Post auction update. Deutsche Telekom. October 6, 2006.
Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They include statements as to market potential and future development of T-Mobile USA. They are generally identified by the words “expect,” “anticipate,” “believe,” “intend,” “estimate,” “aim,” “goal,” “plan,” “will,” “seek,” “outlook” or similar expressions and include generally any information that relates to expectations or targets for revenue, adjusted EBITDA or other performance measures. Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control, including those described in the sections “Forward-Looking Statements” and “Risk Factors” of the company’s Form 20-F report filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom’s workforce reduction initiative and the impact of other significant strategic or business initiatives, including acquisitions, dispositions and business combinations. In addition, regulatory rulings, stronger than expected competition, technological change, litigation and supervisory developments, among other factors, may have a material adverse effect on costs and revenue development. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom’s actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be achieved. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. Deutsche Telekom does not reconcile its adjusted EBITDA, free cash flow, and cash contribution guidance to a GAAP measure because it would require unreasonable efforts to do so. As a general matter, Deutsche Telekom does not predict the net effect of future special factors because of their uncertainty. Special factors and interest, taxes, depreciation and amortization (including impairment losses) can be significant to the company’s results. Among the adjustments to be made in determining adjusted EBITDA in 2006 and 2007 will be the costs of the Group’s workforce adjustment initiative, which Deutsche Telekom estimates will result in costs and charges totaling approximately EUR 3.3 billion. In addition to figures prepared in accordance with IFRS or US GAAP, Deutsche Telekom presents non-GAAP financial performance measures, e.g., EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, OIBDA, adjusted EBIT, adjusted net profit, free cash flow, gross debt and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS or US GAAP. Non-GAAP financial performance measures are not subject to IFRS or US GAAP or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the backup of this presentation and to the chapter “Reconciliation of pro forma figures” of the H1/06 Interim Report, which is also posted on Deutsche Telekom’s Investor Relations website at [www.deutschetelekom.com], and to the earnings releases published by T-Mobile USA and by Deutsche Telekom for its U.S. mobile operations. NOTE: Auction 66 licenses subject to final FCC grant after application reviewed. October 6, 2006 Investor Relations Page 2
Post auction update. Deutsche Telekom. October 6, 2006. Kai-Uwe Ricke CEO Deutsche Telekom
Deutsche Telekom. 7 objectives – U.S. key component of group strategy. � 1. Germany - Defend position � 2. Europe - Increase revenue market share � 3. USA - Maximize revenue market share � 4. Business Customers - Target top 3 position in Europe � 5. Innovation - Focus on IP-TV, Mobile internet, ICT services and converged services � 6. Service - Import service models from U.S., achieve 80% ‘first done rate’ � 7. Efficiency - Become the integrated telco with highest earnings in Europe October 6, 2006 Investor Relations Page 4
Deutsche Telekom. U.S. wireless – continued favorable market environment. � Industry growth Wireless penetration (%) 1 � Penetration headroom (high to mid 80s) 73 � Robust postpaid growth 70 62 � Landline replacement accelerating 55 43 � Strong growth and high acceptance of mobile data services � Industry consolidation � Price stability 2002 2003 2004 2005 Q2/06 � Quality up – churn down Monthly churn rate (%) 2 � Regulatory environment works with market- driven forces 2.73 2.36 2.35 � In-country consolidation was allowed 1.95 � No threat of rate regulation 1.80 1 Source: CTIA. 2002 2003 2004 2005 Q2/06 2 Average of quarterly rates. Source: Merrill Lynch. October 6, 2006 Investor Relations Page 5
T-Mobile USA. Success story – Consistent execution since acquisition 1 . ‘000 ‘000 $ million $ million 5.000 5. 000 25.000 25. 000 4. 4.000 000 20.000 20. 000 3.000 3. 000 15.000 15. 000 2.000 2. 000 10. 10.000 000 1. 1.000 000 5. 5.000 000 0 0 -1.000 -1 -5.000 -5 Q2/01 Q4/01 Q2/02 Q4/02 Q2/03 Q4/03 Q2/04 Q4/04 Q2/05 Q4/05 Q2/06 Servi rvice ce re rev. v. OI OIBDA/adj. E EBITDA DA Cu Cust stomers 1 U.S. GAAP data. See backup to this presentation for reconciliation of OIBDA. OIBDA reconciliations for periods prior to Q3 2002 are not available. October 6, 2006 Investor Relations Page 6
T-Mobile USA. Key revenue and EBITDA driver. Contribution of TM US to Contribution of TM US to group and TMO revenue (%) group and TMO adj. EBITDA (%) 43 40 40 35 34 DT DT 24 22 20 TMO 19 TMO 16 16 10 H1/06 2004 2005 H1/06 2004 2005 October 6, 2006 Investor Relations Page 7
Deutsche Telekom. Growing importance of international operations. International contribution to International contribution to group and TMO revenue (%) group and TMO adj. EBITDA (%) 75 72 68 66 63 56 DT DT 45 43 39 37 36 TMO TMO 31 H1/06 2004 2005 H1/06 2004 2005 October 6, 2006 Investor Relations Page 8
Post auction update. Deutsche Telekom. October 6, 2006. René Obermann CEO T-Mobile International
Deutsche Telekom. Pioneering mobile data services. � Significant growth in non-voice revenues (H1/06) � € 2.0 billion total non-voice revenues (+23%) � € 0.6 billion non-voice non-SMS revenues (+36%) � First carrier to launch open Internet product (“Web’n’walk”) � First carrier to launch HSDPA in Germany � Upgrade in Germany, U.K., Austria, Hungary, and the Netherlands already completed � Speed to be increased to 7.2 Mbit/s by year-end 2007 � HSDPA-capable data cards and handsets launched � Leading hotspot provider in Europe and the U.S. October 6, 2006 Investor Relations Page 10
Deutsche Telekom. Global T-Mobile business delivering group benefits. � Operational benefits – learning from the other side � U.S.-style bundled tariffs (“best value for money”) launched in Europe � Applying T-Mobile USA’s ‘Best in Class’ service models to European operations � U.S. to benefit from T-Mobile Europe’s early lead in HSDPA � U.S. benefits from T-Mobile’s global procurement of infrastructure, terminals and others � Global scale 101 million customers 1 � € 1.5 billion in hard global synergies in 2005, NPV (Net Present Value) € 11.7 billion � Soft synergies: brand, products/services, best practice groups � Global procurement of handsets and infrastructure major contributor 1 Incl. PTC. October 6, 2006 Investor Relations Page 11
T-Mobile USA. Auction 66 – Solid foundation to continue U.S. success story. � Key auction highlights: � 120 licenses for $4.2 billion ( € 3.3 billion) � Doubles average spectrum in top 100 markets (26 ⇒ 52 MHz) � Reasonable valuation – $0.63 per MHz POP (total average: $0.54) � Nationwide AWS spectrum layer with additional depths in key markets � Enables future capacity growth and delivery of next-generation services October 6, 2006 Investor Relations Page 12
Post auction update. Deutsche Telekom. October 6, 2006. Robert Dotson CEO T-Mobile USA
Since 2002…America’s leading service provider October 6, 2006 Investor Relations Page 14
T-Mobile USA. Foundation in place for sustained success. America’s #1 rated company in customer satisfaction � 4 consecutive J.D. Power and Associates wins � Only carrier to ever win all 6 regions—4 times � Most recent win—this week! � Multi-year wins in Customer Care and Retail Battle-tested senior leadership team � 10+ years together with added deep retail and service expertise October 6, 2006 Investor Relations Page 15
T-Mobile USA. Operations positioned for future success. Network a major driver of #1 ranking � T-Mobile fewest dropped calls across top 35 U.S. markets � Communicating in New York, Chicago, L.A., Houston, Miami, etc. October 6, 2006 Investor Relations Page 16
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