As the information society’s key technolo- gies, media, networks and services con- verge, we see them shaping a new market for communications of unfathomable di- mensions. It brings in its wake information, communication and entertainment – any- time, anywhere. We at Deutsche Telekom have named this market: T=I=M=E=S The complete world of telecommunications. T Telecommunications I Information technology and the Internet M Multimedia and mobile commerce E Entertainment und e-commerce S Systems solutions and security services T.I.M.E.S. adds new facets to our lives. T.I.M.E.S. makes us curious and lets us play. T.I.M.E.S. surprises and inspires us. T.I.M.E.S. is diversity. T.I.M.E.S. is our future. And we place the key to it in your hands. 1 Deutsche Telekom at a glance II Deutsche Telekom is positioning itself globally as an inno- Four pillars for sustainable growth III vation leader in the converging fields of information tech- Selected financial data of the IV nology and telecommunications. We are laying the ground- Deutsche Telekom Group work for the business of tomorrow, building on broadband Milestones 2 5 communications, systems solutions/IP, online and mobile Letter to our shareholders 4 communications. With our four strategic pillars, T-Systems, The Board of Management 8 T-Mobile, T-Online and T-Com, we have prepared our Supervisory Board’s report 10 Group for worldwide growth. The Supervisory Board 12 Management report 14 The 2000 financial year – an overview 16 Introduction of the euro 42 The economic environment 18 Environmental protection 44 – More than 600,000 T-DSL lines sold by Milestones. the end of 2000. Development of business in 2000 22 Key events after December 31, 2000 46 Purchasing 30 Outlook 48 4 – Still the world‘s leading ISDN provider Research and development 32 with over 17 million ISDN channels. Employees 34 – Unabated growth of customer base in Risk management 38 mobile communications: T-Mobil doubled subscriber figures to a total of more than 19 million. Through its T-Share 52 consolidated companies, T-Mobile International served over 31 million subscribers. At the end of 2000, some Our strategy 56 42 million users had subscribed to mobile services offered by Deutsche Telekom’s subsidiaries and affiliated Our services companies around the globe. Network communications 60 Broadcasting and broadband cable 78 3 – Entry into the American wireless mar- Data and IP communications 64 Terminal equipment 80 ket through our planned acquisition of VoiceStream/Powertel. Mobile communications 68 Value-added services 82 T-Online 72 Multimedia, information and 84 – With around 8 million subscribers, Carrier services 76 communication systems T-Online is market leader in Internet International business 86 access and boasts a reach that ranks Network infrastructure 89 top among European providers. – With a majority shareholding in debis Systemhaus, we are on our way to Consolidated financial 91 becoming a European e-business leader. statements 2000 Statement of income 92 Notes to the consolidated 98 Balance sheet 93 financial statements 2 Noncurrent assets 94 Reconciliation to U.S. GAAP 138 Statement of cash flows 96 Auditor’s report 154 Statement of shareholders’ equity 97 Supervisory board seats of the 156 Deutsche Telekom’s most V-VI members of Deutsche Telekom AG’s important statistical data Board of Management Deutsche Telekom worldwide VII Other supervisory board seats of the 158 members of Deutsche Telekom AG’s Supervisory Board 1 Index 160 Glossary 161 Contacts/Financial Calendar 164 2 3 Dear Shareholders, Our goal is clear: to build the business of the future on the The Board of Management and Supervisory Board propose International market position: expansion stepped up sig- Our planned acquisition of VoiceStream/Powertel, which will basis of broadband communications, systems solutions, on- to you to pay a dividend of EUR 0.62 per share. nificantly. principally be conducted as a stock swap and remains sub- line services and mobile communications. We have prepared The worldwide convergence of the T.I.M.E.S. markets is clear ject to US regulatory approvals, will do far more than merely the Group for global growth on the basis of four pillars: T-Com, Forward-looking growth strategy: four pillars for the evidence that the future of telecommunications no longer add some five million wireless customers to our subscriber T-Systems, T-Mobile and T-Online. And the strategy is paying T.I.M.E.S market’s four segments. lies within the confines of national markets or regional eco- base. In fact, we are investing in a significant potential for off. Deutsche Telekom is Europe’s second-largest system Convergence is driving our industry worldwide with lightning nomic spaces. Growth in our sector is global and boundary- growth that should be realizable in a relatively short period house thanks to its acquisition of a majority stake in debis speed as markets, technologies, infrastructures, products less. For us at Deutsche Telekom, the past year was fully de- of time. Owing to the compatibility of our network platforms, Systemhaus. When the planned acquisition in the USA of and services grow together progressively. The Internet, which dicated to internationalizing our organization. Accordingly, we expect to be able to take advantage of significant syner- VoiceStream/Powertel is completed, we will be the world’s became a key medium of the 21st century , is the hub around we pressed ahead in expanding our business more force- getic potential while avoiding substantial follow-up costs that first transatlantic GSM wireless carrier . In European mobile which telecommunications, information technology, mobile fully than ever before. Another brief rundown on our achieve- would have been absolutely necessary if our network infra- communications, we have already secured access to the fu- communications, multimedia applications, e-commerce, ments in this area: second-largest systems solution provider structures were not compatible. Moreover, we are investing ture of mobile multimedia with UMTS licenses in Germany, entertainment, system solutions and security services are in Europe, entry into the US wireless market in the pipeline, to acquire market position: global market leadership in wire- the UK, Austria, Poland and the Netherlands. Europe’s largest converging to form the new mega-market we have dubbed UMTS licenses in all countries in which we have a broad less GSM—one of the most important and lucrative markets online service, T-Online, has operations in France, Spain, T.I.M.E.S. customer base and existing infrastructures, T-Online’s stron- in the telecommunications field. Portugal and Austria. We have systematically enlarged our ger international push and our extensive activities in Central footprint in Central and Eastern Europe, where we are active T.I.M.E.S. is the future. T.I.M.E.S. calls for a new caliber of and Eastern Europe. Equal conditions for international competition: regula- in every major growth market. telecommunications company, capable of taking full advan- tory framework for the internationalization of markets tage of the market’s immense potential for growth. The dy- Deutsche Telekom’s broad international reach is unmistak- without distortion of competition. Performance in 2000: net revenue of the Group up 15 per- namics of the T.I.M.E.S. market leave us little time. We are ably reflected in your company’s commercial results. The We have reached Year Three since the opening of the Ger- cent, net income markedly higher, EUR 0.62 dividend rising to the challenge. Our goal is to turn your company into portion of net revenue generated abroad advanced to 19 per- man telecommunications market, and the goals of deregula- proposed. a T.I.M.E.S. provider with global focus. Consequently, we con- cent from 11 percent in 1999. tion have largely been met. According to an OECD study Make no mistake about it: the T-Share has put in a disap- tinue to reorient your company to make it fit for the future. published in summer 2000, customers in nearly all indus- pointing performance since spring 2000 – for you as share- Our work is resulting in the creation of the four autonomous Investment in VoiceStream/Powertel: building block for trialized countries have to pay more for their telecommuni- holders, for all of us who work for you at Deutsche Telekom. operative pillars T-Mobile, T-Online, T-Systems and T-Com, engineering the world’s biggest GSM provider. cations services than Germans. It is against this backdrop Euphoria that prevailed on the world’s stock markets persist- which enable us to focus on the T.I.M.E.S. market’s key seg- Our planned acquisition of VoiceStream/Powertel ranks that we find it justified and urgently necessary to ratchet ing from 1999 through the early months of 2000 brought in ments, i.e., mobile communications, online communications, among the most prominent investments for the future we down the severity of regulation. In Germany in view of the their wake a critical reevaluation of technology and media e-business/systems solutions and broadband network access. prepared in the 2000 financial year. Once completed, it will markets’ growing international reach, we feel it indispens- issues. The T-Share was not impervious to this phenomenon. Despite the high level of independence they are afforded, the serve as our entry to the US wireless market, the largest of able to have a level playing field, ensuring conditions that Analysts and market observers say that, with a view to our four pillars will cooperate closely with one another in light of its kind in the world, which harbors immense potential for foster fair competition and entry to markets in the European potential, the capital markets will give due regard to our stra- the increasing convergence of their operative business, always growth.