Deutsche Telekom. The 2010 financial year. The Telekom. Deutsche The 2010 financial year. In 2015 mobile customers will send and receive around 14 gigabytes of data per month. Back in 2005, all they needed was a few megabytes. II Selected financial data of the Deutsche Telekom Group. T-Mobile UK no longer fully consolidated since April 1, 2010. Change compared 2010 2009 2008 2007 2006 to prior year (%) a billions of € billions of € billions of € billions of € billions of € Revenue and earnings Net revenue (3.4) 62.4 64.6 61.7 62.5 61.3 Of which: domestic a % 0.3 43.7 43.4 46.8 49.1 52.9 Of which: international a % (0.3) 56.3 56.6 53.2 50.9 47.1 Profit from operations (EBIT) (8.4) 5.5 6.0 7.0 5.3 5.3 Net profit (loss) 380.2 1.7 0.4 1.5 0.6 3.2 Net profit (loss) (adjusted for special factors) 0.8 3.4 3.4 3.4 3.0 3.9 EBITDA a, b, c (13.0) 17.3 19.9 18.0 16.9 16.3 EBITDA (adjusted for special factors) a, b, c (5.8) 19.5 20.7 19.5 19.3 19.4 EBITDA margin (adjusted for special factors) a % (0.8) 31.2 32.0 31.6 30.9 31.7 Statement of financial position Total assets 0.0 127.8 127.8 123.1 120.7 130.2 Shareholders’ equity 2.6 43.0 41.9 43.1 45.2 49.7 Equity ratio a % n.a. 33.7 32.8 35.0 37.5 38.2 Net debt a, c 3.3 42.3 40.9 38.2 37.2 39.6 Relative debt (Net debt/EBITDA (adjusted for special factors)) n.a. 2.2 2.0 2.0 1.9 2.0 Gearing (Net debt/Shareholders’ equity) 0.0 1.0 1.0 0.9 0.8 0.8 Cash capex (7.1) (9.9) (9.2) (8.7) (8.0) (11.8) Cash flows Net cash from operating activities d (6.7) 14.7 15.8 15.4 13.7 14.2 Free cash flow (before dividend payments and spectrum investment) a, c, e, f (6.1) 6.5 7.0 7.0 6.6 3.0 Net cash used in investing activities d 23.8 (10.7) (8.6) (11.4) (8.1) (14.3) Net cash used in financing activities 24.3 (6.4) (5.1) (3.1) (6.1) (2.1) Employees Average number of employees (full-time equivalents, without trainees/student interns) thousands (2.0) 252 258 235 244 248 Revenue per employee a thousands of € (1.4) 247.2 250.8 262.5 256.5 246.9 T-Share – key figures Earnings per share (basic and diluted) in accordance with IFRS g € 387.5 0.39 0.08 0.34 0.13 0.74 Dividend per share € (10.3) 0.70 0.78 0.78 0.78 0.72 Total dividend h billions of € (11.1) 3.0 3.4 3.4 3.4 3.1 Share buy-back i billions of € n.a. 0.4 – – – – Total number of ordinary shares at the reporting date j millions (0.9) 4,321 4,361 4,361 4,361 4,361 a Calculated on the basis of millions for greater precision. Changes to percentages expressed e Before cash outflows totaling EUR 0.1 billion in 2007 for investments in parts of Centrica PLC as percentage points. taken over by T-Systems UK as part of an asset deal. Figures for 2006 include EUR 3.3 billion for b Deutsche Telekom defines EBITDA as profit/loss from operations before depreciation, the acquisition of licenses. amortization and impairment losses. f Deutsche Telekom defines free cash flow as cash generated from operations less interest paid c EBITDA, EBITDA adjusted for special factors, net debt, and free cash flow are non-GAAP figures and net cash outflows for investments in intangible assets (excluding goodwill) and property, not governed by the International Financial Reporting Standards (IFRS). They should not be plant and equipment. viewed in isolation as an alternative to profit or loss from operations, net profit or loss, net cash g Calculation of basic and diluted earnings per share in accordance with IFRS as specified in from operating activities, the debt reported in the consolidated statement of financial position, IAS 33, “Earnings per share.” or other Deutsche Telekom key performance indicators presented in accordance with IFRS. h Subject to approval from the 2011 shareholders’ meeting concerning the dividend payments For detailed information and calculations, please refer to the section on “Development of business for the 2010 financial year. For more detailed explanations, please refer to Note 28 in the in the Group” of the Group management report in this Annual Report. notes to the consolidated financial statements, “Dividend per share.” d Current finance lease receivables were previously reported in net cash from operating activities. i Relating to the shareholder remuneration policy adopted in 2010 for the 2010 to 2012 Since 2007 they have been reported under net cash from/used in investing activities. Prior-year financial years. figures have been adjusted accordingly. j Including treasury shares held by Deutsche Telekom AG. III The Deutsche Telekom Group and its operating segments. Deutsche Telekom is one of the world’s leading integrated telecommunications companies, with approximately 129 million mobile customers, 36 million fixed-network lines, and more than 16 million broadband lines. We provide fixed-network/broadband, mobile com munications, Internet, and IPTV products and services for con sumers, and information and communication technology (ICT) solutions for business and corporate customers. Deutsche Telekom is present in around 50 countries. With a staff of some 247,000 employees throughout the world, we generated revenue of EUR 62.4 billion, over half of it outside Germany. IV Germany. We slowed the year-on-year decrease in total revenue in our Germany operating segment. Change compared 2010 2009 While revenue declined in our fixed-network business, we saw an increase of 3 percent in mobile to prior year billions billions communications revenue, which was primarily attributable to the strong growth in data revenues % of € of € of 35 percent. We invested almost EUR 5 million in Germany‘s broadband future last year – Total revenue (1.1) 25.1 25.4 around 50 percent more than in the previous year. EBIT (profit from operations) (2.9) 4.9 5.1 EBITDA (adjusted for special factors) 0.1 9.6 9.6 Pages 77 – 80 Average number of employees (6.2) 79,364 84,584 Europe. The Europe operating segment encompasses our fixed-network and mobile communications Change compared 2010 2009 subsidiaries in Greece, Romania, Bulgaria, Albania, Hungary, F.Y.R.O. Macedonia, Montenegro, to prior year billions billions Croatia, Slovakia, Poland, the Czech Republic, the Netherlands, and Austria. The tough economic % of € of € situation in the countries of Southern and Eastern Europe in particular had a considerable impact Total revenue (14.1) 16.8 19.6 on total revenue. The greatest growth potential for the future is in broadband business and in the EBIT (profit from operations) n.a. 1.0 0.1 areas of IPTV, as customer figures clearly show. Business with high-value contract customers drove growth in our mobile communications segment. EBITDA (adjusted for special factors) (10.0) 5.7 6.4 Average number of employees (5.5) 65,435 69,277 Pages 81 – 87 USA. We have expanded our high-performance network further in the United States and are running Change compared 2010 2009 it at 4G speeds. What’s more, we will include a range of attractive new smartphones and tablet to prior year billions billions computers in our portfolio. The number of 3G and 4G smartphone users on our network more than % of € of € doubled in 2010. T-Mobile USA received several awards from independent consumer organizations Total revenue 4.0 16.1 15.5 for its excellent customer service. EBIT (profit from operations) (6.3) 2.1 2.2 EBITDA (adjusted for special factors) (2.5) 4.2 4.3 Pages 88 – 89 Average number of employees (1.1) 37,795 38,231 Systems Solutions. T-Systems provides individual ICT solutions for corporate customers, operating networks and Change compared 2010 2009 data centers all over the world. Despite the fact that prices in the ICT business are falling, T-Systems’ to prior year billions billions total revenue increased on the back of strategically significant new deals, with the high level of % of € of € demand for cloud services playing a considerable role. Our customers receive the bandwidth and Total revenue 2.9 9.1 8.8 computing and storage capacity they need for their business processes, and they only pay for EBIT (profit (loss) from operations) n.a. 0.04 (0.01) what they actually use. EBITDA (adjusted for special factors) 2.7 0.9 0.9 Pages 90 –92 Average number of employees 5.0 47,588 45,328 Group Headquarters & Shared Services. Group Headquarters & Shared Services performs strategic and cross-divisional management Change compared 2010 2009 functions and is responsible for operating activities that are not directly related to our core business. to prior year billions billions Shared Services include property management, DeTeFleetServices GmbH, and Vivento, which % of € of € is responsible for providing employees with new employment opportunities as part of our staff Total revenue (10.1) 2.2 2.4 restructuring program. EBIT (loss from operations) (98.5) (2.5) (1.2) EBITDA (adjusted for special factors) n.a.