operating and Financial Review and Prospects ........................... 104 Management Overview ........................................... 104 Critical Accounting Estimates ...................................... 111 Differences between IFRS and German GAAP ......................... 114 Consolidated Results of Operations ................................. 115 Segment Analysis ............................................... 122 Broadband/Fixed Network ...................................... 122 Mobile Communications ........................................ 137 Business Customers ........................................... 151 Group Headquarters and Shared Services ........................... 156 Liquidity and Capital Resources .................................... 158 Reconciling Differences between IFRS and U.S. GAAP ................... 167 Recently Issued IASB Pronouncements ............................... 172 New U.S. GAAP Accounting Pronouncements .......................... 174 Item 6. Directors, Senior Management and Employees ........................... 177 General ..................................................... 177 Supervisory Board .............................................. 178 Management Board ............................................. 183 Compensation ................................................. 186 Share Ownership ............................................... 192 Employees and Labor Relations .................................... 193 Item 7. Major Shareholders and Related Party Transactions ....................... 198 Major Shareholders ............................................. 198 Related Party Transactions ........................................ 199 i Page Item 8. Financial Information ............................................. 203 Consolidated Financial Statements .................................. 203 Export Sales .................................................. 203 Legal Proceedings .............................................. 203 Dividend Policy ................................................ 215 Significant Changes ............................................. 215 Item 9. The Offer and Listing ............................................. 216 Trading Markets ............................................... 216 Item 10. Additional Information ............................................ 219 Articles of Incorporation ......................................... 219 Significant Differences in Corporate Governance Practices ................. 226 Other Matters ................................................. 229 Exchange Controls .............................................. 229 Taxation ..................................................... 229 German Taxation ............................................. 230 U.S. Taxation and U.S.-German Double Taxation Agreement of August 29, 1989 ..................................................... 232 Documents on Display ........................................... 235 Item 11. Quantitative and Qualitative Disclosures about Market Risk ................. 236 Risk Identification and Analysis .................................... 236 Foreign Exchange Rate Risk ...................................... 236 Interest Rate Risk .............................................. 237 Changes in Market Risk Exposure in 2005 Compared to 2004 .............. 238 Item 12. Description of Securities Other than Equity Securities ...................... 238 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies ......................... 239 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds .... 239 Item 15. Controls and Procedures ........................................... 239 Item 16A. Audit Committee Financial Expert .................................... 239 Item 16B. Code of Ethics .................................................. 239 Item 16C. Principal Accountant Fees and Services ................................ 240 Item 16D. Exemptions from the Listing Standards for Audit Committees ................ 242 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers .......... 242 PART III Item 17. Financial Statements .............................................. 243 Item 18. Financial Statements .............................................. 243 Report of Independent Registered Public Accounting Firms as of December 31, 2005, 2004 and 2003 and for the three years ended December 31, 2005 ........ F-2 Consolidated Income Statement for the three years ended December 31, 2005 .... F-3 Consolidated Balance Sheet as of December 31, 2005, 2004 and 2003 .......... F-4 Consolidated Cash Flow Statement for the three years ended December 31, 2005 ..... F-5 Consolidated Statement of Changes in Shareholders’ Equity for the three years ended December 31, 2005 ........................................ F-6 Notes to the Consolidated Financial Statements .......................... F-8 Item 19. Exhibits ....................................................... 243 ii DEFINED TERMS Deutsche Telekom AG is a private stock corporation organized under the laws