Deutsche Telekom AG

Annual Financial Statements and

combined management report as of
December 31, 2020
 Annual Financial Statements 3
Contents

Contents

Annual financial statements of Deutsche Telekom AG

6 Balance sheet
7 Statement of income
8 Notes to the financial statements
8 Summary of accounting policies
16 Notes to the balance sheet
35 Notes to the statement of income
43 Other disclosures

Responsibility statement

Independent auditor’s report

Further information
89 List of abbreviations
91 Contacts

Combined management report

– Excerpt from the 2020 annual report of Deutsche Telekom –

A combined management report has been produced for Deutsche Telekom AG and the Deutsche Telekom Group and is
also published in our 2020 Annual Report.

Deutsche Telekom AG’s single-entity financial statements and the combined management report for the 2020 financial
year are published in the electronic Federal Gazette (elektronischer Bundesanzeiger) and can also be accessed on the
website of the register of companies.
 Annual Financial Statements 5
Contents

Annual financial statements of Deutsche Telekom AG

6 Balance sheet
7 Statement of income
8 Notes to the financial statements
8 Summary of accounting policies
16 Notes to the balance sheet
35 Notes to the statement of income
43 Other disclosures
 Annual Financial Statements 6
Balance sheet

Balance sheet

millions of €

Note Dec. 31, 2020 Dec. 31, 2019

Assets
Noncurrent assets 1
Intangible assets 216 217
Property, plant and equipment 2,388 2,313
Financial assets 101,411 111,020
104,015 113,550

Current assets
Receivables 2 8,180 6,695
Other assets 3 964 1,313
Cash and cash equivalents 4 3,201 2,076
12,345 10,084

Prepaid expenses and deferred charges 5 437 463

Difference between plan assets and corresponding liabilities 6 9 13

Total assets 116,806 124,110

Shareholders’ equity and liabilities

Shareholders’ equity 7
Capital stock 8 12,189 12,189
Less the imputed value of treasury shares (46) (47)
Issued capital 12,143 12,142
Contingent capital of € 1,200 million
Additional paid-in capital 9 31,340 31,334
Retained earnings 10 9,545 9,545
Unappropriated net income 5,129 5,460
58,157 58,481

Accruals
Accruals for pensions and similar obligations 12 3,960 3,780
Tax accruals 13 412 411
Other accruals 14 2,591 2,602
6,963 6,793

Liabilities 15
Debt 10,952 10,928
Remaining liabilities 40,594 47,776
51,546 58,704

Deferred income 16 140 132

Total shareholders’ equity and liabilities 116,806 124,110

 Annual Financial Statements 7
Statement of income

Statement of income

millions of €

Note 2020 2019

Net revenue 18 2,740 3,423
Other own capitalized costs 19 9 7

Total operating performance 2,749 3,430

Other operating income 20 4,725 2,387

Goods and services purchased 21 (471) (1,037)
Personnel costs 22 (2,291) (2,326)
Depreciation, amortization and write-downs 23 (211) (254)
Other operating expenses 24 (2,834) (3,081)

Net financial income (expense) 25 1,245 3,131

Income taxes 26 (380) (484)

Income after income taxes 2,532 1,766

Other taxes 27 (17) (17)

Income after taxes 2,515 1,749

Unappropriated net income carried forward from previous year 2,614 3,711

Unappropriated net income 28 5,129 5,460

 Annual Financial Statements 8
Notes to the financial statements – Summary of accounting policies

Notes to the financial statements

Summary of accounting policies

Description of business activities
Deutsche Telekom AG1, Bonn, (hereinafter referred to as Deutsche Telekom or the Company) operates as a provider of
telecommunications services, information technology (IT), multimedia, information and entertainment, security
­services, as well as sales and agency services via its subsidiaries. Deutsche Telekom performs its activities both in and
outside Germany.

As the Headquarters of the Deutsche Telekom Group, Deutsche Telekom performs strategic and cross-segment
­management functions and provides services for other Group companies. These principally comprise services rendered
by the Group Supply Services unit, whose activities include the management of the Company’s real estate portfolio, the
Technology and Innovation unit, which is responsible for the Group’s technology, innovation and IT areas, the Group
Development unit with the Group functions of mergers & acquisitions and strategic portfolio management as well as
Telekom Placement Services for providing employees with new employment opportunities as part of the staff
­restructuring program.

Part of the Company’s workforce is employed in its subsidiaries. Most of these are civil servants who have been ­assigned
jobs in compliance with the statutory provisions.

On August 20, 2019, the Board of Management of Deutsche Telekom approved the strategic realignment of the
­telecommunications business for business customers as part of the One.B2B project. In the course of this realignment,
the shareholders of Deutsche Telekom approved the spin-off of the “Deutsche Telekom Global Carrier” business area
operated by the Company (hereinafter referred to as DTGC business area), consisting of the “Telekom Global Carrier”
(TGC) and “Network Infrastructure” (NWI) sub-areas, to Telekom Deutschland GmbH, Bonn (hereinafter referred to as
Telekom Deutschland) by resolution of the shareholders’ meeting on June 19, 2020. The spin-off took place with
­retroactive economic effect as of January 1, 2020.

The spun-off DTGC business area mainly provides services for business customers in the areas of International Carrier
Services, Commercial Roaming Services, and Aviation Services, as well as operation of the international network
­infrastructure required for this purpose.

1 Deutsche Telekom was entered into the commercial register of the Bonn District Court (Amtsgericht – HRB 6794) under the name Deutsche Telekom AG
on January 2, 1995.
 Annual Financial Statements 9
Notes to the financial statements – Summary of accounting policies

Description of the relationship with the Federal Republic of Germany

The Federal Republic’s total shareholding in Deutsche Telekom amounted to 31.89 % at the end of the reporting period, of
which 17.41 % of the shares were held by KfW Bankengruppe (KfW) and attributable to the Federal Republic in accordance
with § 16 (4) of the German Stock Corporation Act (Aktiengesetz – AktG). The Federal Ministry of Finance is responsible for
administering the Federal Republic’s shareholding and exercising its rights as a shareholder.

In accordance with legal regulations, the Deutsche Bundespost Federal Posts and Telecommunications Agency, Bonn
(Federal Agency) assumes coordination and administrative tasks that affect cross-company issues at Deutsche Telekom,
Deutsche Post AG, Bonn, and Deutsche Bank AG, Frankfurt/Main (as legal successor of Deutsche Postbank, Bonn). These
are performed on the basis of agency agreements for the Civil Service Health Insurance Fund (Postbeamten­krankenkasse
– PBeaKK), the Recreation Service (Erholungswerk), the Supplementary Retirement Pensions Institution (Versorgung-
sanstalt der Deutschen Bundespost – VAP), the Welfare Service (Betreuungswerk), and the Civil Service Pension Fund
(Postbeamtenversorgungskasse), among others.

The Federal Republic purchases services from the Company as a customer of Deutsche Telekom. In the course of business,
Deutsche Telekom deals directly with individual authorities and other government agencies as mutually independent
individual customers. Services provided to any one department or agency do not represent a significant component of
Deutsche Telekom’s net revenue.

The Federal Network Agency for Electricity, Gas, Telecommunications, Posts, and Railways is a separate higher federal
authority within the scope of business of the Federal Ministry of Economics and Energy. One of its tasks is to supervise the
telecommunications sector in Germany. In this capacity it regulates the business activities of Deutsche Telekom.

Spin-off of the DTGC business area

As part of the strategic realignment of the telecommunications business for business customers described above,
­Deutsche Telekom transferred the entirety of the DTGC business area to Telekom Deutschland on the basis of the ­spin-off
and takeover agreement dated April 20, 2020 and with retroactive economic effect as of January 1, 2020 by way of a
­spin-off by absorption in accordance with § 123 (3) no. 1 UmwG in return for the granting of a new share. The spin-off took
effect upon entry in the commercial register on October 1, 2020.
 Annual Financial Statements 10
Notes to the financial statements – Summary of accounting policies

The assets, prepaid expenses, deferred charges, deferred income, and liabilities transferred as a result of the spin-off as
part of the One.B2B project are as follows:

millions of €

Assets
Noncurrent assets
Intangible assets
Purchased concessions, industrial property and similar rights and assets, and licenses in such rights and assets 5
Advance payments 9
14

Property, plant and equipment

Technical equipment and machinery 45
Other equipment, plant and office equipment 2
Advance payments and construction in progress 12
59

Financial assets
Investments in affiliated companies 5
5

Current assets
Trade accounts receivable 25
Receivables from affiliated companies 569
Receivables from associated and related companies 1
Other assets 127
722

Prepaid expenses and deferred charges 2

Total assets 802

Shareholders’ equity and liabilities

Accruals
Accruals for pensions and similar obligations 18
Other accruals 35
53

Liabilities
Trade accounts payable 60
Payables to affiliated companies 163
Liabilities to associated and related companies 1
Other liabilities 178
402

Deferred income 2

Total shareholders’ equity and liabilities 457

Net assets 345

Increase of the carrying amount of the investment in Telekom Deutschland 1,147

Income from the realization of hidden reserves 802

 Annual Financial Statements 11
Notes to the financial statements – Summary of accounting policies

In accordance with general exchange principles, Deutsche Telekom has increased the carrying amount of the invest-
ment in Telekom Deutschland by EUR 1.1 billion, which is the fair value of the transferred assets.

Where the effects of the transfer as part of the One.B2B project are material and knowledge of these is required for
better comprehension of the business figures, they will be presented in the notes on individual items in the balance
sheet and statement of income.

Basis of preparation
The annual financial statements and the management report of Deutsche Telekom, which is combined with the Group
management report in accordance with § 315 (5) of the German Commercial Code (Handelsgesetzbuch – HGB) in
­conjunction with § 298 (2) HGB, are prepared in accordance with German GAAP and the German Stock Corporation Act.

The balance sheet and the statement of income are prepared in accordance with the classification requirements of
§ 266 and § 275 HGB. The statement of income is prepared using the total cost method in accordance with § 275 (2) HGB.
Unless otherwise stated, all amounts shown are in millions of euros (millions of €/EUR). The financial year c­ orresponds
to the calendar year. Certain items have been aggregated for presentation purposes in the balance sheet and the
­statement of income in order to make the financial statements clearer. These items are disclosed separately in the
notes. Other required disclosures for individual items of the balance sheet and the statement of income are also made
in the notes.

The disclosures on the compensation of the Board of Management and the Supervisory Board are aggregated in a
“Compensation report” in the combined management report of Deutsche Telekom. This is supplemented with certain
information that continues to be required to be shown in the notes to the Company’s financial statements.

Accounting policies
Purchased intangible assets are carried at acquisition cost and are amortized on a straight-line basis over their estimated
useful lives. Write-downs to the lower of cost or market value are charged if an impairment of assets is assumed to be permanent.

Deutsche Telekom does not exercise its option to recognize internally generated intangible assets in accordance with
­§  248 (2) HGB.

As permitted by Postreform II, property, plant and equipment transferred to Deutsche Telekom on January 1, 1995 was
recorded in the opening balance sheet of Deutsche Telekom at fair market values at that date. However, due to the short
period of time that had elapsed since the measurement date for property, plant and equipment acquired since
January 1, 1993, their carrying amount as of December 31, 1994 was recognized on a historical cost basis. The remaining
useful lives and the depreciation methods applicable to these assets were not changed. The fair market values shown in
the opening balance sheet have been carried forward as the acquisition costs.

Other items of property, plant, and equipment are carried at acquisition or production cost, less scheduled depreciation.
Production cost includes directly attributable costs and an appropriate allocation of indirect material and labor cost.
Borrowing costs are not capitalized. Write-downs to the lower of cost or market value are charged if an impairment of
assets is assumed to be permanent.

Depreciation is generally charged using the straight-line method. The standard useful lives used for the calculation are
based on a company-specific estimate that takes both technical and commercial devaluation factors into account.

If the reasons for write-downs no longer exist in subsequent years, either in whole or in part, a write-up is made in the
amount of the increase in value occurred; this may not, however, exceed the value that would have been recognized if
the write-down had not been carried out.
 Annual Financial Statements 12
Notes to the financial statements – Summary of accounting policies

Since BilMoG entered into force, write-downs that are only permissible under tax law are generally no longer permitted
in the annual financial statements. Deutsche Telekom exercises the option to retain the existing carrying amounts in
accordance with Art. 67 (4) sentence 1 of the Introductory Act to the German Commercial Code (Einführungsgesetz zum
Handelsgesetzbuch – EGHGB). Since January 1, 2010, residual value as of December 31, 2009 has been written down
over the remaining useful life using the straight-line method. This method makes it possible to give a picture that more
truly reflects the Company’s actual financial position and results of operations.

Assets are depreciated/amortized over the following useful lives:

Years
Acquired software 3 to 4
Other rights of use and licenses As contractually agreed
Buildings 25 to 50
Switching, transmission, IP, and radio transmission equipment 3 to 10
Other equipment, plant and office equipment 3 to 23

Additions to real estate and movable items of property, plant and equipment are depreciated ratably from the year of
acquisition.

Since January 1, 2018, assets with acquisition or production costs of EUR 800 or less have been written off in full in the
year of acquisition and are presented as disposals in the statement of noncurrent assets. The amended regulation in
­§  6 (2) sentence 1 of the German Income Tax Act (Einkommensteuergesetz – EStG) for corresponding additions in the
financial accounts is being adopted for reasons of simplicity. Until December 31, 2017, assets whose acquisition or
­production costs exceeded EUR 150 and did not exceed EUR 1,000 were capitalized in annual omnibus items of
­immaterial significance overall and depreciated/amortized over five years. These assets are presented as disposals in
the statement of noncurrent assets when they are written off in full.

Noncurrent assets sold or otherwise disposed of are derecognized at their relevant carrying amount (cost less accumulated
depreciation). A gain or loss is recognized in the statement of income in the amount of the difference between the
­proceeds from the sale and the carrying amount of the asset concerned.

Financial assets are reported at the lower of cost or market value. In the case of financial assets acquired in a foreign
currency, the exchange rate at the transaction date is used to determine the acquisition cost. In the case of hedges, the
hedging rate for the purchased foreign currency is used, provided an effective hedge was recognized. Loan receivables
correspond to the loan amounts less repayments and – if applicable – less any write-downs to the lower fair value.
Nonscheduled write-downs are charged only if the impairment of financial assets is assumed to be permanent. The
accounting for structured financial instruments is in accordance with standard IDW RS HFA 22 issued by the Institute of
Public Auditors in Germany.

As a consequence of the application of IDW ERS HFA 13 note 94 as amended, in the event of the shareholder drawing
assets, the reduction in the net carrying amount of the investment is calculated and recognized on the basis “of the ratio
of the fair value of the asset drawn to the fair value of the investment.” The difference between the reduction in the net
carrying amount and the amount of the assets drawn is hence recognized in the statement of income.
 Annual Financial Statements 13
Notes to the financial statements – Summary of accounting policies

Receivables, other assets and cash and cash equivalents are carried at their nominal value. Identified individual risks
are accounted for through appropriate individual valuation adjustments, and general credit risks through general
­valuation adjustments of receivables. Low-interest and non-interest-bearing items with more than one year remaining to
maturity are discounted.

Receivables and other assets denominated in foreign currencies are translated at the middle spot rate at the balance
sheet date in accordance with § 256a HGB and measured at acquisition or production cost (§ 253 (1) sentence 1 HGB)
applying the realization principle (§ 252 (1) no. 4 half-sentence 2 HGB). Current items with maturities of one year or less
are measured at the middle spot rate at the balance sheet date in accordance with § 256a HGB.

Prepaid expenses and deferred charges are recognized as a separate item in accordance with § 266 (2) letter C HGB
and recalculated at each balance sheet date. The discount included under prepaid expenses and deferred charges
­results from the difference between the settlement amount of a financial liability and the lower principal amount. The
discount is amortized over the terms of the financial liabilities by systematic annual charges (§ 250 (3) sentence 2 HGB).
­Deutsche Telekom does not make use of the option to immediately recognize the difference as an expense.

The performance-based compensation plans comprise the Variable I, the Share Matching Plan, the Variable II, and the
Long Term Incentive Plan.

Under the short-term performance-related remuneration component, Variable I, the Board of Management and the
­business leader team are contractually obliged, and other executives are entitled on a voluntary basis, to invest a portion
of their annual variable remuneration – determined according to the level of achievement of fixed targets set for each individ-
ual for the financial year – in shares in Deutsche Telekom, which must be held for at least four years. Deutsche Telekom will
grant additional shares for the shares acquired by the beneficiaries (Share Matching Plan), which will be allotted to the
beneficiaries of this plan from Deutsche Telekom’s holding of treasury shares on expiration of the four-year lock-up period.

In addition, performance-based compensation is awarded based on the level of achievement of long-term targets. For the
Board of Management this component is called Variable II, whereas for the business leader team and other executives it is
known as the Long-Term Incentive Plan.

The Share Matching Plan and the Long-Term Incentive Plan are share-based compensation instruments measured at fair
value. For the Share Matching Plan, the fair value equates to the Deutsche Telekom share price at grant date less an expected
dividend markdown.

In the case of the Long-Term Incentive Plan, the virtual share package allocated to employees at the inception of the plan
is multiplied by Deutsche Telekom’s share price at the grant date and discounted to the reporting date. Over the term of
the plan, the value changes in line with Deutsche Telekom share price development. The number of virtual shares will
change on achievement of the targets for four equally weighted performance indicators. In addition, each beneficiary re-
ceives a dividend during the term of the plan. This dividend is reinvested in virtual shares, increasing the number of virtual
shares held by each plan participant.

Accruals are recognized for the expected costs arising from performance-based compensation. The personnel costs for
the Share Matching Plan, Variable II, and the Long-Term Incentive Plan are recognized over the respective term.
 Annual Financial Statements 14
Notes to the financial statements – Summary of accounting policies

Accruals for pensions and similar obligations are based on obligations to non-civil servants. These accruals are calculated
on the basis of actuarial principles, applying the projected unit credit method and using the Heubeck 2018 G life expectancy
tables, which also take expected future salary and benefit increases into account. The interest rate used to determine the
present value of the pension obligations corresponds to the average market interest rate published by the Deutsche
Bundesbank that results from an assumed remaining maturity of 15 years (§ 253 (2) sentence 2 HGB). In accordance with
the Act on the Implementation of the Mortgage Credit Directive and Amending Commercial Regulations (Gesetz zur
­Umsetzung der Wohnimmobilienkreditrichtlinie und zur Änderung handelsrechtlicher Vorschriften) that entered into force
on March 21, 2016, the average market interest rate for discounting pension accruals is calculated over the past ten ­financial
years (until the 2015 financial year: seven financial years) in accordance with § 253 (2) sentence 1 HGB. The difference ­between
the carrying amount of the pension accruals using the average market interest rate over the past ten financial years and the
carrying amount of the accruals using the average market interest rate over the past seven financial years is subject to the
restriction on distribution (§ 253 (6) sentence 2 HGB). Where an addition to pension accruals is required on account of the
change in measurement following the entry into force of BilMoG, the amount must aggregate to at least one 15th in each
financial year up to December 31, 2024 at the latest (Art. 67 (1) sentence 1 – EGHGB). The Company exercised the option in
such a way that the annual addition corresponds to one 15th of the total amount being added. This amount is presented
separately under other operating expenses.

In the past, Deutsche Telekom entered into phased retirement arrangements with varying terms and conditions largely
based on what is known as the block model. Two types of obligations, both measured at their present value in accordance
with actuarial principles using the Heubeck 2018 G life expectancy tables, arise and are accounted for separately. These
two obligations are outstanding settlement amounts and top-up payments. Top-up payments are often hybrid in ­nature,
i.e., although the agreement is often considered a form of compensation for terminating the employment relationship
at an earlier date, payments to be made at a later date are subject to the performance of work in the future. To the extent
that phased retirement programs are mainly to be considered severance instruments, top-up payments are recognized
in full as soon as the obligation arises. If, by contrast, the focus of the phased retirement arrangements is on the future
performance of work, the top-up payments are recognized over their vesting period.

Obligations arising from long-term accounts are measured at the present value using actuarial principles. Obligations
relating to lifetime work accounts are measured at the fair value of the reinsurance arranged for this purpose.

To hedge claims from phased retirement, lifetime work accounts, long-term accounts and pension commitments,
­assets have been transferred to a trustee under a contractual trust arrangement (CTA). Where these assets are plan
assets pursuant to § 246 (2) sentence 2 HGB, the accruals for lifetime work accounts, long-term accounts and pension
obligations, as well as accruals for outstanding settlement amounts relating to obligations from phased retirement, are
offset against the corresponding plan assets. The plan assets offset are measured at their fair value in accordance with
§ 253 (1) sentence 4 HGB. Any resulting excess in plan assets is recognized as an asset and presented under a separate
item (§ 266 (2) letter E HGB). In accordance with § 246 (2) sentence 2 HGB, income and expenses from discounting and
from the assets to be offset are also offset under financial income/expense. If the fair value of the plan assets exceeds
the historical cost, this part is subject to the restriction on distribution in accordance with § 268 (8) HGB.

Based on the amendment agreement concluded during the financial year between the Company and Deutsche Telekom
Trust e.V., Bonn, the netting of the settlement amount of direct pension obligations does not include the risk component.
 Annual Financial Statements 15
Notes to the financial statements – Summary of accounting policies

Tax accruals and other accruals, including those for contingent losses and environmental liabilities, are carried at
the settlement amount considered necessary in accordance with prudent commercial practice. Sufficient allowance
is made for all identifiable risks when measuring these accruals. Expected increases in prices and costs in the meantime
are taken into account.

Accruals with a remaining term of more than one year are discounted at the balance sheet date at the interest rate
published by the Deutsche Bundesbank, which is the average market interest rate for the past seven financial years
corresponding to their remaining maturity.

Where reversals of accruals became necessary in the 2010 financial year due to the introduction of BilMoG and the
­resulting changes in measurement, Deutsche Telekom exercised the option to retain the higher carrying amount if the
amount being reversed has to be added back before December 31, 2024 (Art. 67 (1) sentence 2 EGHGB).

Liabilities are recognized at the settlement amount. In instances where the settlement amount of a liability is greater
than the principal amount, the difference is recorded under prepaid expenses and deferred charges, and distributed
over the term of the liability. In accordance with § 256a HGB, liabilities denominated in foreign currencies are translated
at the middle spot rate at the balance sheet date and measured using the historical cost convention (§ 253 (1) sentence
1 HGB) and applying the realization principle (§ 252 (1) no. 4 half-sentence 2 HGB). Current items with maturities of one
year or less are measured at the middle spot rate at the balance sheet date in accordance with § 256a HGB.

In line with the imparity principle, unrealized losses relating to non-derivative and derivative financial instruments are
expensed as incurred. This principle is also applied to derivatives that are embedded in structured financial instruments
and that have to be accounted for separately. If financial instruments can be qualified as a valuation unit – hedged item
and hedge transaction – the unrealized losses from the hedged risks are not recognized in accordance with § 254 HGB
provided there are also unrealized gains in the same amount offsetting the losses (net hedge presentation method). If
the offset (netting) of the change in values of the hedged item and the hedge instrument results in a net loss, it is
­recognized in net income or loss through an accrual for contingent losses in accordance with IDW RS HFA 35, whereas
unrealized gains are not recognized until realized.

Financial liabilities denominated in foreign currencies that are part of a hedge are recognized at the middle spot rate at
the transaction date.

Unrealized settlement gains and losses from expired hedge transactions for revolving hedging (roll-over gains or losses)
and other settlement gains and losses for which the hedged item has not yet been recognized in the statement of
­income are reported separately as other assets or other liabilities.

All proceeds from the sale and the renting and leasing out of products, as well as the provision of services are presented
as revenue. This primarily relates to revenue from the Technology and Innovation unit plus revenue from hiring out
­employees, renting and leasing out property, and offering training services.

Revenue is recorded net of sales-related reductions and value-added tax as well as other taxes directly linked to r­ evenue.
In accordance with the realization principle, revenue is recognized in the accounting period when earned.

Research and development costs are expensed as incurred.

 Annual Financial Statements 16
Notes to the financial statements – Notes to the balance sheet

Pension costs include expenditures in connection with the appropriation of accruals for current employees as well as
expenditures for ongoing payments to the Federal Agency on behalf of employed civil servants.

Income tax expense includes current payable taxes on income. Deutsche Telekom has not exercised its option to recognize
deferred tax assets in accordance with § 274 (1) HGB.

Scope of discretion
The preparation of the annual financial statements requires the Company to make estimates and assumptions that
­affect the reported carrying amounts of assets and liabilities, the disclosure of risks and uncertainties with regard to the
assets and liabilities recognized at the closing date and the amounts of income and expenses recognized during the
reporting period. Actual results may differ from those estimates.

Notes to the balance sheet

1 Noncurrent assets

As of December 31, 2020, intangible assets amounted to EUR 216 million (December 31, 2019: EUR 217 million) and primarily
include advance payments, licenses, and rights to use software. Additions of EUR 85 million in the reporting year relate in
particular to purchased software. Amortization of EUR 72 million and disposals from the spin-off of the DTGC business area
totaling EUR 14 million had an offsetting effect.

Property, plant and equipment increased by EUR 75 million to EUR 2.4 billion in the reporting period. Of this increase,
EUR 251 million resulted from intragroup purchases of properties owned by Deutsche Telekom Asset Management
GmbH & Co. KG, Monheim, which are being used on a long-term basis by operating units of Deutsche Telekom. External
investments in property, plant and equipment in the reporting year amounted to EUR 35 million (2019: EUR 48 million),
of which EUR 22 million related to other equipment, plant and office equipment and EUR 10 million to advance ­payments
and construction in progress. Property, plant and equipment was reduced by depreciation of EUR 139 million in the
­reporting year, of which EUR 110 million relates to depreciation on real estate. Disposals of EUR 59 million resulting from
the spin-off of the DTGC business area and external disposals, which relate almost exclusively to disposals of real estate,
further reduced property, plant and equipment.

As of the balance sheet date, financial assets decreased by EUR 9.6 billion compared with December 31, 2019.

The increase of EUR 154 million in investments in affiliated companies mainly results from an increase in the carrying
amount of the investment in Telekom Deutschland, in connection with the spin-off of the DTGC business area, at the fair
value of the new shareholding amounting to EUR 1.1 billion. In addition, write-ups of EUR 890 million on the shares in
­Hellenic Telecommunications Organization S.A. (OTE), Athens, and of EUR 73 million on the shares in Deutsche Telekom
Asset Management GmbH & Co. KG, Monheim, as well as capital increases, particularly at Deutsche Telekom IoT GmbH,
Bonn (formerly Tibull Telekommunikationsdienste GmbH, Bonn), in the amount of EUR 40 million, and at Telekom Innovation
Pool GmbH, Bonn, in the amount of EUR 30 million, contributed to the increase. A write-down of EUR 1.4 billion on CTA
Holding GmbH, Bonn, as a result of the impairment of this company’s indirectly held investment in the BT Group plc,
­London, and a write-down of EUR 44 million on T-Systems International GmbH, Frankfurt/Main (hereinafter referred to as
T-Systems) had an offsetting effect. The decrease was also due to capital repayments, particularly by T-Mobile Global
Zwischenholding GmbH, Bonn, in the amount of EUR 629 million, applying IDW ERS HFA 13 as amended.
 Annual Financial Statements 17
Notes to the financial statements – Notes to the balance sheet

In addition to the spin-off of the DTGC business area, additions and disposals from conversions and similar transactions
were attributable in particular to the split-off of the TC Services and Classified ICT business areas from T-Systems to
­Deutsche Telekom Business Solutions GmbH, Bonn (formerly Kolga Telekommunikationsdienste GmbH, Bonn), an investment
held directly by Telekom Deutschland. This resulted in an increase in the carrying amount of the investment in Telekom
Deutschland in the amount of EUR 2.2 billion. Furthermore, the split-off of the Telekom Security business area from
­T-Systems to Deutsche Telekom Security GmbH, Bonn (formerly Sallust Telekommunikationsdienste GmbH, Bonn), resulted
in an addition of EUR 0.1 billion. As a consequence of these transactions, the net carrying amount of the investment in
T-Systems decreased by EUR 2.3 billion.

Loans to affiliated companies with a carrying amount of EUR 22.6 billion at December 31, 2020 mainly consist of loans to
Telekom Deutschland (EUR 12.3 billion), to DFMG Holding GmbH, Bonn, (EUR 5.7 billion), to T-Mobile USA, Inc., Bellevue,
(EUR 4.1 billion), and to Magyar Telekom Telecommunications Public Limited Company, Budapest, (EUR 245 million). The
decrease in loans to affiliated companies of EUR 9.7 billion results in particular from repayments by T-Mobile USA, Inc.,
Bellevue, in the amount of EUR 8.5 billion, by T-Mobile Polska S.A., Warsaw, in the amount of EUR 678 million, and by
­Telekom Deutschland in the amount of EUR 429 million. An increase of EUR 125 million in the loan to Magyar Telekom
Telecommunications Public Limited Company, Budapest, had an offsetting effect.

The decrease of EUR 22 million in investments in associated and related companies is due almost exclusively to the sale
of shares in Ströer SE & Co. KGaA, Cologne.

Write-downs on financial assets amounted to EUR 1.4 billion in the reporting year and were recorded in net financial
­income/expense (please refer to Note 25).

For the statement of investment holdings in accordance with § 285 HGB, please refer to Note 39.
 Annual Financial Statements 18
Notes to the financial statements – Notes to the balance sheet

Statement of noncurrent assets

millions of €
Acquisition costs

Additions Additions from Disposals Disposals from

from transfers conversions from transfers conversions
Balance at from Group and similar to Group and similar Reclassi­- Balance at
Jan. 1, 2020 Additions companies transactions Disposals companies transactions fi­cations Dec. 31, 2020
I. Intangible assets
1. Purchased concessions,
industrial property and
similar rights and assets,
and licenses in such
rights and assets 346 55 1 – (39) 0 (10) 38 391
2. Advance payments 47 29 0 – 0 0 (9) (38) 29
393 84 1 – (39) 0 (19) – 420

II. Property, plant and equipment

1. Land and equivalent
rights and buildings
including buildings
on land owned by
third parties 8,288 3 251 – (72) – – 11 8,481
2. Technical equipment
and machinery 409 0 – – (21) 0 (350) – 38
3. Other equipment, plant
and office equipment 655 22 0 – (63) 0 (10) 0 604
4. Advance payments and
construction in progress 30 10 – – 0 0 (12) (11) 17
9,382 35 251 – (156) 0 (372) – 9,140

III. Financial assets

1. Investments in affiliated
companies 82,287 192 0 3,439 (719) 0 (4,219) – 80,980
2. Loans to affiliated
companies 32,309 162 – – (9,903) – – – 22,568
3. Investments in associated
and related companies 344 4 – – (26) – – – 322
4. Other long-term loans 5 – – – 0 – – – 5
114,945 358 0 3,439 (10,648) 0 (4,219) – 103,875

Noncurrent assets 124,720 477 252 3,439 (10,843) 0 (4,610) – 113,435

 Annual Financial Statements 19
Notes to the financial statements – Notes to the balance sheet

Depreciation, amortization and write-downs Net carrying amounts

Additions Disposals Disposals from

from transfers from transfers conversions
Balance at from Group to Group and similar Balance at Balance at Balance at
Jan. 1, 2020 Additions companies Write-ups Disposals companies transactions Dec. 31, 2020 Dec. 31, 2020 Dec. 31, 2019

(176) (72) 0 – 39 0 5 (204) 187 170

– – – – – – – – 29 47
(176) (72) 0 – 39 0 5 (204) 216 217

(6,142) (110) 0 16 44 – – (6,192) 2,289 2,146

(363) 0 – – 21 0 305 (37) 1 46

(564) (29) 0 – 62 0 8 (523) 81 91

– – – – – – – – 17 30
(7,069) (139) 0 16 127 0 313 (6,752) 2,388 2,313

(3,903) (1,420) – 963 – 0 1,918 (2,442) 78,538 78,384

0 0 – – 0 – – – 22,568 32,309

(22) – – – – – – (22) 300 322

– – – – – – – – 5 5
(3,925) (1,420) – 963 0 0 1,918 (2,464) 101,411 111,020

(11,170) (1,631) 0 979 166 0 2,236 (9,420) 104,015 113,550

 Annual Financial Statements 20
Notes to the financial statements – Notes to the balance sheet

2 Receivables

millions of €

Dec. 31, 2020 Dec. 31, 2019

Trade accounts receivable 0 29
of which: with a remaining maturity of more than one year € 0 million
(Dec. 31, 2019: € 0 million)
Receivables from affiliated companies 8,179 6,665
of which: with a remaining maturity of more than one year € 0 million
(Dec. 31, 2019: € 0 million)
Receivables from associated and related companies 1 1
of which: with a remaining maturity of more than one year € 0 million
(Dec. 31, 2019: € 0 million)

8,180 6,695

The decrease in trade accounts receivable mainly relates to receivables at the Telekom Global Carrier business area
regarding wholesale telecommunications services for international carriers; these receivables were transferred to
­Telekom Deutschland in connection with the spin-off of the DTGC business area.

Receivables from affiliated companies consist of receivables related to intercompany cash management amounting to
EUR 5,970 million (December 31, 2019: EUR 5,312 million), financial receivables amounting to EUR 1,393 million
­(December 31, 2019: EUR 409 million), other receivables of EUR 630 million (December 31, 2019: EUR 594 million), and
intercompany trade accounts receivable amounting to EUR 186 million (December 31, 2019: EUR 350 million). The
­increase in receivables from affiliated companies primarily results from short-term loans issued to Deutsche Telekom
Europe B.V., Maastricht, in the amount of EUR 990 million.

Receivables from associated and related companies did not include any trade accounts receivable in the reporting
year (December 31, 2019: EUR 1 million).
 Annual Financial Statements 21
Notes to the financial statements – Notes to the balance sheet

3 Other assets

millions of €

Dec. 31, 2020 Dec. 31, 2019

Tax receivables
Income tax receivables
Corporate income tax 119 232
Trade income tax 97 145
216 377

Other tax receivables 0 0

216 377

Accrued interest 324 384

Receivables from derivatives 241 268
Receivables from collateral 34 2
Receivables from reimbursements 12 144
Receivables from employees 7 6
Miscellaneous other assets 130 132
748 936

964 1,313

Income tax receivables relate to corporate and trade income tax receivables for the 2020 financial year as well as
prior years from overpayments to the tax authorities and municipalities.

Accrued interest is mainly from interest rate derivatives.

Receivables from derivatives mainly relate to unrealized settlement gains and losses from expired hedge transactions
for revolving hedging (roll-over gains or losses).

Collateral is used to hedge the credit risk from derivative financial instruments. In this case, Deutsche Telekom transfers
collateral in the form of cash to its contracting parties. The increase in receivables from collateral is attributable to
regular fluctuation in market values resulting from changes in exchange rates, interest rates, and maturities of derivative
financial instruments.

The decrease in receivables from reimbursements relates mainly to the roaming discount business (interoperator
­discount services) that was transferred to Telekom Deutschland in connection with the spin-off of the DTGC business area.

Miscellaneous other assets mainly include receivables of EUR 91 million from Deutsche Telekom Trust e. V., Bonn, in
the amount of the credit on trust and securities accounts in connection with pensions and lifetime work accounts.

Of the receivables reported under other assets, EUR 249 million (December 31, 2019: EUR 260 million) have a
­remaining maturity of more than one year.
 Annual Financial Statements 22
Notes to the financial statements – Notes to the balance sheet

4 Cash and cash equivalents

millions of €

Dec. 31, 2020 Dec. 31, 2019

Cash in hand and cash in banks 3,201 2,076

3,201 2,076

The total time to maturity of cash and cash equivalents is less than three months.

5 Prepaid expenses and deferred charges

millions of €

Dec. 31, 2020 Dec. 31, 2019

Personnel costs 228 148
Loan discounts 172 181
Loan premium 18 114
Other prepaid expenses 19 20

437 463

Deferred personnel costs in the reporting period mainly comprise prepaid expenses to the Federal Agency for 2021 and
prepaid remuneration.

Prepaid expenses and deferred charges for loan discounts predominantly relate to loan liabilities to Deutsche Telekom
International Finance B.V., Maastricht.

The loan premium results from the granting of early repayment options for loans issued to T-Mobile USA, Inc., Bellevue.
Early repayments of loans by T-Mobile USA, Inc., Bellevue, in the reporting year reduced the loan premium by
EUR 96 million year-on-year.

6 Difference between plan assets and corresponding liabilities

millions of €

Dec. 31, 2020 Dec. 31, 2019

Settlement amount of the netted liabilities from phased retirement arrangements,
lifetime work accounts, and long-term accounts 68 58
Fair value of the CTA assets 77 71
Acquisition cost of the CTA assets 72 67
Netted expenses 1 4
Netted income 2 4
Excess of plan assets above obligations from outstanding settlement amounts from
phased retirement arrangements and long-term accounts 9 13

The difference between plan assets and corresponding liabilities amounting to EUR 9 million relates exclusively to the
netting of marketable securities, cash in banks, and reinsurance in the amount of EUR 77 million with the outstanding
­settlement amounts for accruals for phased retirement and obligations relating to lifetime work and long-term accounts
amounting to EUR 68 million. The marketable securities, cash in banks and reinsurance that were transferred to a trustee
serve as security for employees’ entitlements from phased retirement arrangements, lifetime work accounts, and ­long-term
 Annual Financial Statements 23
Notes to the financial statements – Notes to the balance sheet

accounts under the CTA. The fair value of the CTA assets covers Deutsche Telekom’s discounted outstanding settlement
amounts relating to obligations from phased retirement, lifetime work and long-term accounts at December 31, 2020 in
the amount required by law. The amortized cost of the CTA assets for lifetime work accounts corresponds to the fair value.
The acquisition cost of the CTA assets for phased retirement and long-term accounts is lower than the fair value. The
­resulting difference of EUR 5 million (fair value of EUR 62 million, cost of acquisition EUR 57 million) is subject to a restriction
on distribution.

The netted expenses and income are reported in net interest expense.

The CTA assets are valued as of the respective balance sheet date taking into account current prices.

7 Shareholders’ equity

millions of €

Dec. 31, 2020 Dec. 31, 2019

Capital stock 12,189 12,189
Less the imputed value of treasury shares (46) (47)
Issued capital 12,143 12,142

Additional paid-in capital 31,340 31,334

31,340 31,334

Retained earnings
other retained earnings 9,545 9,545
9,545 9,545

Unappropriated net income 5,129 5,460

58,157 58,481

Shareholders’ equity decreased by EUR 324 million year-on-year. The changes are described in detail in the following
sections.

8 Capital stock

Authorized and Authorized capital Contingent capital

issued capital (not issued) (not issued)
thousands thousands thousands thousands thousands thousands
of shares of € of shares of € of shares of €
As of Dec. 31, 2019 4,761,459 12,189,334 1,406,250 3,600,000 468,750 1,200,000
Change – – – – – –

As of Dec. 31, 2020 4,761,459 12,189,334 1,406,250 3,600,000 468,750 1,200,000

As of December 31, 2020, Deutsche Telekom’s capital stock totaled approximately EUR 12.2 billion. The capital stock is
divided into 4,761,458,596 no par value registered shares. This results in a calculated value of EUR 2.56 per share. Each
share entitles the holder to one vote.
 Annual Financial Statements 24
Notes to the financial statements – Notes to the balance sheet

As of December 31, 2020, the shareholders listed in the following table had shareholdings in Deutsche Telekom subject to
reporting requirements in accordance with § 33 (1) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG).
The remaining shares were in free float.

Dec. 31, 2020

thousands of shares  %
Federal Republic of Germany 689,601 14.48
KfW Bankengruppe, Frankfurt/Main, Germany 829,179 17.41
BlackRock, Inc., Wilmington, DE, United States* 234,194 4.92

*As of the latest voting rights notification, published on September 22, 2017

Authorized capital
As of December 31, 2020, Deutsche Telekom had the following authorized capital:

thousands thousands Authorization

of € of shares Purpose until
Capital increase against
cash contribution/
2017 Authorized capital 3,600,000 1,406,250 contribution in kind May 30, 2022

2017 Authorized capital

The shareholders’ meeting on May 31, 2017 authorized the Board of Management to increase the capital stock with the
approval of the Supervisory Board by up to EUR 3,600,000,000 by issuing up to 1,406,250,000 no par value registered
shares against cash and/or non-cash contributions in the period ending May 30, 2022. This authorization may be
­exercised in full or on one or more occasions in partial amounts. The Board of Management is authorized, subject to the
approval of the Supervisory Board, to exclude residual amounts from shareholders’ subscription rights. Furthermore,
the Board of Management is authorized, subject to the approval of the Supervisory Board, to disapply shareholders’
subscription rights in the event of capital increases against non-cash contributions when issuing new shares for ­business
combinations or acquisitions of companies, parts thereof or interests in companies, including increasing existing invest-
ment holdings, or other assets eligible for contribution for such acquisitions, including receivables from the Company.
­However, the value of the new shares for which shareholders’ subscription rights have been disapplied on the basis of
this authorization – together with the value of the shares or conversion and/or option rights or obligations under bonds
issued or sold since May 31, 2017 subject to the disapplication of subscription rights – must not exceed 20 % of the total
share capital; the latter is defined as the amount existent as of May 31, 2017, upon entry of the authorization, or upon the
issue of the new shares, whichever amount is lowest. If the issue or sale is carried out in analogous or mutatis mutandis
application of § 186 (3) sentence 4 AktG, this shall also constitute the disapplication of subscription rights. The Board of
Management is also authorized, subject to the approval of the Supervisory Board, to determine the rights accruing to
the shares in the future and the conditions for issuing shares.

The 2017 authorized capital was entered into the commercial register on July 11, 2017.

Contingent capital
As of December 31, 2020, Deutsche Telekom had the following contingent capital:

thousands thousands
of € of shares Purpose
Servicing convertible bonds and/or
bonds with warrants issued
2018 contingent capital 1,200,000 468,750 on or before May 16, 2023
 Annual Financial Statements 25
Notes to the financial statements – Notes to the balance sheet

2018 contingent capital

The Company’s capital stock was contingently increased by up to EUR 1,200,000,000 as of December 31, 2020, comprising
up to 468,750,000 no par value shares. The contingent capital increase will be implemented only to the extent that

a) the holders or creditors of bonds with warrants, convertible bonds, profit participation rights and/or participating
bonds (or combinations of these instruments) with options or conversion rights, which are issued or guaranteed by
Deutsche Telekom or its direct or indirect majority holdings by May 16, 2023, on the basis of the authorization resolution
granted by the shareholders’ meeting on May 17, 2018, make use of their option and/or conversion rights or

b) those obligated as a result of bonds with warrants, convertible bonds, profit participation rights, and/or participating
bonds (or combinations of these instruments), which are issued or guaranteed by Deutsche Telekom or its direct or
indirect majority holdings by May 16, 2023, on the basis of the authorization resolution granted by the shareholders’
meeting on May 17, 2018, fulfill their option or conversion obligations (including in the event that, in exercising a
­repayment option when the final due date of the bond is reached, Deutsche Telekom grants shares in Deutsche Telekom
completely or partially in lieu of cash payment of the amount due)

and other forms of fulfillment are not used. The new shares shall participate in profits starting at the beginning of the
financial year in which they are issued as the result of the exercise of any option or conversion rights or the fulfillment of
any option or conversion obligations. The Supervisory Board is authorized to amend § 5 (3) of Deutsche Telekom’s
­Articles of Incorporation in accordance with the particular usage of the contingent capital and after the expiry of all the
option or conversion periods.

Treasury shares
The amount of capital stock assigned to treasury shares was approximately EUR 46 million at December 31, 2020. This
equates to 0.4 % of the capital stock. At 18,002,303 shares, the holding of treasury shares breaks down as follows:

Number
Share Matching Plan 104,122
Shares formerly deposited with a trustee 17,898,181

18,002,303

The year-on-year decrease in treasury shares was due exclusively to the transfer of a total of 523 thousand treasury
shares to the custody accounts of eligible participants in the Share Matching Plan.

Authorization to acquire and use treasury shares

The shareholders’ meeting resolved on May 25, 2016 to authorize the Board of Management to purchase shares in the
Company by May 24, 2021, with the amount of capital stock accounted for by these shares totaling up to
EUR 1,179,302,878.72, provided the shares to be purchased on the basis of this authorization in conjunction with the
other shares of the Company which the Company has already purchased and still possesses or are to be assigned to it
under § 71d and § 71e AktG do not at any time account for more than 10 % of the Company’s capital stock. Moreover, the
requirements under § 71 (2) sentences 2 and 3 AktG must be complied with. Shares shall not be purchased for the
­purpose of trading in treasury shares. This authorization may be exercised in full or in part. The purchase can be carried
out in partial tranches spread over various purchase dates within the authorization period until the maximum purchase
volume is reached. Dependent Group companies of Deutsche Telekom within the meaning of § 17 AktG or third parties
acting for the account of Deutsche Telekom or for the account of dependent Group companies of Deutsche Telekom
within the meaning of § 17 AktG are also entitled to purchase the shares. The shares are purchased through the stock
exchange in adherence to the principle of equal treatment (§ 53a AktG). Shares can instead also be purchased by means
of a public purchase or share exchange offer addressed to all shareholders, which, subject to a subsequently approved
exclusion of the right to offer shares, must also comply with the principle of equal treatment.
 Annual Financial Statements 26
Notes to the financial statements – Notes to the balance sheet

The shares may be used for one or several of the purposes permitted by the authorization granted by the shareholders’
meeting on May 25, 2016 under item 6 on the agenda. The shares may also be used for purposes involving an exclusion
of subscription rights. They may also be sold on the stock market or by way of an offer to all shareholders, or withdrawn.
The shares may also be used to fulfill the rights of Board of Management members to receive shares in Deutsche Telekom,
which the Supervisory Board has granted to these members as part of the arrangements governing the compensation
of the Board of Management, on the basis of a decision by the Supervisory Board to this effect.

Under the resolution of the shareholders’ meeting on May 25, 2016, the Board of Management is also authorized to
­acquire the shares through the use of equity derivatives.

On the basis of the authorization by the shareholders’ meeting on May 25, 2016 described above and corresponding
authorizations by the shareholders’ meetings on May 12, 2011 and May 24, 2012, 110 thousand shares were acquired in
June 2011, 206 thousand shares in September 2011, and 268 thousand shares in January 2013. The total acquisition
volumes amounted to EUR 2,762 thousand in the 2011 financial year, and EUR 2,394 thousand in the 2013 financial year
(excluding transaction costs). This increased the number of treasury shares by 316 thousand and 268 thousand, respectively.
Further, 90 thousand shares and 860 thousand shares were acquired in September and October 2015, respectively, for
an aggregate amount of EUR 14,787 thousand (excluding transaction costs); these acquisitions increased the number
of treasury shares by 950 thousand.

No treasury shares were acquired in the reporting period.

As part of the Share Matching Plan, a total of 2 thousand shares were transferred free of charge to the custody accounts
of eligible participants in each of the 2012 and 2013 financial years. A further 90 thousand treasury shares were
­transferred free of charge in the 2014 financial year. Additional 140 thousand treasury shares were transferred in the
2015 financial year. In the 2016 financial year, 232 thousand treasury shares were transferred. 300 thousand treasury
shares were transferred in the 2017 financial year, and 312 thousand treasury shares were transferred in the 2018 financial
year. In the 2019 financial year, 448 thousand treasury shares were transferred to the custody accounts of eligible
­participants. Transfers of treasury shares to the custody accounts of employees of Deutsche Telekom are free of charge.
In cases where treasury shares are transferred to the custody accounts of employees of other Group companies, the
costs have been transferred at fair value to the respective Group company since the 2016 financial year.

In all months of the reporting year with the exception of March and August, treasury shares (523 thousand in total) were
reallocated and transferred to the custody accounts of eligible participants of the Share Matching Plan.

As of December 31, 2020, disposals of treasury shares resulting from the transfers in the reporting period accounted for
0.01 %, or EUR 1,338 thousand, of capital stock. Gains on disposal arising from transfers of treasury shares amounted to
EUR 7,426 thousand. Transfers of treasury shares increased retained earnings by EUR 36 thousand and additional
­paid-in capital by EUR 6,052 thousand. In the reporting year, 266 thousand treasury shares with a fair value of
EUR 3,885 thousand were billed to other Group companies.

As part of the acquisition of VoiceStream Wireless Corp., Bellevue, and Powertel Inc., Bellevue, in 2001 Deutsche Telekom
issued new shares from authorized capital to a trustee, for the benefit of holders of warrants, options and conversion
rights, among others. These options and conversion rights fully expired in the 2013 financial year. As a result, the trustee
no longer had any obligation to fulfill any claims in accordance with the purpose of the deposit. The trust relationship
was terminated at the start of 2016 and the deposited shares were transferred free of charge to a custody account of
Deutsche Telekom. The previously deposited shares are accounted for in the same way as treasury shares in accordance
with § 272 (1a) HGB. On the basis of authorization by the shareholders’ meeting on May 25, 2016, the treasury shares
acquired free of charge may be used for the same purposes as the treasury shares acquired for a consideration. In the
reporting year, 558 thousand previously deposited shares were reclassified for issue to eligible participants of the Share
Matching Plan (prior year: 61 thousand shares).
 Annual Financial Statements 27
Notes to the financial statements – Notes to the balance sheet

9 Additional paid-in capital

Additional paid-in capital increased by EUR 6,052 thousand in the 2020 financial year. This resulted from transfers of
the treasury shares held by Deutsche Telekom to custody accounts of participants in the Share Matching Plan.

10 Retained earnings

Retained earnings include the transfers from income after taxes from prior years to other retained earnings. The
­increase in retained earnings of EUR 36 thousand in the reporting year was exclusively attributable to transfers of the
treasury shares held by Deutsche Telekom to custody accounts of participants in the Share Matching Plan.

Restriction on distribution
The amount that is subject to a restriction on distribution in accordance with § 268 (8) sentence 3 HGB is attributable
to the measurement of the CTA assets for accruals for pensions and similar obligations at fair value amounting to EUR
418 million, to the measurement of the CTA asset for phased retirement obligations amounting to EUR 4 million, and to
the measurement of the CTA asset for long-term accounts amounting to EUR 1 million. Deferred tax liabilities account
for EUR 48 million of the difference of EUR 423 million, resulting in a net amount of EUR 375 million. After accounting
for deferred tax assets, also of EUR 48 million, which are offset against the deferred tax liabilities, the amount that is
subject to a restriction on distribution in accordance with § 268 (8) HGB is EUR 423 million.

The amount that is subject to a restriction on distribution in accordance with § 253 (6) sentence 2 HGB is attributable
to the difference in the amount of EUR 449 million resulting from changed measurement principles for pension a­ ccruals
pursuant to § 253 (6) sentence 1 HGB.

Unappropriated net income can be distributed in full as the amount of EUR 872 million that is subject to a restriction on dis­
tribution pursuant to § 268 (8) sentence 3 HGB and § 253 (6) sentence 2 HGB is covered entirely by freely available reserves.

11 Stock-based compensation plans

Share Matching Plan

Since the 2011 financial year, specific executives have been contractually obligated to invest a minimum of 10 % of their
short-term variable remuneration component, which is based on the achievement of targets set for each person for the
financial year (Short-Term Incentive/Variable I), in Deutsche Telekom shares. In the 2019 financial year, the upper limit
for personal investment was raised from 33.3 % to 50 % of the short-term variable remuneration component.
Deutsche Telekom will award one additional share for every share acquired as part of this executive’s aforementioned
personal investment (Share Matching Plan). These shares will be allotted to the beneficiaries of this plan on expiration
of the ­four-year lock-up period.

Since the 2015 financial year, further executives who are not contractually obligated to participate in the Share Matching
Plan have been given the opportunity to participate on a voluntary basis. This offer is only made when the Group’s free
cash flow target for the preceding year has been achieved. The conditions of participation in the voluntary Share
­Matching Plan were updated in the 2019 financial year. Since then, participation has been open to all executives in
certain management groups. To participate, the executives invest at least 10 % and – since the 2019 financial year – a
maximum of 50 % of the target amount (100 %) of their short-term remuneration component (Short-Term Incentive) in
shares of Deutsche Telekom. Deutsche Telekom will award additional shares for every share acquired as part of this
­executive’s aforementioned personal investment (Share Matching Plan). The number of additional shares granted will
depend on the management group to which the executive belongs. The additional shares will be allotted to the
­beneficiaries of this plan on expiration of the four-year lock-up period.

For the compensation system of Board of Management members who also participate in the Share Matching Plan,
please refer to the “Compensation report” in the combined management report.
 Annual Financial Statements 28
Notes to the financial statements – Notes to the balance sheet

Long-Term Incentive Plan (LTI)

Executives from the Deutsche Telekom Group can participate in a Long-Term Incentive Plan provided they meet certain
eligibility requirements or have an individual contractual commitment. At the inception of the plan, the participating
executives receive a package of virtual shares with a value between 10 % and 43 % of the participant’s annual target
salary depending on the extent to which defined criteria are fulfilled. The number of virtual shares is contingent on the
participant’s annual target salary, management group assignment, and, since the 2019 financial year, on the achievement
of the collective targets (financial and strategic targets) of the organizational unit to which the executive belongs.

Over the term of the four-year plan, the value of the virtual shares changes in line with Deutsche Telekom share price
development. The number of virtual shares will change on achievement of the targets for four equally weighted
­per­formance indicators (return on capital employed, adjusted earnings per share, employee satisfaction, and customer
satisfaction), to be determined at the end of each year. In addition, a dividend is granted for the virtual shares over the
term of the plan. This dividend is reinvested in virtual shares, increasing the number of virtual shares held by each plan
participant. At the end of the four-year plan term, the final number of virtual shares will be converted on the basis of a
share price calculated in a reference period at the end of the plan and paid out in cash together with the dividend for the
last year of the plan, which is not converted into virtual shares.

12 Accruals for pensions and similar obligations

millions of €

Dec. 31, 2020 Dec. 31, 2019

Direct pension obligations 2,417 2,323
of which: parallel obligation € 1.1 billion (Dec. 31, 2019: € 1.1 billion)
Indirect pension obligations 31 28
2,448 2,351

Accruals for collateral promise for pensions 1,512 1,429

3,960 3,780

The carrying amounts of the pension obligations were calculated on the basis of the actuarial reports.

The pension obligations to non-civil servant employees are based on indirect and direct pension commitments. The
indirect commitments include the obligations of Versorgungsanstalt der Deutschen Bundespost (VAP) and obligations
of Telekom-Pensionsfonds a. G. (TPF), Bonn.

Deutsche Telekom’s direct pension commitments comprise direct commitments with and without VAP parallel
­obligations. The VAP parallel obligations are based on direct legal claims against Deutsche Telekom which were
­originally attributable to VAP. VAP’s obligations are therefore suspended.

The VAP benefits supplement statutory pension benefits up to the level specified in the Articles of Incorporation and
generally depend on the level of employee compensation and the eligible periods of service of the eligible employees.
As part of the restructuring of the corporate pension plan in 1997, the employer and the trade unions entered into an
agreement stipulating measures for the protection of vested VAP benefits.

Pursuant to this agreement, the benefit obligations due to retirees and employees approaching retirement will remain
unchanged. For younger employees with vested benefits, the obligations have been converted into an initial amount
based on the number of years of coverage to date, which was then credited to a capital account held by the employer
(cash balance plan). Deutsche Telekom credits this account on an annual basis; when the insured event occurs, the
­account balance is paid out in full or in installments, or can be converted into a life-long pension.

The form of implementation changed as a result of the collective agreement on the restructuring of the corporate
­pension plan at Deutsche Telekom signed on August 17, 2005. According to this agreement, all company pension
­benefits for active and inactive employees will henceforth be granted directly and with a legal claim.
 Annual Financial Statements 29
Notes to the financial statements – Notes to the balance sheet

The assets allocated to Deutsche Telekom in TPF exceed the share of indirect pension obligations in TPF in both years.
Thus, the indirect pension obligations in TPF are not reported in the balance sheet.

Pension accruals are measured using the projected unit credit method since the introduction of BilMoG effective
­January 1, 2010. The addition resulting from the change in the measurement of pension accruals is spread over 15 years
in accordance with transitional provisions (Art. 67 (1) sentence 1 EGHGB) of BilMoG.

Pension accruals not shown in the balance sheet as a consequence of the transitional provisions of BilMoG amounted
to EUR 62 million at December 31, 2020 (December 31, 2019: EUR 79 million) for direct pension obligations and
EUR  2 million (December 31, 2019: EUR 2 million) for indirect pension obligations.

Calculations at the balance sheet date were based on the following assumptions:

in %

2020
Notional interest rate 2.30
Projected salary increase 2.50
Projected pension increase
General 1.50
According to Articles of Incorporation 1.00
Fluctuation 4.00

Pension obligations were calculated using the biometrics of the Heubeck 2018 G life expectancy tables.

Based on the actuarial reports, an accrual for direct pension obligations amounting to EUR 2,417 million is recognized at
the balance sheet date (December 31, 2019: EUR 2,323 million).

This figure is the result of the netting of the settlement amount of the direct pension obligations reduced by the risk
component totaling EUR 3,936 million as of December 31, 2020 with the fair value of the plan assets measured at mar-
ket values of EUR 1,475 million and the remaining addition (BilMoG) amounting to EUR 62 million. The accrual also in-
cludes obligations arising from the risk component in the amount of EUR 18 million, which due to an amendment agree-
ment concluded in the reporting year with Deutsche Telekom Trust e. V., Bonn, no longer constitute pension obligations
within the meaning of the trust agreement and are reported on an unnetted basis accordingly. In the previous year, the
full settlement amount of the direct pension obligations amounting to EUR 3,855 million had been netted with the fair
value of the plan assets of EUR 1,453 million and the remaining addition (BilMoG) amounting to EUR 79 million.

The acquisition cost of the plan assets totaled EUR 1,057 million (December 31, 2019: EUR 1,057 million) and was lower
than the fair value. The difference of EUR 418 million by which the fair value exceeds the acquisition cost of the asset is
subject to a restriction on distribution.

In the reporting year, expenses in the amount of EUR 270 million (2019: EUR 315 million) were offset against income
from the netted assets of EUR 24 million (2019: EUR 192 million) in net interest income/expense.

The CTA asset is valued as of the respective balance sheet date taking into account current prices.

The accruals for collateral promise for pensions comprise the economic obligations assumed by Deutsche Telekom
with respect to the liabilities for pension claims of the companies Deutsche Telekom Außendienst GmbH, Bonn,
­Deutsche Telekom Technik GmbH, Bonn, and Deutsche Telekom Service GmbH, Bonn.

In accordance with the Act on the Implementation of the Mortgage Credit Directive and Amending Commercial Rules
(Gesetz zur Umsetzung der Wohnimmobilienkreditrichtlinie und zur Änderung handelsrechtlicher Vorschriften), which
entered into force on March 21, 2016, the average market interest rate for discounting pension accruals is calculated
over the past ten financial years (until the 2015 financial year: seven financial years). The difference between the carrying
amount of the pension accruals and accruals for the collateral promise for pensions using the average market interest rate
over the past ten financial years and the carrying amount of the accruals using the average market interest rate over the
 Annual Financial Statements 30
Notes to the financial statements – Notes to the balance sheet

past seven financial years amounted to EUR 449 million as of December 31, 2020 (December 31, 2019: EUR 476 million).
The difference is subject to a restriction on distribution.

The increase in accruals for pensions and similar obligations is mainly attributable to a lower notional interest rate for
the calculation of pension accruals compared with the prior year.

13 Tax accruals

millions of €

Dec. 31, 2020 Dec. 31, 2019

Income taxes 359 369
Other taxes 53 42

412 411

Income tax accruals relate to corporate income tax and trade income tax from the reporting year and prior years.

The majority of other taxes related to value-added tax from prior years.

14 Other accruals

millions of €

Dec. 31, 2020 Dec. 31, 2019

Employee benefits
Civil Service Health Insurance Fund 1,088 851
Phased retirement arrangements 454 395
Early retirement (Civil Service Pension Fund) 175 335
Miscellaneous obligations 204 194

Other obligations
Loss contingencies from pending transactions 194 134
Outstanding invoices 153 176
Loss contingencies from derivatives 98 235
Litigation risks 72 121
Miscellaneous other accruals 153 161

2,591 2,602

The accrual for the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK) covers the risk of having
to make compensation payments to the PBeaKK. The risk of utilization arises if a deficit were to remain after scheduled
withdrawal from the fund’s assets.

The accrual for phased retirement relates to both the top-up payments and outstanding settlement amounts for obli-
gations to civil servants, to the extent not covered by the CTA assets. The increase in the accrual is mainly attributable
to the new phased retirement arrangements made in the reporting year.

Civil servants working at Deutsche Telekom who have reached the age of 55 and fulfill all the criteria set out in the Act on
the Staff Structure at the Residual Special Asset of the Federal Railways and the Successor Companies of the Former
­Deutsche Bundespost (BEDBPStruktG) enacted in 1993 as amended on December 3, 2020 can apply for early retirement.
Deutsche Telekom is required to offset the additional costs from early retirement arising for the Civil Service Pension Fund
at the Federal Agency in accordance with the BEDBPStruktG by making corresponding payments to the Civil Service
­Pension Fund. On July 14, 2020, the Board of Management resolved to apply the statutory regulations again in December 2020
and in 2021 within the limits of the budget agreed for this. Accruals arising from the arrangement for early retirement for
civil ­servants were recognized in the reporting year in the amount of expected utilization in 2021.
 Annual Financial Statements 31
Notes to the financial statements – Notes to the balance sheet

Accruals for loss contingencies arising from pending transactions relate primarily to agreements concluded with
­partners outside the Deutsche Telekom Group resulting from the staff surplus.

Accruals for outstanding invoices were recognized for consulting and IT costs in particular.

Accruals for loss contingencies from derivatives were recognized in the reporting year principally for embedded
­derivatives vis-à-vis T-Mobile USA, Inc., Bellevue, as well as for external currency derivatives. The year-on-year change
is mainly attributable to the decrease in the accrual for loss contingencies for external currency derivatives and
­embedded derivatives vis-à-vis T-Mobile USA, Inc., Bellevue.

The accruals for litigation risks mainly comprised risk accruals for ongoing legal disputes.

Miscellaneous other accruals included accruals for environmental clean-up expenses, interest claims by third parties,
transfer premiums in connection with staff restructuring, asset retirement obligations, and archiving expenses.

Deutsche Telekom made use of the option to retain the higher carrying amount of accruals under the transitional
­provisions of BilMoG. Retaining the higher carrying amount resulted in an excess of miscellaneous other accruals of
EUR 18 thousand as of December 31, 2020.

15 Liabilities

millions of €
Dec. 31, 2020 Dec. 31, 2019
Total of which Total of which
of which: of which:
Due within Due due Due within Due due
1 year > 1 year > 5 years 1 year > 1 year > 5 years
Debt
Bonds and debentures 7,068 – 7,068 6,989 5,884 421 5,463 5,384
Liabilities to banks 3,884 1,144 2,740 1,275 5,044 1,601 3,443 1,003
10,952 1,144 9,808 8,264 10,928 2,022 8,906 6,387

Remaining liabilities
Advances received 0 0 – – 0 0 – –
Trade accounts payable 129 129 – – 216 216 – –
Payables to affiliated companies 36,059 10,784 25,275 14,539 42,436 12,723 29,713 16,405
Liabilities to associated
and related companies 14 14 – – 13 13 – –
Other liabilities 4,392 2,596 1,796 871 5,111 2,976 2,135 934
of which: from taxes 143 143 – – 217 217 – –
of which: from social security 16 6 10 2 15 4 11 2
40,594 13,523 27,071 15,410 47,776 15,928 31,848 17,339

Total liabilities 51,546 14,667 36,879 23,674 58,704 17,950 40,754 23,726

Bonds and debentures exclusively relate to fixed-rate bonds in the amount of EUR 7,068 million.
 Annual Financial Statements 32
Notes to the financial statements – Notes to the balance sheet

The structure of bonds and debentures is as shown below:

millions of €

Due by December 31 up to 1% up to 2% up to 3% up to 4% up to 5% Total

2021 – – – – – –
2022 – – – – – –
2023 – – 79 – – 79
2024 – – – – – –
2025 – – – – – –
2026 to 2050 2,030 2,450 659 1,696 154 6,989

2,030 2,450 738 1,696 154 7,068

Liabilities to banks mainly relate to long-term loans and promissory notes. The EUR 1.2 billion decrease is due in
­particular to the repayment of short-term borrowings.

The decrease in trade accounts payable mainly concerns liabilities at the Telekom Global Carrier business area regarding
wholesale telecommunications services for international carriers that were transferred to Telekom Deutschland in
­connection with the spin-off of the DTGC business area.

Payables to affiliated companies consist primarily of financial liabilities of EUR 29.6 billion (December 31, 2019:
EUR 33.8 billion) and liabilities arising from cash management of EUR 6.1 billion (December 31, 2019: EUR 8.1 billion). In
addition, payables to affiliated companies in the reporting year relate to other liabilities of EUR 312 million (December
31, 2019: EUR 300 million) and trade accounts payable of EUR 48 million (December 31, 2019: EUR 217 million).
EUR 28.0 billion (December 31, 2019: EUR 33.4 billion) of payables to affiliated companies related to liabilities to Deutsche
Telekom International Finance B.V., Maastricht. Financial liabilities to affiliated companies decreased due in particular to
loan repayments to Deutsche Telekom International Finance B.V., Maastricht, in the amount of EUR 5.4 billion. An
­increase in payables to T-Mobile Austria Holding GmbH, Wien, in the amount of EUR 1.2 billion had an offsetting effect.

Deutsche Telekom International Finance B.V., Maastricht, issues bonds that it passes on to Group companies. The resulting
liabilities of Deutsche Telekom to Deutsche Telekom International Finance B.V., Maastricht, are as shown below. In
­individual cases, the year in which Deutsche Telekom International Finance B.V., Maastricht, issues financial liabilities
outside the Group is not the same as the year in which they are passed on to Deutsche Telekom. The interest rate of
variable-interest liabilities as depicted are based on the most recent interest rate fixing valid at December 31, 2020.

2003 tranche Nominal amount in currency Interest rate in % Term

EUR 500,000,000 7.580 2033

2008 tranche Nominal amount in currency Interest rate in % Term

EUR 200,000,000 5.926 2023

2009 tranche Nominal amount in currency Interest rate in % Term

EUR 220,000,000 5.450 2021
GBP 700,000,000 6.575 2022
 Annual Financial Statements 33
Notes to the financial statements – Notes to the balance sheet

2010 tranche Nominal amount in currency Interest rate in % Term

GBP 300,000,000 7.715 2030
EUR 300,000,000 4.625 2030

2012 tranche Nominal amount in currency Interest rate in % Term

EUR 650,000,000 2.875 2024
USD 1,000,000,000 5.000 2042

2013 tranche Nominal amount in currency Interest rate in % Term

EUR 870,778,000** 2.255 2021
EUR 1,250,000,000 4.375 2022
EUR 500,000,000 5.000 2025
EUR 750,000,000 3.380 2028
USD 1,815,000,000 8.023 2030
USD 1,685,000,000 6.800 2030
USD 500,000,000 9.330 2032

2016 tranche Nominal amount in currency Interest rate in % Term

EUR 357,751,000** 0.380 2021
USD 282,005,000** 2.080 2021
EUR 1,750,000,000 0.755 2023
USD 750,000,000 2.615 2023
GBP 300,000,000 1.380 2023
EUR 1,500,000,000 1.630 2028

2017 tranche Nominal amount in currency Interest rate in % Term

EUR 610,371,000** 0.526 2021
USD 274,431,000** 2.971 2022
EUR 1,250,000,000 1.026 2024
EUR 750,000,000 0.776 2024
EUR 750,000,000 1.276 2026
USD 1,250,000,000 3.751 2027
EUR 1,250,000,000 1.526 2027
HKD 1,300,000,000 3.101 2027
GBP 250,000,000 2.401 2029

2018 tranche Nominal amount in currency Interest rate in % Term

EUR 400,000,000 0.151* 2022
EUR 500,000,000 0.776 2022
GBP 300,000,000 2.651 2025
EUR 1,000,000,000 1.526 2025
USD 1,200,000,000 4.526 2028
EUR 1,000,000,000 2.151 2029
EUR 250,000,000 2.351 2033
USD 550,000,000 4.901 2038

* Variable interest rate

** Partially repaid in 2020
 Annual Financial Statements 34
Notes to the financial statements – Notes to the balance sheet

Liabilities to associated and related companies include trade accounts payable amounting to EUR 5 million
(December 31, 2019: EUR 8 million).

The following table shows the composition of other liabilities:

millions of €

Dec. 31, 2020 Dec. 31, 2019

Liabilities from collateral 1,530 1,273
Liabilities from early retirement arrangements 1,143 1,097
Liabilities from interest 616 711
Liabilities from promissory notes 501 701
Liabilities from derivatives 303 594
Tax liabilities 143 217
Liabilities to employees 73 64
Liabilities from interoperator discount services – 178
Miscellaneous other liabilities 83 276

4,392 5,111

Collateral is used to hedge the credit risk from derivative financial instruments. In this case, Deutsche Telekom receives
collateral in the form of cash from its contracting parties. The increase in liabilities from collateral is attributable to
regular fluctuation in market values resulting from changes in exchange rates and interest rates.

Liabilities from early retirement arrangements for civil servants exist vis-à-vis the Civil Service Pension Fund and arise
from payment obligations under agreements that have already been concluded. The obligations are payable in up to
seven annual installments following retirement.

Liabilities from interest almost exclusively relate to deferred interest and unrealized settlement gains and losses from
the close out of interest rate hedging derivatives.

Liabilities from promissory notes relate to insurance companies and other institutional investors. The decrease is due
to repayments in the amount of EUR 200 million.

Liabilities from derivatives mainly relate to unrealized settlement gains and losses from expired and terminated hedge
transactions. The decrease in liabilities is due among other things to the disposal of embedded derivatives vis-à-vis
T-Mobile USA, Inc., Bellevue.

Tax liabilities in the reporting year exclusively relate to liabilities from other taxes in the amount of EUR 143 million
­(December 31, 2019: EUR 217 million). The liabilities from other taxes consisted primarily of value-added tax still to be
paid relating to the fiscal entity parent company amounting to EUR 122 million and wage tax liabilities of EUR 20 million
­resulting from the December payroll that will not fall due until the following month.

Liabilities to employees resulted mainly from severance agreements and short-term payment obligations arising from
the company pension plan.

The liabilities from interoperator discount services were transferred to Telekom Deutschland in connection with the
spin-off of the DTGC business area.

Miscellaneous other liabilities consist mainly of liabilities from the staff restructuring (e.g., transfer premiums for civil
servants). In the previous year, this item had included liabilities of EUR 150 million arising from the agreement reached
with the Federal Republic of Germany to cease the Toll Collect arbitration proceedings. The last tranche was settled in
the reporting year.
 Annual Financial Statements 35
Notes to the financial statements – Notes to the statement of income

16 Deferred income

The year-on-year increase in deferred income of EUR 8 million is primarily attributable to the addition of a loan premium
from the issuance of a bond.

17 Deferred taxes

Deferred tax assets exceeded deferred tax liabilities in the reporting year. Deutsche Telekom does not exercise the
option according to § 274 (1) HGB of recognizing the resulting tax relief as deferred tax assets. Deferred tax assets and
liabilities mainly related to differences between carrying amounts for tax purposes and carrying amounts under G ­ erman
GAAP in the balance sheet items property, technical equipment and machinery, as well as accruals. When determining
deferred taxes, an effective tax rate which covers corporate income tax, the solidarity surcharge, and trade taxes
­totaling 31.4 % was used.

Notes to the statement of income

18 Net revenue

Revenue by area of activity

millions of €

2020 2019
Revenue from hiring out employees 1,052 1,097
Revenue from renting and leasing out property 887 909
Revenue from training services 164 156
Revenue from fixed network 31 660
Other revenue 606 601

2,740 3,423

Revenue from hiring out employees amounted to EUR 1.1 billion (2019: EUR 1.1 billion) and resulted from hiring
­employees out to other companies. Employees were placed with internal and external employers on loan and temporary
work contracts. Civil servants were placed with internal employers by means of temporary leave or assignment and with
external employers by means of secondments.

Revenue from renting and leasing out property totaled EUR 0.9 billion (2019: EUR 0.9 billion) and is generated under
the rent-including-utilities model. Deutsche Telekom leases real estate centrally from GMG Generalmietgesellschaft mbH,
Cologne, and then rents it out to its German subsidiaries together with facility management services in the form of
standardized facility products.

Revenue from training services mainly consisted of training services for junior staff in Germany.

The decrease of around EUR 600 million in revenues from fixed-network business is primarily attributable to the
­spin-off of the DTGC business area. In the previous year, revenue had been generated mainly from the wholesale service
for international carriers. In the reporting year, revenues from fixed-network business primarily include revenues from
the provision of digital services.
 Annual Financial Statements 36
Notes to the financial statements – Notes to the statement of income

Reported under other revenue is in particular income that was attributable to HR Business Services, Group Legal
Services, and Technology and Innovation.

Revenue by geographic area

millions of €

2020 2019
Domestic 2,617 2,862
International 123 561

2,740 3,423

19 Other own capitalized costs

millions of €

2020 2019
Other own capitalized costs 9 7

9 7

20 Other operating income

millions of €

2020 2019
Income from write-ups of noncurrent assets 979 1,010
Income from derivatives 506 250
Cost transfers/reimbursements 328 390
Foreign currency transaction gains 307 364
Income from the reversal of accruals 196 227
Income from the disposal of noncurrent assets 74 33
Other income 2,335 113

4,725 2,387

Income from write-ups of noncurrent assets is largely made up of a write-up on the carrying amount of the investment in
Hellenic Telecommunications Organization S.A. (OTE), Athens, of EUR 890 million and on the carrying amount of the
­investment in Deutsche Telekom Asset Management GmbH & Co. KG, Monheim, of EUR 73 million.

Income from derivatives relates in particular to income from currency derivatives falling due and income from the ­disposal
of embedded derivatives vis-à-vis T-Mobile USA, Inc., Bellevue.

Income from cost transfers/reimbursements includes in particular income from the consolidation of the real estate
­portfolio at GMG Generalmietgesellschaft mbH, Cologne. The properties are leased centrally under the rent-including-utilities
model by Deutsche Telekom and provided to tenants within the Group as managed space.

Foreign currency transaction gains mainly result from exchange rate effects realized upon the maturity of loans granted/
taken out in foreign currency.

Income from the reversal of accruals of EUR 196 million (2019: EUR 227 million) relates in particular to income from the
reversal of accruals for the forecast fund for hedging premium risks regarding civil servants eligible for allowances,
­accruals for litigation risks, accruals for outstanding invoices, accruals for employee expenses, and accruals for Federal
Agency services.
 Annual Financial Statements 37
Notes to the financial statements – Notes to the statement of income

Income from the disposal of noncurrent assets of EUR 53 million (2019: EUR 17 million) is attributable to sales of land
and buildings.

Other income is mainly attributable to income of EUR 1.5 billion in connection with a capital repayment based on fair
values by T-Mobile Global Zwischenholding GmbH, Bonn, as well as to income of EUR 0.8 billion from the realization of
hidden reserves as a result of the spin-off of the DTGC business area.

Pursuant to § 285 no. 32 HGB, EUR 1,258 million (2019: EUR 1,279 million) of income relating to another period is included
in other operating income in the reporting year. This relates almost exclusively to income from write-ups of noncurrent
assets, income from the reversal of accruals, and income from the disposal of noncurrent assets.

21 Goods and services purchased

millions of €

2020 2019
Goods purchased
Raw materials and supplies 0 0
Goods purchased 2 1
2 1

Services purchased
Interconnection rates 17 464
Other services 452 572
469 1,036

471 1,037

The decrease in expenses for interconnection rates is mainly due to the transfer of the International Carrier Services
unit in connection with the spin-off of the DTGC business area. In the reporting year, expenses for interconnection rates
primarily include upstream services purchased from Deutsche Telekom Security GmbH, Bonn.

Other services primarily include EUR 347 million of expenses for upstream services related to renting and leasing out
property incurred under the rent-including-utilities model. Other services also include expenses of Group companies for
product and technology innovations and expenses for upstream services related to energy and training.

22 Personnel costs/Average number of employees

millions of €

2020 2019
Wages and salaries 1,702 1,728

Social security contributions and expenses for pension plans and benefits
Expenses for pension plans for civil servants 396 428
Social security contributions 84 87
Support allowances 62 54
Expenses for pension plans for non-civil servants 34 13
Expenses arising from the collateral promise for pensions 13 16
589 598

2,291 2,326
 Annual Financial Statements 38
Notes to the financial statements – Notes to the statement of income

Personnel costs declined by a total of EUR 35 million compared with the previous year. This decrease was mainly
­attributable to a EUR 32 million year-on-year decline in expenses for pension plans for civil servants and a EUR 26 million
decrease in expenses for wages and salaries. Higher expenses for pension plans for non-civil servants of EUR 21 million
and higher support allowances of EUR 8 million had an offsetting effect on personnel costs.

The decrease in expenses for wages and salaries is primarily due to a lower headcount. In the reporting year, higher
expenses in connection with staff restructuring measures, especially for early retirement for civil servants, higher
­expenses from performance-related compensation, and higher expenses from collectively agreed pay increases had an
offsetting effect.

In the reporting year expenses for early retirement for civil servants consisted of wages and salaries of EUR 369 million
(2019: EUR 335 million) and expenses for support allowances of EUR 16 million (2019: EUR 2 million).

The Civil Service Pension Fund at the Federal Agency performs the functions described in §§ 14 to 16 of the Act
­concerning the Legal Provisions for the Former Deutsche Bundespost Staff (Postpersonalrechtsgesetz – PostPersRG)
for pension plans for civil servants at Deutsche Bundespost and its successor companies. It carries out all transactions
for pension and allowance payments in respect of civil servants for Deutsche Post AG, Bonn, Deutsche Bank AG,
­Frankfurt/Main (as the legal successor of Deutsche Postbank AG, Bonn) and Deutsche Telekom. In accordance with the
provisions of the Act, the Civil Service Pension Fund makes pension and allowance payments to retired employees and
their surviving dependents who are entitled to pension payments as a result of civil servant status.

Under PostPersRG, the Federal Republic compensates the Civil Service Pension Fund for differences between the ongoing
payment obligations of the fund and the amounts received from the successor companies of the former Deutsche
Bundespost, or between said payment obligations and returns on assets, and guarantees that the special pension fund
is always in a position to fulfill the obligations it has assumed. The Federal Republic cannot demand reimbursement
from Deutsche Telekom of any amounts it pays to the Civil Service Pension Fund in accordance with this provision.

Pursuant to § 16 PostPersRG, Deutsche Telekom is required to make contributions to the federal government, repre-
sented by the Civil Service Pension Fund, equal to 33 %, respectively, of the gross emoluments of active civil servants
and the notional pensionable gross emoluments of civil servants on temporary leave from civil servant status; these
contributions are recognized as ongoing expenses in the respective year. The announcement by the Federal Agency on
October 16, 2019 stipulated an advance payment of EUR 406 million for the 2020 contribution for the civil service
­pensions. Deutsche Telekom has already made the payment in full. Only EUR 374 million (2019: EUR 405 million) of the
advance payment was recognized as an expense due to the lower number of active civil servants and civil servants on
leave of absence in the reporting year. The year-on-year decline in costs was primarily due to the reduction in the
­number of active civil servants (departures as a result of reaching retirement age, take-up of early retirement options,
and transfer to other authorities).

The average number of employees (full-time equivalents) developed as follows:

Number

2020 2019
Civil servants 11,250 12,541
Non-civil servants 4,832 5,472

16,082 18,013

Trainees and student interns 5,611 5,564

The decrease in the number of employees is mainly attributable to the use of early retirement arrangements for civil
­servants, to further staff restructuring measures, and to staff reductions in connection with the spin-off of the DTGC
­business area.
 Annual Financial Statements 39
Notes to the financial statements – Notes to the statement of income

23 Depreciation, amortization and write-downs

millions of €

2020 2019
Depreciation and amortization
Amortization of intangible assets 72 64
Depreciation of property, plant and equipment 138 186
210 250

Write-downs
in accordance with § 253 (3) sentence 5 HGB 1 4

211 254

Amortization of intangible assets mainly relates to the amortization of rights to use software in the amount of EUR 65 million
(2019: EUR 58 million).

EUR 109 million of the depreciation of property, plant and equipment in the reporting year relates to buildings in particu-
lar (2019: EUR 135 million).

In the reporting year, write-downs consist entirely of write-downs of real estate to the lower of cost or market value,
amounting to EUR 1 million (2019: EUR 4 million).

Write-downs on financial assets are recorded in net financial income/expense (please refer to Note 25).

24 Other operating expenses

millions of €

2020 2019
Rental and leasing expenses 760 766
Other employee-related costs 401 345
Expenses arising from derivatives 314 483
Foreign currency transaction losses 265 347
Legal and consulting fees 124 151
IT support 103 103
Cleaning, transport, and surveillance 103 114
Marketing expenses 101 122
Additions to accruals for contingent losses 77 19
Research and development 63 67
Maintenance and repair 61 76
Expenses arising from reimbursements 21 21
Expenses according to Art. 67 (1) and (2) EGHGB 17 17
Other expenses 424 450

2,834 3,081

Rental and leasing expenses are incurred in particular under the rent-including-utilities model and comprise almost
entirely the portion of internal use by Deutsche Telekom.
 Annual Financial Statements 40
Notes to the financial statements – Notes to the statement of income

Other employee-related costs mainly include expenses of EUR 154 million for the Civil Service Health Insurance Fund
(Postbeamtenkrankenkasse – PBeaKK), EUR 144 million arising from the allocation of administration costs payable to
the Federal Agency, EUR 25 million for human resources (e.g. recruitment), EUR 21 million compensation payments
­related to the placement of civil servants with various federal authorities, EUR 21 million in staff development costs, and
EUR 9 million for conferences.

Expenses arising from derivatives primarily relate to expenses from U.S. dollar currency derivatives falling due.

Foreign currency transaction losses mainly result from exchange rate effects realized upon the maturity of loans
­granted/taken out in foreign currency.

Legal and consulting fees encompass expenses for technical and business consulting, expenses for legal counseling, as
well as expenses for the preparation and audit of annual financial statements.

Expenses for IT support relate to the provision of computing and network services as well as services for workstation
systems.

Cleaning, transport, and surveillance expenses are incurred under the rent-including-utilities model and comprise
­almost entirely the portion of internal use by Deutsche Telekom.

Marketing expenses in the reporting year relate in particular to expenses for sponsoring, advertising, trade fairs, and
other agency fees.

Additions to accruals for contingent losses are mainly the result of agreements concluded with partners outside the
Deutsche Telekom Group with the intention of generating a contribution margin for the expenses resulting from the
staff surplus.

Expenses for research and development mainly comprise expenses for the development of software and expenses for
university partnership programs.

Expenses for maintenance and repair principally relate to expenses arising under maintenance and servicing contracts.

Expenses arising from reimbursements largely comprise expenses relating to the cross-charging of services rendered
by subsidiaries.

Expenses according to Art. 67 (1) and (2) EGHGB relate to expenses in the amount of EUR 17 million (2019: EUR 17 million)
from the adjustment of the carrying amount of pension accruals due to BilMoG. The Company has exercised the option
to spread the addition pursuant to Art. 67 (1) sentence 1 EGHGB such that the annual addition equals one 15th of the
total amount being added.

In the reporting year, other expenses consist, in particular, of insurance policies, telephone and transmission fees,
­administrative expenses, and ad-hoc temporary employment.

Pursuant to § 285 no. 32 HGB, EUR 6 million (2019: EUR 8 million) of expenses relating to another period are included
in other operating expenses in the reporting year. This relates mainly to expenses from the measurement of receivables
as well as expenses from the disposal of noncurrent assets.
 Annual Financial Statements 41
Notes to the financial statements – Notes to the statement of income

25 Net financial income/expense

millions of €

2020 2019
Income related to subsidiaries, associated and related companies 337 330
of which: from affiliated companies € 324 million (2019: € 316 million)
Income from profit transfer agreements 4,745 4,300
Expenses arising from loss transfers (1,630) (999)

Income (loss) related to subsidiaries, associated, and related companies 3,452 3,631

Income from long-term loans from noncurrent financial assets 806 936
of which: from affiliated companies € 806 million (2019: € 936 million)
Other interest and similar income 521 513
of which: from affiliated companies € 79 million (2019: € 114 million)
of which: from the discounting of accruals € 0 million (2019: € 2 million)
Interest and similar expenses (2,114) (1,949)
of which: to affiliated companies: € 1.2 billion (2019: € 1.2 billion)
of which: from interest added back to accruals € 496 million (2019: € 342 million)

Net interest expense (787) (500)

Write-downs of financial assets and marketable securities (1,420) 0

1,245 3,131

Income related to subsidiaries, associated, and related companies mainly comprises the share of profits of
Deutsche ­Telekom Asset Management GmbH & Co. KG, Monheim (EUR 138 million) as well as the dividends from
­Hellenic ­Telecommunications Organization S.A. (OTE), Athens (EUR 122 million), and CTA Holding GmbH, Bonn (EUR 50 million).

Income from profit transfer agreements recognized in the reporting period relates primarily to profits transferred by
­T­elekom Deutschland (EUR 3.6 billion), T-Mobile Global Zwischenholding GmbH, Bonn (EUR 648 million), GMG General­
mietgesellschaft mbH, Cologne (EUR 221 million), and DFMG Holding GmbH, Bonn (EUR 204 million).

Expenses arising from loss transfers relate primarily to Deutsche Telekom IT GmbH, Bonn (EUR 780 million), T-Systems
(EUR 654 million), Deutsche Telekom IoT GmbH, Bonn (EUR 109 million), and Deutsche Telekom Europe Holding GmbH,
Bonn (EUR 49 million).

Income from long-term loans from noncurrent financial assets and other interest and similar income from affiliated
­companies largely relates to interest from loans issued to T-Mobile USA, Inc., Bellevue, and interest from loans to Telekom
Deutschland and to DFMG Holding GmbH, Bonn.

Interest expenses to affiliated companies primarily result from loan relationships with Deutsche Telekom International
­Finance B.V., Maastricht.

In the reporting year, expenses from interest added back to accruals for outstanding settlement amounts from phased
retirement arrangements, long-term accounts and lifetime work accounts totaling EUR 1 million were netted with income
of EUR 2 million from the corresponding CTA assets and reported in other interest and similar income. Furthermore,
­expenses from interest added back to pension accruals (not including the risk component) totaling EUR 276 million were
 Annual Financial Statements 42
Notes to the financial statements – Notes to the statement of income

netted with income of EUR 25 million from the corresponding CTA asset and reported in interest and similar expenses.
In the previous year, expenses from interest added back to pension accruals as well as accruals for outstanding settle-
ment amounts from phased retirement arrangements, long-term accounts, and lifetime work accounts amounting to
EUR 322 million, plus expenses related to the corresponding CTA assets of EUR 1 million were netted in full with income
from the corresponding CTA assets of EUR 196 million.

Write-downs on financial assets of EUR 1.4 billion in the reporting year relate to a write-down on CTA Holding GmbH, Bonn,
as a result of the impairment of this company’s indirectly held investment in BT Group plc, London, and to a write-down on
T-Systems in the amount of EUR 44 million.

26 Income taxes

millions of €

2020 2019
Income taxes 380 484

380 484

Income taxes in the reporting year include EUR 187 million for trade income tax and EUR 129 million for corporate
­income tax and the solidarity surcharge.

Income tax expense includes an amount of EUR 64 million (2019: EUR 104 million) of expenses relating to another period
in accordance with § 285 no. 32 HGB that results from items from previous years.

27 Other taxes

millions of €

2020 2019
Other taxes 17 17

17 17

Other taxes mainly comprise real estate tax expenses of EUR 17 million.

28 Reconciliation of income after taxes to unappropriated net income

Income after taxes generated in the 2020 financial year amounted to EUR 2,515 million. Together with unappropriated
net income from 2019 of EUR 2,614 million after dividend payments (unappropriated net income from the prior year of
EUR 5,460 million less dividend payments totaling EUR 2,846 million), this resulted in unappropriated net income of
EUR 5,129 million.
 Annual Financial Statements 43
Notes to the financial statements – Other disclosures

Other disclosures
29 Guarantees and commitments and transactions not included in the balance sheet in accordance with § 285 no. 3 HGB,
and reasons underlying the evaluation of the risk of utilization of guarantees and commitments in accordance with
§ 285 no. 27 HGB

millions of €

Dec. 31, 2020 Dec. 31, 2019

Liabilities from guarantees 1,118 1,549
Liabilities arising from warranty agreements 7,913 9,229
of which: to affiliated companies € 0 million (Dec. 31, 2019: € 0 million)
of which: to associates € 0 million (Dec. 31, 2019: € 0 million)

9,031 10,778

Guarantees include litigation and security deposit guarantees as well as warranties. Liabilities arising from warranty
­agreements relate to third parties and in most cases were incurred for affiliated companies.

Liabilities arising from warranty agreements include guarantees as well as comfort letters and relate primarily to
­Telekom Deutschland (EUR 6.9 billion), T-Systems (EUR 471 million), and T-Mobile Austria Holding GmbH, Vienna
­(EUR 109 million). Guarantees relate to loan collateral guarantees in particular. Deutsche Telekom guarantees the
­liabilities of Deutsche Telekom International Finance B.V., Maastricht, to external third parties – mostly originating from
bonds. In cases where the funds are not passed on to Deutsche Telekom and therefore recognized as a liability, an
­obligation arising from warranty agreements has to be recorded; such an obligation to Deutsche Telekom International
Finance B.V., Maastricht, was recorded as of December 31, 2020 in the amount of EUR 101 million.

Guarantees to the benefit of affiliated companies and contingent liabilities arising from warranty agreements entered
into with third parties are not recognized as liabilities as the underlying obligations can be fulfilled by the Company’s
subsidiaries, meaning utilization is unlikely.

In accordance with § 133 (1) UmwG, Deutsche Telekom is jointly and severally liable vis-à-vis third parties for the
­liabilities of the DTGC business area that was spun off with economic effect as of January 1, 2020. The joint and several
liability applies to liabilities that existed prior to the entry into force of the spin-off as of October 1, 2020. For purposes
of the relationship between Deutsche Telekom and Telekom Deutschland, the spin-off and takeover agreement
­stipulates that only the company to which the liabilities were allocated under the split-off and takeover agreement will
be held liable; these two companies will indemnify each other against a joint liability prescribed by law.

Transactions not included in the balance sheet

The aforementioned guarantees and commitments are among the transactions not included in the balance sheet.
 Annual Financial Statements 44
Notes to the financial statements – Other disclosures

30 Other financial obligations

millions of €

Dec. 31, 2020 Dec. 31, 2019

Total of which due Total of which due
from the from the
second financial second financial
in year after in year after
the following the balance the following the balance
financial year sheet date financial year sheet date
Present value of the payments to the Civil Service
Pension Fund for the civil service pension scheme 1,685 296 1,389 1,967 336 1,631
Obligations under rental and lease agreements 7,142 1,197 5,945 7,254 1,232 6,022
of which: to affiliated companies € 7.1 billion
(Dec. 31, 2019: € 7.3 billion)
of which: to associates € 0 billion
(Dec. 31, 2019: € 0 billion)
Purchase commitments arising from future
expenditure and investments 629 362 267 598 368 230
of which: to affiliated companies € 440 million
(Dec. 31, 2019: € 359 million)
of which: to associates € 0 million
(Dec. 31, 2019: € 0 million)
Commitments arising from unpaid contributions
and from pending transactions 1,458 1,418 40 1,263 1,219 44
of which: to affiliated companies € 1.4 billion
(Dec. 31, 2019: € 1.2 billion)
of which: to associates € 0 million
(Dec. 31, 2019: € 0 million)

10,914 3,273 7,641 11,082 3,155 7,927

The present value of payments that Deutsche Telekom is required to make in accordance with PTNeuOG to the
Civil Service Pension Fund on the basis of the Heubeck 2018 G tables amounted to EUR 1.7 billion as of December 31, 2020.
The year-on-year decrease is attributable to the reduction in the number of active civil servants, in particular as a result
of early retirement.

Obligations under rental and lease agreements include obligations to affiliated companies in the amount of
­EUR 7,138 million, which are almost exclusively to GMG Generalmietgesellschaft mbH, Cologne.

Purchase commitments arising from future expenditure and investments were largely composed of commitments for
non-capital expenditure of EUR 467 million.

Unpaid and uncalled contributions mostly relate to Deutsche Telekom Capital Partners Venture Fund II GmbH & Co. KG,
Hamburg (EUR 92 million), and Deutsche Telekom Capital Partners Portfolio Fund GmbH & Co. KG, Hamburg
(EUR 70 million).

Commitments arising from pending transactions with affiliated companies relate mainly to existing obligations from
profit and loss transfers from Deutsche Telekom IT GmbH, Bonn (EUR 709 million), T-Systems (EUR 351 million),
­Deutsche Telekom IoT GmbH, Bonn (EUR 109 million), and Deutsche Telekom Europe Holding GmbH, Bonn (EUR 45 million).

Deutsche Telekom is a party to a number of lawsuits and other proceedings and issues arising from the general conduct
of its business. Fees for legal counseling and – where appropriate – forecast costs in connection with a negative out-
come of proceedings were included in the accruals for litigation risks and/or in miscellaneous other operating expenses.
 Annual Financial Statements 45
Notes to the financial statements – Other disclosures

31 Derivative financial instruments

Derivative financial instruments not included under valuation units as of the reporting date were as follows:

millions of €

Nominal amount2 Fair values

Dec. 31, 2020 Dec. 31, 2020
Interest-related instruments
Embedded derivatives1 3,057 (92)
3,057 (92)

Currency instruments
Future exchange transactions 506 (3)
506 (3)

Share-based instruments
Stock options with a fixed exercise price 3,713 1,506
Stock options with a variable exercise price3, 4 6,202 94
9,915 1,600

Other instruments
Diesel derivatives 18 (5)
18 (5)

13,496 1,500

1
Repricing element that is not closely related to the economic characteristics and risks of the host contract.
2
The figures shown are absolute amounts.
3
The exercise price is determined on the basis of a moving average price, which is calculated using the prices
from the last 20 trading days preceding the exercise date.
4
The nominal amount was determined on the basis of the share price as of December 31, 2020.

The fair values shown above were determined using discounted cash flow models and option pricing models, which use
the relevant market data as input parameters for calculation as of December 31, 2020.

Receivables, liabilities and accruals for derivatives were reported under the following balance sheet items:

millions of €

Dec. 31, 2020

Receivables from affiliated companies 21
Other assets 303
Other accruals (98)
Payables to affiliated companies (155)
Other liabilities (333)

(262)

The Company uses derivatives for the purpose of hedging exposures to currency, interest rate, and raw material price
risks. The top priority in all cases in which derivatives are used is to limit the risk of the underlyings. Derivative financial
instruments may therefore only be used to eliminate risk exposures, and may never be used to enter into new risks for
speculative reasons.

Derivatives are designed to offset changes in the fair values and cash flow risks associated with the financial assets and
liabilities to which they are allocated. Such derivatives are reviewed regularly for their effectiveness as hedge
­instruments. Derivative financial instruments are subject to internal controls.

As a rule, the nominal amounts of the derivative financial instruments are merely the basis for determining the interest
payment (nominal amounts only represent a receivable or liability in the case of interest rate and cross currency swaps).
 Annual Financial Statements 46
Notes to the financial statements – Other disclosures

The nominal amounts are generally not material to the value of a derivative. By contrast, the main material influences
on the market value of derivatives are changes in interest rates, exchange rates and other conditions.

Interest rate swaps are entered into to transform the coupons on bonds and the interest rates on loans in accordance
with a mix of fixed and floating rate interest instruments determined in the course of interest rate management.

The Company uses foreign currency forward contracts and non-deliverable forwards to hedge exchange rates, and
cross-currency and interest rate swaps to eliminate currency and, if relevant, interest rate risks related to financing and
service.

Foreign currency forward contracts and hedged items are assigned to foreign currency hedge valuation units categorized
by foreign currency type and marked to market as of the balance sheet date. Foreign currency forward contracts are
valued at the forward exchange rate on the balance sheet date; cross-currency and interest rate swaps are recognized
at the present value of future payments. Measurement gains and losses are netted valuation unit for valuation unit. An
accrual for loss contingencies from pending transactions is established for each valuation unit for the amount of the
excess loss. Net gains are not recognized.

The cross-currency and interest rate swaps are primarily used to transform the original currencies of bonds and
­promissory notes into Deutsche Telekom’s target currencies (mainly euros and U.S. dollars). In addition, various
cross-currency and interest rate swaps are used to hedge currency risks in the financing of subsidiaries.

The fair values and nominal amounts reported under share-based instruments relate to the stock options received from
SoftBank in the financial year for the purchase of shares in T-Mobile US, Bellevue, USA. The stock options, which can be
exercised at any time, mature in 2024 and can be exercised partially at fixed and partially at variable purchase prices.

Diesel derivatives are used to hedge the price risk resulting from the purchase of diesel fuel for Deutsche Telekom’s
vehicle fleet.

Hedging risk through valuation units:

millions of €

Value of the hedged item

Type of hedged item Type of hedged risk (carrying amount, expected value)
Assets
Currency risk 669
Interest rate/currency risk 3,872
Interest rate risk 1,763

Liabilities
Currency risk (7,092)
Interest rate/currency risk (5,562)
Interest rate risk (23,507)

Highly probable forecast transactions

Interest rate risk –

Pending transactions
Interest rate risk –

(29,857)

The valuation units always took the form of micro hedges.

 Annual Financial Statements 47
Notes to the financial statements – Other disclosures

In all cases, the hedging relationships were extremely effective, as the main risk-determining parameters matched for
the hedged item and hedge transaction.

The risks hedged with valuation units amounted to (averted need to recognize accrual for contingent losses, write-ups
of foreign currency liabilities, and write-downs on foreign currency receivables):

millions of €

Dec. 31, 2020

Interest rate risk 1,020
Interest rate/currency risk 410
Currency risk 538

1,968

The offsetting changes in value and cash flows are expected to largely cancel each other out by January 21, 2050, in
terms of both interest rate and currency hedges.

The effectiveness of the hedge relationships in terms of the hedged risk at the balance sheet date was determined
using the critical terms match method. In the case of revolving hedges, effectiveness was measured using an analysis of
changes in fair value based on spot price components (dollar offset method). In these cases, the ineffective p­ ortion of the
change in value calculated in this way was recorded directly in the statement of income in line with the i­mparity principle.

The hedged items with interest rate risk recognized under assets and amounting to EUR 5.6 billion break down into
underlyings of EUR 1.7 billion for cash flow hedges and EUR 3.9 billion for fair value hedges.

The hedged items with interest rate risk recognized under liabilities and amounting to EUR 29.1 billion break down into
underlyings of EUR 7.8 billion for cash flow hedges and EUR 21.3 billion for fair value hedges.

32 Exchange rates

Annual average rate Rate at the reporting date

2020 2019 Dec. 31, 2020 Dec. 31, 2019

100 Swiss francs (CHF) 93.41260 89.87680 92.54550 92.17020
100 Czech korunas (CZK) 3.78060 3.89551 3.81076 3.93593
1 Pound sterling (GBP) 1.12417 1.13925 1.11352 1.17482
100 Hong Kong dollars (HKD) 11.28852 11.40012 10.51315 11.43681
100 Croatian kuna (HRK) 13.26560 13.48050 13.24500 13.43960
100 Hungarian forints (HUF) 0.28469 0.30743 0.27445 0.30248
100 Japanese yen (JPY) 0.82072 0.81948 0.79083 0.82051
100 Polish zlotys (PLN) 22.51210 23.26470 21.93370 23.49380
100 Singapore dollars (SGD) 63.52900 65.47440 61.64470 66.19450
1 U.S. dollar (USD) 0.87553 0.89326 0.81510 0.89055
 Annual Financial Statements 48
Notes to the financial statements – Other disclosures

33 Auditor’s fees and services

The total fees charged by the external auditor for the reporting period are broken down into auditing services, other
assurance services, and other non-audit services in the relevant note in the consolidated financial statements.

Fees for auditing services include in particular fees for the statutory auditing of annual and consolidated financial
­statements and the subsidiaries included in the consolidated financial statements, fees for the review of the interim
­financial statements, and fees for other auditing services.

The fees recognized under other assurance services relate primarily to the auditing of information systems and processes,
as well as the issuing of comfort letters.

Other services mainly consist of professional services in connection with strategic projects.

The total fees charged by the external auditor for the reporting period as defined in § 285 no. 17 HGB are detailed in the
relevant note in the consolidated financial statements.

34 Members of the Board of Management of Deutsche Telekom AG in 2020

Timotheus Höttges Birgit Bohle

Chairman of the Board of Management Board member responsible for Human Resources and
since January 1, 2014 Legal Affairs, and Labor Director since January 1, 2020

Seats on the supervisory boards of other companies: Member of the supervisory boards of subsidiaries,
ƒ Daimler AG, Stuttgart (since 7/2020) associated, and related companies:
ƒ FC Bayern München AG, Munich (since 2/2010) ƒ Telekom Deutschland GmbH, Bonn (since 1/2019)
ƒ Henkel AG & Co. KGaA, Düsseldorf (since 4/2016) ƒ Deutsche Telekom Services Europe SE, Bonn
(since 10/2019)
Member of comparable supervisory bodies of
business enterprises in Germany or abroad: Srini Gopalan
ƒ BT Group plc, London, United Kingdom, Member Board member responsible for Germany
of the Board of Directors (1/2016 to 5/2020) since November 1, 2020
Board member responsible for Europe
Member of the supervisory boards of subsidiaries, from January 1, 2017 to October 31, 2020
associated, and related companies:
ƒ Telekom Deutschland GmbH, Bonn (since 4/2005), Member of the supervisory boards of subsidiaries,
Chairman of the Supervisory Board (since 7/2009) associated, and related companies:
ƒ T-Mobile US, Inc., Bellevue, United States, ƒ Deutsche Telekom Service GmbH, Bonn,
Chairman of the Board of Directors (since 4/2013) Chairman of the Supervisory Board (since 11/2020)
ƒ Deutsche Telekom Technik GmbH, Bonn,
Adel Al-Saleh Chairman of the Supervisory Board (since 11/2020)
Board member responsible for T-Systems ƒ Hellenic Telecommunications Organization S.A.
since January 1, 2018 (OTE S.A.), Marousi, Athens, Greece (1/2017 to 12/2020)
ƒ T-Mobile Polska S.A., Warsaw, Poland (since 1/2017),
Member of comparable supervisory bodies Chairman of the Supervisory Board (1/2017 to 10/2020)
of business enterprises in Germany or abroad: ƒ T-Mobile US, Inc., Bellevue, United States, Member
ƒ BT Group plc, London, United Kingdom, of the Board of Directors (6/2019 to 10/2020)
Member of the Board of Directors (since 5/2020)
 Annual Financial Statements 49
Notes to the financial statements – Other disclosures

Dr. Christian P. Illek Claudia Nemat

Board member responsible for Finance Board member responsible for Technology
since January 1, 2019 and Innovation since January 1, 2017

Member of the supervisory boards of subsidiaries, Seats on the supervisory boards of other companies:
associated, and related companies: ƒ Airbus Defence and Space GmbH, Ottobrunn
ƒ BuyIn SA/NV, Brussels, Belgium, (since 5/2016)
Member of the Board of Directors (since 12/2018)
ƒ Deutsche Telekom Services Europe SE, Bonn Member of comparable supervisory bodies
(since 8/2019), Chairman of the of business enterprises in Germany or abroad
Supervisory Board (since 11/2019) ƒ Airbus Group SE, Leiden, Netherlands,
ƒ T-Mobile US, Inc., Bellevue, United States, Member of the Board of Directors (since 5/2016)
Member of the Board of Directors (since 1/2019)
ƒ T-Systems International GmbH, Frankfurt/Main Member of the supervisory boards of subsidiaries,
(since 5/2015), Chairman of the Supervisory Board associated, and related companies:
(since 11/2016) ƒ Deutsche Telekom IT GmbH, Bonn, Chairwoman
of the Supervisory Board (since 6/2017)
Thorsten Langheim ƒ Deutsche Telekom Security GmbH, Bonn
Board member responsible for USA and Group Development (since 8/2020), Deputy Chairwoman of the
since January 1, 2019 Supervisory Board (since 9/2020)
ƒ T-Systems International GmbH, Bonn (since 4/2020)
Member of the supervisory boards of subsidiaries,
associated, and related companies: Board of Management members who left in 2020:
ƒ Deutsche Telekom Capital Partners Management
GmbH, Hamburg, Chairman of the Investment Dr. Thomas Kremer
Committee (since 6/2015) Board member responsible for Data Privacy, Legal Affairs,
ƒ T-Mobile US, Inc., Bellevue, United States, and Compliance from June 1, 2012 to March 31, 2020
Member of the Board of Directors (since 6/2014)
Member of the supervisory boards of subsidiaries,
Dominique Leroy associated, and related companies:
Board member responsible for Europe ƒ T-Systems International GmbH, Frankfurt/Main
since November 1, 2020 (5/2015 to 3/2020)

Member of comparable supervisory bodies Dr. Dirk Wössner

of business enterprises in Germany or abroad: Board member responsible for Germany
ƒ Koninklijke Ahold Delhaize N.V., Zaandam, Netherlands, from January 1, 2018 to October 31, 2020
Member of the Supervisory Board (since 4/2015)
ƒ Compagnie de Saint-Gobain, Courbevoie, France, Member of the supervisory boards of subsidiaries,
Member of the Board of Directors (since 11/2017) associated, and related companies:
ƒ Telenco Group, Moirans, France, Member of ƒ Deutsche Telekom Außendienst GmbH, Bonn,
the Board of Directors (7/2020 to 12/2020) Chairman of the Supervisory Board (1/2018 to
10/2020)
Member of the supervisory boards of subsidiaries, ƒ Deutsche Telekom Geschäftskunden-Vertrieb GmbH,
associated, and related companies: Bonn (1/2018 to 10/2020), Chairman of the
ƒ Hellenic Telecommunications Organization S.A. Supervisory Board (2/2018 to 10/2020)
(OTE S.A.), Marousi, Athens, Greece (since 11/2020) ƒ Deutsche Telekom Service GmbH, Bonn, Chairman
ƒ T-Mobile US, Inc., Bellevue, United States, of the Supervisory Board (1/2018 to 10/2020)
Member of the Board of Directors (since 11/2020) ƒ Deutsche Telekom Technik GmbH, Bonn, Chairman
ƒ T-Mobile Polska S.A., Warsaw, Poland (since 11/2020), of the Supervisory Board (1/2018 to 10/2020)
Chairwoman of the Supervisory Board (since 11/2020) ƒ Deutsche Telekom Privatkunden-Vertrieb GmbH, Bonn,
Chairman of the Supervisory Board (1/2018 to 10/2020)
 Annual Financial Statements 50
Notes to the financial statements – Other disclosures

35 Members of the Supervisory Board Constantin Greve

of Deutsche Telekom AG in 2020 Member of the Supervisory Board
since November 20, 2018
Prof. Dr. Ulrich Lehner Chairman of the Central Works Council
Member of the Supervisory Board since April 17, 2008 of Deutsche Telekom AG, Bonn
Chairman of the Supervisory Board since April 25, 2008 – no other seats –
Member of the Shareholders’ Committee of Henkel
AG & Co. KGaA, Düsseldorf Lars Hinrichs
Member of the Supervisory Board since October 1, 2013
Seats on the supervisory boards of other companies: CEO of Cinco Capital GmbH, Hamburg
ƒ Porsche Automobil Holding SE, Stuttgart
(since 11/2007) Seats on the supervisory boards of other companies:
ƒ xbAV AG, Munich, Chairman of the Supervisory Board
Dr. Rolf Bösinger (since 1/2016)
Member of the Supervisory Board since June 1, 2018
State Secretary at the Federal Ministry of Finance, Berlin Dr. Helga Jung
– no other seats – Member of the Supervisory Board since May 25, 2016
Former member of the Board of Management
Dr. Günther Bräunig of Allianz SE, Munich
Member of the Supervisory Board since March 21, 2018
CEO of the Executive Board of KfW, Frankfurt/Main Seats on the supervisory boards of other companies:
ƒ Allianz Beratungs- und Vertriebs-AG, Munich
Seats on the supervisory boards of other companies: (3/2018 to 12/2020)
ƒ Deutsche Pfandbriefbank AG, Unterschleißheim ƒ Allianz Deutschland AG, Munich (since 3/2016)
(since 8/2009), Chairman of the Supervisory ƒ Allianz Global Corporate & Specialty SE, Munich,
Board (since 8/2014) Deputy Chairwoman of the Supervisory Board
ƒ Deutsche Post AG, Bonn (since 3/2018) (since 5/2013)
ƒ Allianz Private Krankenversicherungs-AG,
Odysseus D. Chatzidis Munich (3/2018 to 12/2020)
Member of the Supervisory Board since January 3, 2018 ƒ Allianz Versicherungs-AG, Munich (since 11/2019),
Chairman of the European Works Council Chairwoman of the Supervisory Board
of Deutsche Telekom, Bonn (11/2019 to 3/2020)
– no other seats – ƒ Allianz Lebensversicherungs-AG, Stuttgart, Deputy
Chairwoman of the Supervisory Board (since 4/2020)
 Annual Financial Statements 51
Notes to the financial statements – Other disclosures

Prof. Dr. Michael Kaschke Nicole Koch

Member of the Supervisory Board since April 22, 2015 Member of the Supervisory Board since January 1, 2016
CEO & President of Carl Zeiss AG, Oberkochen, Chairwoman of the Works Council of Deutsche Telekom
until March 31, 2020 Privatkunden-Vertrieb GmbH, Bonn

Seats on the supervisory boards of other companies: Member of the supervisory boards of subsidiaries,
ƒ Carl Zeiss Meditec AG, Jena, Chairman of the associated, and related companies:
Supervisory Board (since 3/2010) ƒ Deutsche Telekom Privatkunden-Vertrieb GmbH,
ƒ Carl Zeiss Industrielle Messtechnik GmbH, Bonn (since 6/2004)
Oberkochen, Chairman of the Supervisory Board
(1/2014 to 3/2020) Dagmar P. Kollmann
ƒ Henkel AG & Co. KGaA, Düsseldorf (since 4/2008) Member of the Supervisory Board since May 24, 2012
ƒ Robert Bosch GmbH, Stuttgart (since 4/2016) Entrepreneur, member of several supervisory boards and
advisory boards as well as the Monopolies Commission
Member of comparable supervisory bodies Former CEO of Morgan Stanley Bank, Frankfurt/Main
of business enterprises in Germany or abroad: Former Member of the Board of Directors, Morgan
ƒ Carl Zeiss Co., Ltd., Seoul, South Korea, Chairman Stanley Bank International Limited, London, United
of the Board of Directors (1/2017 to 3/2020) Kingdom
ƒ Carl Zeiss Far East Co., Ltd., Hong Kong,
China, Chairman of the Board of Directors Seats on the supervisory boards of other companies:
(4/2002 to 3/2020) ƒ Deutsche Pfandbriefbank AG, Unterschleißheim,
ƒ Carl Zeiss India (Bangalore) Private Ltd., Deputy Chairwoman of the Supervisory Board
Bangalore, India, Chairman of the (since 8/2009)
Board of Directors (12/2009 to 3/2020) ƒ KfW IPEX-Bank GmbH, Frankfurt/Main (since 5/2012)
ƒ Carl Zeiss Pte. Ltd., Singapore, Singapore,
Member of the Board of Directors (4/2002 to 3/2020) Member of comparable supervisory bodies
ƒ Carl Zeiss (Shanghai) Co., Ltd., Shanghai, China, of business enterprises in Germany or abroad:
Member of the Board of Directors (6/2017 to 3/2020) ƒ Coca Cola European Partners plc, London,
United Kingdom (since 5/2019)
Member of supervisory boards in Germany required ƒ Unibail-Rodamco SE, Paris, France, Member
to be formed by law outside of business enterprises: of the Supervisory Board (since 5/2014)
ƒ Karlsruhe Institute of Technology (KIT), Karlsruhe,
corporation under public law (not a commercial
enterprise within the meaning of § 100 (2)
sentence 1 no. 1 AktG), Chairman (since 12/2019)
 Annual Financial Statements 52
Notes to the financial statements – Other disclosures

Petra Steffi Kreusel Frank Sauerland

Member of the Supervisory Board since January 1, 2013 Member of the Supervisory Board since November 20, 2018
Senior Vice President, Customer & Public Relations at Deputy Chairman of the Supervisory Board
T-Systems International GmbH, Frankfurt/Main, until since March 27, 2020
June 30, 2020 Head of the Collective Bargaining Policy Committee,
Senior Vice President, Customer & Public Relations at TC/IT National Committee at the ver.di National
Deutsche Telekom Business Solutions GmbH, Bonn Executive Board, Berlin
Group Officer Digital Education and School at
Deutsche Telekom AG, Bonn Member of the supervisory boards of subsidiaries,
Chairwoman of the Executive Staff Representation associated, and related companies:
Committee of T-Systems International GmbH, ƒ Telekom Deutschland GmbH, Bonn (since 12/2016),
Frankfurt/Main, until June 30, 2020 Deputy Chairman of the Supervisory Board
Chairwoman of the Executive Staff Representation (since 1/2017)
Committee of Deutsche Telekom Business
Solutions GmbH, Bonn Lothar Schröder
Deputy Chairwoman of the Group Executive Member of the Supervisory Board since June 22, 2006
Staff Representation Committee of Deputy Chairman of the Supervisory Board
Deutsche Telekom AG, Bonn from June 29, 2006 to March 26, 2020
Trade Union Secretary, former member of the
Member of the supervisory boards of subsidiaries, ver.di National Executive Board, Berlin
associated, and related companies:
ƒ Deutsche Telekom Business Solutions GmbH, Seats on the supervisory boards of other companies:
Bonn (since 8/2020) ƒ Vereinigte Postversicherung VVaG, Stuttgart
ƒ T-Systems International GmbH, Frankfurt/Main (since 6/2008)
(12/2010 to 6/2020) ƒ VPV Holding AG, Stuttgart (since 6/2018)
ƒ VPV Lebensversicherungs-AG, Stuttgart (since 10/2015)
Harald Krüger
Member of the Supervisory Board since May 17, 2018 Member of the supervisory boards of subsidiaries,
Former Chairman of the Board of Management of associated, and related companies:
Bayerische Motoren Werke Aktiengesellschaft, ƒ Deutsche Telekom Services Europe SE,
Munich Bonn (since 8/2019), Deputy Chairman of
the Supervisory Board (since 11/2019)
Seats on the supervisory boards of other companies:
ƒ Deutsche Lufthansa AG, Cologne (since 5/2020)

Kerstin Marx
Member of the Supervisory Board since May 1, 2020
Chairwoman of the Group Works Council
of Deutsche Telekom AG, Bonn

Member of the supervisory boards of subsidiaries,

associated, and related companies:
ƒ Deutsche Telekom Business Solutions GmbH,
Bonn (since 8/2020)
ƒ T-Systems International GmbH,
Frankfurt/Main (12/2010 to 6/2020)
 Annual Financial Statements 53
Notes to the financial statements – Other disclosures

Nicole Seelemann-Wandtke Margret Suckale

Member of the Supervisory Board since July 5, 2018 Member of the Supervisory Board
Deputy Chairwoman of the Works Council of the since September 28, 2017
Consumers unit of Telekom Deutschland GmbH, Bonn Former Member of the Board of Executive
– no other seats – Directors of BASF SE, Ludwigshafen

Sibylle Spoo Seats on the supervisory boards of other companies:

Member of the Supervisory Board since May 4, 2010 ƒ DWS Group GmbH & Co. KGaA, Frankfurt/Main
Lawyer, Trade Union Secretary at the ver.di Federal (since 3/2018)
Administration, Berlin ƒ HeidelbergCement AG, Heidelberg (since 8/2017)
– no other seats – ƒ Infineon Technologies AG, Neubiberg (since 2/2020)

Karl-Heinz Streibich Karin Topel

Member of the Supervisory Board since October 1, 2013 Member of the Supervisory Board since July 1, 2017
President of acatech – Deutsche Akademie der Chairwoman of the Works Council of Deutsche Telekom
Technikwissenschaften (National Academy of Technik GmbH, Bonn, Technical Branch
Science and Engineering), Berlin Office Eastern District
– no other seats –
Seats on the supervisory boards of other companies:
ƒ Dürr AG, Bietigheim-Bissingen (5/2011 to 5/2020), Supervisory Board members who left in 2020:
Chairman of the Supervisory Board (1/2018 to 5/2020)
ƒ Münchener Rückversicherungs-Gesellschaft Aktien­ Josef Bednarski
gesellschaft in München, Munich (since 4/2019) Member of the Supervisory Board
ƒ Siemens Healthineers AG, Erlangen (since 3/2018) from November 26, 2013 to April 30, 2020
ƒ Software AG, Darmstadt, Chairman of Chairman of the Group Works Council of
the Supervisory Board (since 6/2020) Deutsche Telekom AG, Bonn, until April 30, 2020
– no other seats –
 Annual Financial Statements 54
Notes to the financial statements – Other disclosures

36 Compensation of the Board of Management and the Supervisory Board

Compensation of the Board of Management

The representation of the compensation system and the mandatory disclosures pursuant to § 285 no. 9 a) sentences
5-8 HGB (old version), with the exception of pension information, are part of the combined management report.

Board of Management compensation for the 2020 financial year

Total compensation of the members of the Board of Management for the 2020 financial year amounted to EUR 24.1 million
(2019: EUR 23.3 million). This includes a total of 189,315 entitlements to matching shares with a fair value of EUR 2.5 million
on the date granted (2019: EUR 2.7 million).

Development of the pension accrual for each member of the Board of Management

Development of pension accruals for current members of the Board of Management

Additions to Present value of the Additions to Present value of the

pension accruals defined benefit obligation pension accruals defined benefit obligation
2020 Dec. 31, 2020 2019 Dec. 31, 2019
Birgit Bohle 297,737 559,757 262,020 262,020
Srini Gopalan 328,039 1,139,784 306,518 811,745
Timotheus Höttges 1,825,094 15,481,047 1,874,640 13,662,173
Dr. Christian P. Illek 311,989 1,555,587 305,196 1,243,598
Dr. Thomas Kremer (until March 31, 2020) 62,500 2,139,166 308,768 2,076,666
Thorsten Langheim 274,849 530,424 255,575 255,575
Claudia Nemat 421,487 2,852,549 418,286 2,431,062
Dr. Dirk Wössner (until October 31, 2020) 259,099 788,102 280,236 529,003

In accordance with the provisions of the defined contribution pension plan, amounts of EUR 250,000 each were allocated
to Birgit Bohle, Srini Gopalan, Dr. Christian P. Illek, Dr. Thomas Kremer, Thorsten Langheim, Claudia Nemat, and
Dr. Dirk Wössner for each year of service rendered. Mr. Höttges is the only current Board member to have a defined
benefit plan, which means that a contribution cannot be reported.

The expensed additions to pension accruals for active members of the Board of Management amounted to EUR 3.8 million
in the reporting year (2019: EUR 4.0 million).

Former members of the Board of Management

A total of EUR 8.5 million (2019: EUR 8.8 million) was paid out regarding payments to and entitlements for former
­members of the Board of Management and their surviving dependents.

Accruals totaling EUR 179.7 million (2019: EUR 166.7 million) were recognized for current pensions and vested rights to
pensions for this group of persons and their surviving dependents. Pension accruals not shown in the balance sheet for
this group of persons as a consequence of the transitional provisions of BilMoG amounted to EUR 2.5 million at the
balance sheet date (2019: EUR 3.1 million).

Several former Board of Management members are entitled to a civil servant pension from the Civil Service Pension
Fund. In the reporting year, there was no expense incurred in this regard. The present value of the estimated pensions of
these Board of Management members amounts to EUR 3.3 million as of December 31, 2020 (2019: EUR 3.3 million).

Other
The Company has not granted any advances or loans to current or former Board of Management members, nor were any
other financial ­obligations to the benefit of this group of people entered into.
 Annual Financial Statements 55
Notes to the financial statements – Other disclosures

Compensation of the Supervisory Board

The main features of the compensation system and information on the compensation received by the individual
­members of the Supervisory Board is provided in the combined management report.

The total compensation of the members of the Supervisory Board in 2020 amounted to EUR 3,043,250.00 (plus VAT)
and comprises fixed ­annual compensation and attendance fees.

The Company has not granted any advances or loans to current or former Supervisory Board members, nor were any
other financial obligations to the benefit of this group of people entered into.

37 Declaration of conformity with the German Corporate Governance Code in accordance with § 161 AktG

In accordance with § 161 AktG, the Board of Management and the Supervisory Board of Deutsche Telekom have submitted
the mandatory ­declaration of conformity and made it available to shareholders on Deutsche Telekom’s website. The full
text of the Declaration of Conformity can be found on the Deutsche Telekom website (www.telekom.com) under Investor
Relations in the Management & Corporate Governance section.

38 Proposal for the appropriation of net income

The Board of Management of Deutsche Telekom proposes to the shareholders’ meeting that a dividend of EUR 0.60 per
no par value share ­carrying dividend rights be paid to shareholders from the unappropriated net income amounting to
EUR 5.1 billion, and that the remaining ­balance be carried forward.

The final amount of the total dividend payment depends on the number of no par value shares carrying dividend rights
as of the date of the ­resolution on the appropriation of net income as adopted on the day of the shareholders’ meeting.

The amount that is subject to a restriction on distribution in accordance with § 268 (8) sentence 3 HGB is attributable
to the measurement of the CTA assets for accruals for pensions and similar obligations at fair value amounting to
EUR 418 million, to the measurement of the CTA asset for phased retirement obligations amounting to EUR 4 million,
and to the measurement of the CTA asset for long-term accounts amounting to EUR 1 million. Deferred tax liabilities
account for EUR 48 million of the difference of EUR 423 million, resulting in a net amount of EUR 375 million. After
­accounting for deferred tax assets, also of EUR 48 million, which are offset against the deferred tax liabilities, the
amount that is subject to a restriction on distribution in accordance with § 268 (8) HGB is EUR 423 million.

The amount that is subject to a restriction on distribution in accordance with § 253 (6) sentence 2 HGB is attributable
to the difference in the amount of EUR 449 million resulting from changed measurement principles for pension accruals
pursuant to § 253 (6) sentence 1 HGB.

Unappropriated net income can be distributed in full as the amount of EUR 872 million that is subject to a restriction on
distribution pursuant to § 268 (8) sentence 3 HGB and § 253 (6) sentence 2 HGB is covered entirely by freely available
reserves.

 
 Annual Financial Statements 56
Notes to the financial statements – Other disclosures

39 Statement of investment holdings in accordance with § 285 HGB

1. Affiliated companies

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
1. 3. T-Venture Beteiligungsgesellschaft mbH
(3. TVB), Bonn 1.171. 100.00 25,000 EUR 5,576 (137) EUR 2)
2. ALDA Wireless Holdings LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 8,961 245 USD 6)
3. APC Realty and Equipment Co., LLC,
Overland Park, Kansas City 1.380. 100.00 1 USD 298,425 (44,388) USD 6)
4. ATI Sub, LLC, Overland Park, Kansas City 1.45. 100.00 1 USD 6,539 (752) USD 6)
5. American Telecasting Development, LLC,
Overland Park, Kansas City 1.45. 100.00 1 USD 185,292 2,336 USD 6)
6. American Telecasting of Anchorage, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 3,407 (80) USD 6)
7. American Telecasting of Columbus, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 49,832 (93) USD 6)
8. American Telecasting of Denver, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 6,239 (803) USD 6)
9. American Telecasting of Fort Collins, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 4,023 (14) USD 6)
10. American Telecasting of Fort Myers, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 2,419 (49) USD 6)
11. American Telecasting of Green Bay, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 9,697 (447) USD 6)
12. American Telecasting of Lansing, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 7,910 (479) USD 6)
13. American Telecasting of Lincoln, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 24,381 217 USD 6)
14. American Telecasting of Little Rock, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 2,839 (12) USD 6)
15. American Telecasting of Louisville, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 7,597 (1,124) USD 6)
16. American Telecasting of Medford, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 6,155 92 USD 6)
17. American Telecasting of Michiana, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 9,867 106 USD 6)
18. American Telecasting of Monterey, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 3,807 71 USD 6)
19. American Telecasting of Redding, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 4,992 29 USD 6)
20. American Telecasting of Santa Barbara, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 1,041 (87) USD 6)
21. American Telecasting of Seattle, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 45,451 (340) USD 6)
22. American Telecasting of Sheridan, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 1,024 (5) USD 6)
23. American Telecasting of Yuba City, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 1,997 (37) USD 6)
24. Antel Germany GmbH, Karben 1.184. 100.00 25,000 EUR 374 (1) EUR 2)
25. Arbeitgeberverband comunity,
Arbeitgeberverband für Telekommunikation
und IT e.V., Bonn 0.00 0 – –
26. Assessment Point (Proprietary) Limited i. L.,
Johannesburg 1.202. 100.00 100 ZAR – – ZAR 5) 2)
27. Assurance Wireless USA, L.P.,
Overland Park, Kansas City 1.386. 95.00 100 USD 511,353 (375,955) USD 6)
27. Assurance Wireless USA, L.P.,
Overland Park, Kansas City 1.506. 5.00 100 USD 511,353 (375,955) USD 6)
28. Assurance Wireless of South Carolina, LLC,
Overland Park, Kansas City 1.27. 100.00 100 USD – – USD
29. BENOCS GmbH, Bonn 1.491. 100.00 25,000 EUR 207 (105) EUR 2)
30. Benocs, Inc., Wilmington 1.29. 100.00 100 USD – – USD
31. Boost Worldwide, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 738,195 249 USD 6)
 Annual Financial Statements 57
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
32. Broadcast Cable, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 4,494 4 USD 6)
33. CBS GmbH, Bonn 100.00 838,710 EUR 2,055 0 EUR 1)
34. CE Colo Czech, s.r.o., Prague 1.408. 100.00 711,991,857 CZK 711,992 116,758 CZK 2)
35. COMBIS - IT Usluge d.o.o., Belgrad 1.37. 100.00 49,136 RSD (105,764) 6,484 RSD 2)
36. COMBIS d.o.o. Sarajevo, Sarajevo 1.37. 100.00 2,000 BAM 4,097 1,064 BAM 2)
37. COMBIS, usluge integracija informatickih
tehnologija, d.o.o., Zagreb 1.192. 100.00 64,943,900 HRK 211,999 43,933 HRK 2)
38. COSMO-ONE HELLAS MARKET SITE
SOCIETE ANONYME OF ELECTRONIC
COMMERCE SERVICES, Athens 1.193. 30.87 2,788,500 EUR 1,971 478 EUR 3)
38. COSMO-ONE HELLAS MARKET SITE
SOCIETE ANONYME OF ELECTRONIC
COMMERCE SERVICES, Athens 1.40. 30.87 2,788,500 EUR 1,971 478 EUR 3)
39. COSMOTE GLOBAL SOLUTIONS N.V.,
Diegem 1.40. 99.00 5,700,000 EUR 1,593 (268) EUR 2)
39. COSMOTE GLOBAL SOLUTIONS N.V.,
Diegem 1.64. 1.00 5,700,000 EUR 1,593 (268) EUR 2)
40. COSMOTE Mobile Telecommunications S.A.,
Athens 1.193. 100.00 157,899,931 EUR 2,173,263 537,191 EUR 3)
41. COSMOTE PAYMENTS ELECTRONIC
MONEY SERVICES S.A., Athens 1.193. 100.00 4,425,000 EUR 408 (14) EUR 3)
42. CTA Holding GmbH, Bonn 76.00 100,000 EUR 4,104,685 227,952 EUR 2)
42. CTA Holding GmbH, Bonn 1.459. 17.00 100,000 EUR 4,104,685 227,952 EUR 2)
42. CTA Holding GmbH, Bonn 1.489. 7.00 100,000 EUR 4,104,685 227,952 EUR 2)
43. Carduelis B.V. (Netherlands), Amsterdam 1.184. 100.00 18,000 EUR 4,191 2,439 EUR 2)
44. Clear Wireless, LLC, Overland Park,
Kansas City 1.386. 100.00 100 USD 242,588 9,988 USD 6)
45. Clearwire Communications, LLC,
Overland Park, Kansas City 1.326. 100.00 1 USD 20,675,193 3,076,541 USD 6)
46. Clearwire Hawaii Partners Spectrum, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 17,493 (1,669) USD 6)
47. Clearwire IP Holdings, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 4,857 (77) USD 6)
48. Clearwire International, LLC,
Overland Park, Kansas City 1.49. 100.00 100 USD (1,096,044) (50,511) USD 6)
49. Clearwire Legacy, LLC,
Overland Park, Kansas City 1.45. 100.00 1 USD 1,005,394 (30,151) USD 6)
50. Clearwire Spectrum Holdings II, LLC,
Overland Park, Kansas City 1.49. 100.00 1 USD 1,127,399 3,046 USD 6)
51. Clearwire Spectrum Holdings III, LLC,
Overland Park, Kansas City 1.45. 100.00 1 USD 2,693,488 (118) USD 6)
52. Clearwire Spectrum Holdings, LLC,
Overland Park, Kansas City 1.49. 100.00 1 USD 176,556 304 USD 6)
53. Clearwire XOHM, LLC, Overland Park,
Kansas City 1.254. 100.00 1 USD 5,407,992 82,215 USD 6)
54. Click & Buy Services India Private Limited,
Hydrabad 1.179. 99.62 1,609,920 INR (18,276) (3,936) INR 2)
55. ClickandBuy International Limited,
Milton Keynes 1.33. 100.00 1,301,008 GBP 3,415 177 GBP 2)
56. Combridge S.R.L., Sfântu Gheorghe 1.230. 100.00 29,801,490 RON 39,655 7,059 RON 2)
57. Comfortcharge GmbH, Bonn 1.491. 100.00 25,000 EUR 16,037 – EUR 1)
58. Commander Services s.r.o., Bratislava 1.296. 100.00 5,000 EUR 2,778 1,172 EUR 2)
59. Compendo GmbH, Nuremberg 1.85. 100.00 25,000 EUR 25 – EUR 2)
60. Complex Bidco B.V., Schiphol 1.426. 100.00 4,347,293 EUR (42,085) 5,418 EUR 2)
61. Connect CCC, LLC, Bellevue 1.441. 100.00 1 USD (4,084) (4,084) USD 2)
62. Consortium 1 S.à r.l., Luxembourg 1.117. 100.00 2,423,526 EUR (66,442) (3,298) EUR 2)
63. Cosmoholding International B.V.,
Amsterdam 1.40. 99.00 1,600,000 EUR (97) (1,568) EUR 2)
 Annual Financial Statements 58
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
63. Cosmoholding International B.V.,
Amsterdam 1.188. 1.00 1,600,000 EUR (97) (1,568) EUR 2)
64. Cosmote E-Value Contact Center Services
Societe Anonyme, Agios Stefanos 1.188. 100.00 5,105,062 EUR 22,392 1,662 EUR 3)
65. Cosmote TV Productions & Services S.A.,
Athens 1.193. 100.00 3,400,000 EUR 4,000 220 EUR 3)
66. Cosmote Technical Services S.A., Athens 1.193. 100.00 4,714,408 EUR 9,504 (502) EUR 3)
67. Crnogorski Telekom a.d. Podgorica,
Podgorica 1.192. 76.53 123,857,700 EUR 141,258 4,292 EUR 2)
68. DEUTSCHE TELEKOM GLOBAL BUSINESS
SOLUTIONS CANADA INC., Saint John 1.149. 100.00 2,031,555 CAD 14,196 (201) CAD 2)
69. DFMG Deutsche Funkturm GmbH, Münster 1.489. 16.67 30,000 EUR 7,727 – EUR 1)
69. DFMG Deutsche Funkturm GmbH, Münster 1.71. 83.33 30,000 EUR 7,727 – EUR 1)
70. DFMG Holding GmbH, Bonn 100.00 26,000 EUR 54 – EUR 1)
71. DFMG Zwischenholding GmbH, Bonn 1.70. 100.00 27,000 EUR 137 – EUR 1)
72. DIGI SLOVAKIA, s.r.o., Bratislava 1.317. 100.00 5,152,230 EUR 31,502 5,486 EUR 2)
73. DTAG Global Business Solutions Mexico, S.A.
de C.V., Puebla 1.100. 100.00 26,100,000 MXN – – MXN 9)
74. DTCP Israel Ltd., Herzliya 1.103. 100.00 415 ILS 335 174 ILS 2)
75. DTCP Korea Co. Ltd., Seoul 1.103. 100.00 34,000,000 KRW – – KRW 9)
76. DTCP NL I B.V., Maastricht 1.106. 100.00 0 EUR 11 (5) EUR 2)
77. DTCP NL II C.V., Maastricht 1.106. 99.99 9,999 EUR 52 – EUR 2)
77. DTCP NL II C.V., Maastricht 1.76. 0.01 9,999 EUR 52 – EUR 2)
78. DTCP NL III B.V., Maastricht 1.106. 100.00 0 EUR 13 (2) EUR 2)
79. DTCP NL IV C.V., Maastricht 1.106. 99.99 9,999 EUR 39,517 – EUR 2)
79. DTCP NL IV C.V., Maastricht 1.78. 0.01 9,999 EUR 39,517 – EUR 2)
80. DTCP NL V B.V., Maastricht 1.106. 100.00 0 EUR 8 (5) EUR 2)
81. DTCP NL VI C.V., Maastricht 1.106. 99.99 9,999 EUR 13,342 – EUR 2)
81. DTCP NL VI C.V., Maastricht 1.80. 0.01 9,999 EUR 13,342 – EUR 2)
82. DTCP USA, LLC, San Francisco 1.103. 100.00 1 USD (171) (229) USD 2)
83. DeTeAsia Holding GmbH, Bonn 100.00 50,000 DEM 49 – EUR 1)
84. DeTeAssekuranz – Deutsche Telekom
Assekuranz-Vermittlungsgesellschaft mbH,
Cologne 1.85. 100.00 1,000,000 EUR 1,000 – EUR 1)
85. DeTeAssekuranz Holding GmbH, Bonn 100.00 150,000 EUR 22,021 6,976 EUR 2)
86. DeTeFleetServices GmbH, Bonn 100.00 5,000,000 EUR 129,263 – EUR 1)
87. Detecon (Schweiz) AG, Zurich 1.91. 100.00 1,000,000 CHF 12,360 372 CHF 2)
88. Detecon Asia-Pacific Ltd., Bangkok 1.91. 100.00 49,000,000 THB 65,413 (10,110) THB 2)
89. Detecon Consulting Austria GmbH, Vienna 1.87. 100.00 72,673 EUR 500 57 EUR 2)
90. Detecon Consulting FZ-LLC, Dubai 1.91. 100.00 500,000 AED 2,350 699 AED 2)
91. Detecon International GmbH, Cologne 1.459. 100.00 8,700,000 EUR 24,023 (3,487) EUR 2)
92. Detecon Vezetési Tanácsadó Kft., Budapest 1.91. 100.00 4,600,000 HUF 64,787 14,372 HUF 2)
93. Detecon, Inc., Wilmington 1.91. 100.00 1,872,850 USD 16 (9) USD 2)
94. Deutsche TELEKOM Asia Pte. Ltd., Singapore 100.00 137,777,793 SGD 6,137 (47) SGD 2)
95. Deutsche Telekom (UK) Limited,
Hertfordshire 100.00 30,100,000 GBP – – GBP 4)
96. Deutsche Telekom Asset Management GmbH
& Co. KG, Monheim 100.00 6,858,242 EUR 151,483 16,779 EUR 2)
97. Deutsche Telekom Asset Management
Verwaltungsgesellschaft mbH, Monheim 100.00 25,000 EUR 78 10 EUR 2)
98. Deutsche Telekom Außendienst GmbH, Bonn 1.489. 100.00 27,000 EUR 56,145 – EUR 1)
99. Deutsche Telekom Business Development &
Venturing Ltd., Herzliya 100.00 10 ILS 2,297 (30) ILS 2)
100. Deutsche Telekom Business Solutions GmbH,
Bonn 1.489. 100.00 25,000 EUR 27 – EUR 1)
101. Deutsche Telekom Capital Partners Expert/
Advisor Co-Invest GmbH & Co. KG, Hamburg 1.103. 0.00 800 EUR 3,985 – EUR 2)
 Annual Financial Statements 59
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
101. Deutsche Telekom Capital Partners
Expert/Advisor Co-Invest GmbH & Co. KG,
Hamburg 93.20 800 EUR 3,985 – EUR 2)
101. Deutsche Telekom Capital Partners
Expert/Advisor Co-Invest GmbH & Co. KG,
Hamburg 1.102. 800 EUR 3,985 – EUR 2)
102. Deutsche Telekom Capital Partners Fund
GmbH, Hamburg 1.103. 100.00 25,000 EUR 46 4 EUR 2)
103. Deutsche Telekom Capital Partners
Management GmbH, Hamburg 49.00 25,000 EUR 2,540 1,660 EUR 2)
104. Deutsche Telekom Capital Partners Portfolio
Fund Carry GmbH & Co. KG, Hamburg 1.103. 0.00 1,500 EUR 402 – EUR 2)
104. Deutsche Telekom Capital Partners Portfolio
Fund Carry GmbH & Co. KG, Hamburg 51.00 1,500 EUR 402 – EUR 2)
104. Deutsche Telekom Capital Partners Portfolio
Fund Carry GmbH & Co. KG, Hamburg 1.102. 1,500 EUR 402 – EUR 2)
105. Deutsche Telekom Capital Partners Portfolio
Fund Co-Invest I GmbH & Co. KG, Hamburg 1.107. 96.77 300 EUR 109,744 – EUR 2)
105. Deutsche Telekom Capital Partners Portfolio
Fund Co-Invest I GmbH & Co. KG, Hamburg 1.104. 0.75 300 EUR 109,744 – EUR 2)
105. Deutsche Telekom Capital Partners Portfolio
Fund Co-Invest I GmbH & Co. KG, Hamburg 1.101. 2.48 300 EUR 109,744 – EUR 2)
106. Deutsche Telekom Capital Partners Portfolio
Fund Co-Invest Ia GmbH, Hamburg 1.105. 100.00 25,000 EUR 53,073 37,211 EUR 2)
107. Deutsche Telekom Capital Partners Portfolio
Fund GmbH & Co. KG, Hamburg 1.103. 0.00 300 EUR 90,097 – EUR 2)
107. Deutsche Telekom Capital Partners Portfolio
Fund GmbH & Co. KG, Hamburg 100.00 300 EUR 90,097 – EUR 2)
107. Deutsche Telekom Capital Partners Portfolio
Fund GmbH & Co. KG, Hamburg 1.104. 0.00 300 EUR 90,097 – EUR 2)
108. Deutsche Telekom Capital Partners Venture
Fund Carry GmbH & Co. KG, Hamburg 1.103. 0.01 1,400 EUR 3,992 – 2)
108. Deutsche Telekom Capital Partners Venture
Fund Carry GmbH & Co. KG, Hamburg 24.97 1,400 EUR 3,992 – 2)
108. Deutsche Telekom Capital Partners Venture
Fund Carry GmbH & Co. KG, Hamburg 1.102. 1,400 EUR 3,992 – 2)
109. Deutsche Telekom Capital Partners Venture
Fund GmbH & Co. KG, Hamburg 1.103. 0.00 400 EUR 66,683 – EUR 2)
109. Deutsche Telekom Capital Partners Venture
Fund GmbH & Co. KG, Hamburg 96.77 400 EUR 66,683 – EUR 2)
109. Deutsche Telekom Capital Partners Venture
Fund GmbH & Co. KG, Hamburg 1.108. 0.75 400 EUR 66,683 – EUR 2)
109. Deutsche Telekom Capital Partners Venture
Fund GmbH & Co. KG, Hamburg 1.101. 2.48 400 EUR 66,683 – EUR 2)
110. Deutsche Telekom Capital Partners Venture
Fund II Carry GmbH & Co. KG, Hamburg 1.103. 0.00 2,000 EUR 718 – EUR 2)
110. Deutsche Telekom Capital Partners Venture
Fund II Carry GmbH & Co. KG, Hamburg 20.72 2,000 EUR 718 – EUR 2)
110. Deutsche Telekom Capital Partners Venture
Fund II Carry GmbH & Co. KG, Hamburg 1.102. 2,000 EUR 718 – EUR 2)
111. Deutsche Telekom Capital Partners Venture
Fund II GmbH & Co. KG, Hamburg 1.103. 0.00 400 EUR 74,596 – EUR 2)
111. Deutsche Telekom Capital Partners Venture
Fund II GmbH & Co. KG, Hamburg 98.10 400 EUR 74,596 – EUR 2)
111. Deutsche Telekom Capital Partners Venture
Fund II GmbH & Co. KG, Hamburg 1.110. 0.75 400 EUR 74,596 – EUR 2)
111. Deutsche Telekom Capital Partners Venture
Fund II GmbH & Co. KG, Hamburg 1.116. 1.15 400 EUR 74,596 – EUR 2)
111. Deutsche Telekom Capital Partners Venture
Fund II GmbH & Co. KG, Hamburg 1.102. 400 EUR 74,596 – EUR 2)
112. Deutsche Telekom Capital Partners Venture
Fund II Parallel GmbH & Co. KG, Hamburg 1.103. 0.00 1,000 EUR 25,059 – EUR 2)
112. Deutsche Telekom Capital Partners Venture
Fund II Parallel GmbH & Co. KG, Hamburg 1.110. 0.75 1,000 EUR 25,059 – EUR 2)
112. Deutsche Telekom Capital Partners Venture
Fund II Parallel GmbH & Co. KG, Hamburg 1.102. 1,000 EUR 25,059 – EUR 2)
 Annual Financial Statements 60
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
113. Deutsche Telekom Clinical Solutions GmbH,
Bonn 1.139. 100.00 25,000 EUR 2,029 – EUR 1)
114. Deutsche Telekom Clinical Solutions India
Private Limited, Pune 1.447. 0.00 2,146,070 INR 248,505 70,340 INR 6)
114. Deutsche Telekom Clinical Solutions India
Private Limited, Pune 1.459. 100.00 2,146,070 INR 248,505 70,340 INR 6)
115. Deutsche Telekom Digital Labs Private
Limited, Gurgaon 1.120. 99.00 8,000,000 INR – – INR 9)
115. Deutsche Telekom Digital Labs Private
Limited, Gurgaon 1.118. 1.00 8,000,000 INR – – INR 9)
116. Deutsche Telekom ECP GmbH & Co. KG,
Hamburg 50.00 200 EUR – – EUR
117. Deutsche Telekom Europe B.V., Maastricht 1.119. 100.00 67,006 EUR 15,333,275 909,380 EUR 2)
118. Deutsche Telekom Europe Beteiligungs­
verwaltungsgesellschaft mbH, Bonn 100.00 25,000 EUR 32 – EUR 4)
119. Deutsche Telekom Europe Holding B.V.,
Maastricht 1.120. 100.00 25,002 EUR 13,869,570 (44) EUR 2)
120. Deutsche Telekom Europe Holding GmbH,
Bonn 100.00 30,000 EUR 14,464,965 – EUR 1)
121. Deutsche Telekom GBS Japan K.K., Tokyo 1.100. 100.00 10,035,000 JPY 365,801 10,620 JPY 2)
122. Deutsche Telekom Geschäftskunden-
Vertrieb GmbH, Bonn 1.489. 100.00 25,000 EUR 504 – EUR 1)
123. Deutsche Telekom Global Business Solutions
Argentina S.A., Buenos Aires 1.447. 2.00 2,000,001 ARS – – ARS 10)
123. Deutsche Telekom Global Business Solutions
Argentina S.A., Buenos Aires 1.100. 98.00 2,000,001 ARS – – ARS 10)
124. Deutsche Telekom Global Business Solutions
Belgium NV, Machelen 1.100. 100.00 172,125 EUR 4,004 587 EUR 2)
125. Deutsche Telekom Global Business Solutions
China (HK) Limited, Hong Kong 1.100. 100.00 24,000,000 HKD 43,233 9,103 HKD 2)
126. Deutsche Telekom Global Business Solutions
France SAS, Rueil-Malmaison 1.100. 100.00 845,546 EUR – – EUR 10)
127. Deutsche Telekom Global Business Solutions
GmbH, Vienna 1.100. 100.00 35,000 EUR – – EUR 9)
128. Deutsche Telekom Global Business Solutions
Greece E.P.E., Athens 1.447. 1.00 18,000 EUR 766 (1) EUR 2)
128. Deutsche Telekom Global Business Solutions
Greece E.P.E., Athens 1.100. 99.00 18,000 EUR 766 (1) EUR 2)
129. Deutsche Telekom Global Business Solutions
Iberia S.L., Madrid 1.100. 100.00 3,006 EUR 152 (2) EUR 2)
130. Deutsche Telekom Global Business Solutions
Italia S.r.l., Rozzano 1.100. 100.00 594,000 EUR 5,645 580 EUR 2)
131. Deutsche Telekom Global Business Solutions
Luxembourg S.A., Münsbach 1.447. 0.02 1,500,000 EUR 5,754 14 EUR 2)
131. Deutsche Telekom Global Business Solutions
Luxembourg S.A., Münsbach 1.100. 99.98 1,500,000 EUR 5,754 14 EUR 2)
132. Deutsche Telekom Global Business Solutions
Nederland B.V., Utrecht 1.100. 100.00 10,000 EUR – – EUR 10)
133. Deutsche Telekom Global Business Solutions
Schweiz AG, Münchenbuchsee 1.100. 100.00 100,000 CHF – – CHF 9)
134. Deutsche Telekom Global Business Solutions
Singapore Pte. Ltd., Singapore 1.100. 100.00 22,550,000 SGD – – SGD 10)
135. Deutsche Telekom Global Business Solutions
Telekomünikasyon Limited Sirketi, Istanbul 1.100. 100.00 4,453,325 TRY 33,055 8,416 TRY 2)
136. Deutsche Telekom Global Business Solutions
UK Ltd., Milton Keynes 1.100. 100.00 500,000 GBP 499 – GBP 2)
137. Deutsche Telekom Global Business Solutions,
telekomunikacije, d.o.o., Ljubljana 1.100. 100.00 8,763 EUR 483 2 EUR 2)
138. Deutsche Telekom Healthcare Solutions
Netherlands B.V., LB Bunnik 1.459. 100.00 18,000 EUR 2,308 74 EUR 2)
139. Deutsche Telekom Healthcare and Security
Solutions GmbH, Bonn 1.459. 100.00 511,300 EUR 2,161 – EUR 1)
140. Deutsche Telekom Holding B.V., Maastricht 1.411. 100.00 20,500 EUR 8,992,522 (46) EUR 2)
141. Deutsche Telekom Hosted Business
Services, Inc., Menlo Park 1.222. 100.00 5,306 USD – – USD
 Annual Financial Statements 61
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
142. Deutsche Telekom IT & Telecommunications
Hungary Kft., Budapest 1.100. 100.00 3,000,000 HUF – – HUF 9)
143. Deutsche Telekom IT & Telecommunications
Slovakia s.r.o., Kosice 1.169. 100.00 715,000 EUR – – EUR 9)
144. Deutsche Telekom IT GmbH, Bonn 100.00 25,000 EUR 142,893 – EUR 1)
145. Deutsche Telekom Individual Solutions &
Products GmbH, Bonn 1.489. 100.00 25,000 EUR 3,070 – EUR 1)
146. Deutsche Telekom International Finance B.V.,
Maastricht 100.00 500,000 EUR 266,195 1,599 EUR 2)
147. Deutsche Telekom IoT GmbH, Bonn 100.00 25,000 EUR 27 – EUR 1)
148. Deutsche Telekom Nordic A/S, Ballerup 1.100. 100.00 1,010,000 DKK – – DKK 10)
149. Deutsche Telekom North America Inc.,
Wilmington 1.100. 100.00 30 USD 10,782 2,420 USD 2)
150. Deutsche Telekom Pan-Net Croatia d.o.o.,
Zagreb 1.120. 100.00 180,000 HRK 115,748 2,002 HRK 2)
151. Deutsche Telekom Pan-Net Czech Republic
s.r.o., Prague 1.120. 100.00 13,600,000 CZK 64,068 291 CZK 2)
152. Deutsche Telekom Pan-Net GmbH, Vienna 1.120. 100.00 600,000 EUR 2,607 7 EUR 2)
153. Deutsche Telekom Pan-Net Greece EPE,
Maroussi (Athens) 1.120. 99.88 650,040 EUR 5,356 282 EUR 2)
153. Deutsche Telekom Pan-Net Greece EPE,
Maroussi (Athens) 1.118. 0.12 650,040 EUR 5,356 282 EUR 2)
154. Deutsche Telekom Pan-Net Hungary Kft.,
Budapest 1.120. 100.00 7,501,000 HUF 1,353,778 28,119 HUF 2)
155. Deutsche Telekom Pan-Net Macedonia Dooel,
Skopje 1.120. 100.00 3,020,000 EUR 187,491 1,092 EUR 2)
156. Deutsche Telekom Pan-Net Montenegro d.o.o.,
Podgorica 1.120. 100.00 2,020,000 EUR 2,030 4 EUR 3)
157. Deutsche Telekom Pan-Net Poland Spolka z
ograniczona odpowiedzialnoscia, Warsaw 1.120. 100.00 100,000 PLN 2,906 385 PLN 2)
158. Deutsche Telekom Pan-Net Romania S.R.L.,
Bucharest 1.120. 100.00 4,000,000 EUR 19,053 495 RON 2)
159. Deutsche Telekom Pan-Net s.r.o., Bratislava 1.120. 97.00 25,000 EUR 45,579 1,524 EUR 2)
159. Deutsche Telekom Pan-Net s.r.o., Bratislava 1.118. 3.00 25,000 EUR 45,579 1,524 EUR 2)
160. Deutsche Telekom Privatkunden-Vertrieb
GmbH, Bonn 1.489. 100.00 10,000,000 EUR 44,258 – EUR 1)
161. Deutsche Telekom Security GmbH, Bonn 100.00 25,000 EUR 27 – EUR 1)
162. Deutsche Telekom Service GmbH, Bonn 1.489. 100.00 25,000 EUR 141,960 – EUR 1)
163. Deutsche Telekom Services Europe Czech
Republic s.r.o., Brno 1.165. 100.00 13,500,000 CZK 10,529 1,852 CZK 2)
164. Deutsche Telekom Services Europe Romania
S.R.L., Bucharest 3.33 13,198,200 RON 15,179 (279) RON 2)
164. Deutsche Telekom Services Europe Romania
S.R.L., Bucharest 1.165. 96.67 13,198,200 RON 15,179 (279) RON 2)
165. Deutsche Telekom Services Europe SE, Bonn 100.00 120,000 EUR 3,020 – EUR 1)
166. Deutsche Telekom Services Europe Slovakia
s.r.o., Bratislava 1.165. 99.99 6,520,000 EUR 3,880 782 EUR 2)
166. Deutsche Telekom Services Europe Slovakia
s.r.o., Bratislava 1.447. 0.01 6,520,000 EUR 3,880 782 EUR 2)
167. Deutsche Telekom Strategic Investments
GmbH, Bonn 100.00 10,225,900 EUR 25,823 (285) EUR 2)
168. Deutsche Telekom Systems Solutions Hungary
Kft., Budapest 1.459. 100.00 150,100,000 HUF 11,409,110 1,724,641 HUF 2)
169. Deutsche Telekom Systems Solutions
Slovakia s.r.o., Kosice 1.447. 2.50 258,581 EUR 32,760 6,003 EUR 2)
169. Deutsche Telekom Systems Solutions
Slovakia s.r.o., Kosice 1.459. 97.50 258,581 EUR 32,760 6,003 EUR 2)
170. Deutsche Telekom Technik GmbH, Bonn 1.489. 100.00 27,000 EUR 385,192 – EUR 1)
171. Deutsche Telekom Venture Funds GmbH, Bonn 100.00 25,000 EUR 329,185 – EUR 1)
172. Deutsche Telekom hub:raum Fund GmbH, Bonn 100.00 25,000 EUR 6,795 – EUR 1)
173. Deutsche Telekom, Inc., New York 100.00 100 USD 8,194 272 USD 2)
174. Digital Media Audience Products GmbH, Bonn 1.491. 100.00 25,000 EUR 28 – EUR 2)
 Annual Financial Statements 62
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
175. E-Value Collection Ltd., Agios Stefanos 1.64. 100.00 350,010 EUR 2,791 (28) EUR 3)
176. E-Value International S.A., Bucharest 1.64. 0.01 6,700,000 RON (16,256) (3,911) RON 2)
176. E-Value International S.A., Bucharest 1.63. 99.99 6,700,000 RON (16,256) (3,911) RON 2)
177. Erste DFMG Deutsche Funkturm
Vermögens-GmbH, Bonn 100.00 100,000 EUR 170,273 – EUR 1)
178. Erste Newco GmbH, Bonn 100.00 25,000 EUR – – EUR 9)
179. Firstgate Holding AG, Oberägeri 1.33. 100.00 100,000 CHF 829 2 CHF 2)
180. Fixed Wireless Holdings, LLC,
Overland Park, Kansas City 1.49. 100.00 1 USD 777,360 9,683 USD 6)
181. Fresno MMDS Associates, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 8,467 (484) USD 6)
182. GEMAPPS Gesellschaft für mobile
Lösungen mbH, Hamburg 1.459. 100.00 25,000 EUR 207 – EUR 2)
183. GMG Generalmietgesellschaft mbH, Cologne 100.00 51,130,000 EUR 51,423 – EUR 1)
184. GTS Central European Holding B.V.
(Netherlands), Amsterdam 1.62. 100.00 18,500 EUR 455,001 13,558 EUR 2)
185. GTS Poland Sp. z o.o. (Poland), Warsaw 1.117. 100.00 199,870 PLN 47,050 19,728 PLN 2)
186. GTS Telecom S.R.L., Bucharest 1.184. 47.44 7,368,415 RON 58,625 9,249 RON 2)
186. GTS Telecom S.R.L., Bucharest 1.43. 52.56 7,368,415 RON 58,625 9,249 RON 2)
187. GTS Ukraine L.L.C., Kiev 1.184. 100.00 1,150,000 UAH (39,934) 22,411 UAH 2)
188. Germanos Industrial and Commercial
Company of Electronic Telecommunication
materials and supply of Services Societe
Anon, Agios Stefanos 1.40. 100.00 29,600,892 EUR 136,804 6,318 EUR 3)
189. GlasfaserPlus GmbH, Bonn 1.489. 100.00 25,000 EUR – – EUR 9)
190. Goingsoft Software Vertriebs- und
Beratungs GmbH, St. Johann 1.489. 100.00 35,000 EUR 2,076 481 EUR 2)
191. HT PRODUKCIJA d.o.o., Zagreb 1.194. 100.00 25,020,000 HRK (2,240) (17,452) HRK 2)
192. HT holding d.o.o., Zagreb 1.194. 100.00 929,965,000 HRK 1,751,765 (11,585) HRK 2)
193. Hellenic Telecommunications Organization
S.A. (OTE), Athens 46.91 1,330,594,050 EUR 3,154,600 635,000 EUR 3)
194. Hrvatski Telekom d.d., Zagreb 1.117. 51.71 10,244,977,390 HRK 12,705,000 717,000 HRK 2)
195. Huron Merger Sub LLC, Bellevue 1.440. 100.00 1 USD – – USD
196. I.T.E.N.O.S. International Telecom Network
Operation Services GmbH, Bonn 1.100. 100.00 3,000,000 EUR 6,410 – EUR 1)
197. IBSV LLC, Wilmington 1.441. 100.00 0 USD – – USD 5)
198. ITgen Informatikai Szolgáltató Korlátolt
FelelQsségq Társaság, Budapest 1.461. 100.00 3,000,000 HUF 561,676 216,634 HUF 2)
199. Immmr GmbH, Bonn 1.491. 100.00 25,000 EUR 397 (537) EUR 2)
200. ImmoCom Verwaltungs GmbH,
Heusenstamm 1.183. 100.00 50,000 DEM (4,759) (1) EUR 2)
201. Infovan (Proprietary) Limited, Johannesburg 1.474. 100.00 2,000 ZAR 2 – ZAR 2)
202. Intervate Holdings (Proprietary) Limited i. L.,
Johannesburg 1.474. 100.00 2,090 ZAR 2 – ZAR 5)
203. Intervate Project Services (Proprietary)
Limited i. L., Johannesburg 1.204. 100.00 300 ZAR – – ZAR 5)
204. Intervate Solutions (Proprietary) Limited,
Johannesburg 1.474. 100.00 1,070 ZAR (30,938) 7,190 ZAR 2)
205. Investel Magyar Távközlési Befektetési Zrt.,
Budapest 1.230. 100.00 1,113,000,000 HUF 1,459,392 157,972 HUF 2)
206. Iskon Internet d.d., Zagreb 1.192. 100.00 420,269,100 HRK 153,908 (43,338) HRK 2)
207. Kabelsko distributivni sustav d.o.o., Cakovec 1.192. 100.00 1,229,600 HRK 1,554 422 HRK 2)
208. KalászNet Kft., Budapest 1.230. 100.00 225,000,000 HUF 2,646,304 738,654 HUF 2)
209. Kennewick Licensing, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 1,318 (43) USD 6)
210. Kumukan GmbH, Bonn 1.491. 100.00 25,000 EUR 1,828 (9) EUR 2)
211. L3TV Chicagoland Cable System, LLC,
Bellevue 1.223. 100.00 1 USD – – USD
212. L3TV Colorado Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
 Annual Financial Statements 63
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
213. L3TV DC Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
214. L3TV Dallas Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
215. L3TV Detroit Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
216. L3TV Los Angeles Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
217. L3TV Minneapolis Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
218. L3TV New York Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
219. L3TV Philadelphia Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
220. L3TV San Francisco Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
221. L3TV Seattle Cable System, LLC, Bellevue 1.223. 100.00 1 USD – – USD
222. Lambda Telekommunikationsdienste GmbH,
Bonn 100.00 25,000 EUR 36 – EUR 1)
223. Layer3 TV, LLC, Bellevue 1.441. 100.00 10 USD 267,812 (197,035) USD 2)
224. Leto Telekommunikationsdienste GmbH, Bonn 1.489. 100.00 25,000 EUR 29 – EUR 2) 9)
225. Loki Telekommunikationsdienste GmbH, Bonn 1.489. 100.00 25,000 EUR 27 – EUR 1)
226. MAGYARCOM SZOLGÁLTATÓ
KOMMUNIKÁCIÓS Kft., Budapest 1.489. 100.00 50,000,000 HUF 4,492 317 HUF 2)
227. MFP LeaseCo, LLC, Bellevue 1.441. 51.00 1 USD (1,547) 1,714 USD 2)
228. Magenta GmbH, Bonn 100.00 25,000 EUR 27 – EUR 2)
229. Magenta Telekom Infra GmbH, Vienna 1.117. 100.00 35,000 EUR 12 (7) EUR 2)
230. Magyar Telekom Telecommunications Public
Limited Company, Budapest 1.117. 60.49 104,274,254,300 HUF 591,305,000 39,333,000 HUF 3)
231. Makedonski Telekom AD Skopje, Skopje 1.400. 56.67 9,583,887,760 MKD 15,376,980 1,505,395 MKD 2)
232. MetroPCS California, LLC, Bellevue 1.441. 100.00 1 USD 5,489,755 1,172,941 USD 2)
233. MetroPCS Florida, LLC, Bellevue 1.438. 100.00 1 USD 4,592,498 813,057 USD 2)
234. MetroPCS Georgia, LLC, Bellevue 1.438. 100.00 1 USD 1,746,584 458,757 USD 2)
235. MetroPCS Massachusetts, LLC, Bellevue 1.432. 100.00 1 USD 546,756 198,851 USD 2)
236. MetroPCS Michigan, LLC, Bellevue 1.407. 100.00 0 USD 2,267,372 650,562 USD 2)
237. MetroPCS Networks California, LLC, Bellevue 1.441. 100.00 1 USD (405,575) (41,770) USD 2)
238. MetroPCS Networks Florida, LLC, Bellevue 1.438. 100.00 1 USD (85,007) (7,073) USD 2)
239. MetroPCS Nevada, LLC, Bellevue 1.443. 100.00 1 USD 165,287 49,090 USD 2)
240. MetroPCS New York, LLC, Bellevue 1.432. 100.00 1 USD 1,602,516 404,787 USD 2)
241. MetroPCS Pennsylvania, LLC, Bellevue 1.432. 100.00 1 USD 1,228,804 381,096 USD 2)
242. MetroPCS Texas, LLC, Bellevue 1.443. 100.00 1 USD 877,569 147,199 USD 2)
243. MinorCo., LLC, Overland Park, Kansas City 1.386. 100.00 100 USD 89,655 (15,756) USD 6)
244. Mobilbeeep Telecommunications One
Person Limited Liability, Athens 1.40. 100.00 620,100 EUR 5 (51) EUR 2)
245. MobiledgeX GmbH, Bonn 1.246. 100.00 25,000 EUR 31 (14) EUR 2)
246. MobiledgeX, Inc., Menlo Park 1.491. 60.69 22,110,460 USD 2,283 (16,613) USD 2)
247. Motionlogic GmbH, Bonn 1.491. 100.00 25,000 EUR 1,769 (1,970) EUR 2)
248. NSAC, LLC, Overland Park, Kansas City 1.45. 100.00 1 USD 2,606,787 84,493 USD 6)
249. NextGen Communications S.R.L, Bucharest 1.482. 100.00 50,564,200 RON 61,587 4,500 RON 2)
250. Nextel Communications of the Mid-Atlantic, Inc.,
Overland Park, Kansas City 1.326. 100.00 1 USD 2,827,268 264,982 USD 6)
251. Nextel Retail Stores, LLC,
Overland Park, Kansas City 1.386. 100.00 100 USD 8,350 38 USD 6)
252. Nextel South Corporation,
Overland Park, Kansas City 1.326. 100.00 100 USD 1,009,693 121,534 USD 6)
253. Nextel System, LLC,
Overland Park, Kansas City 1.386. 80.00 1 USD 5,829,569 (292,551) USD 6)
253. Nextel System, LLC,
Overland Park, Kansas City 1.326. 20.00 1 USD 5,829,569 (292,551) USD 6)
254. Nextel West Corporation,
Overland Park, Kansas City 1.326. 100.00 100 USD 2,890,701 411,822 USD 6)
255. Nextel of New York, Inc,
Overland Park, Kansas City 1.326. 100.00 1 USD 382,857 53,513 USD 6)
256. Nextel of Puerto Rico, Inc,
Overland Park, Kansas City 1.326. 100.00 100 USD (64,160) (2,826) USD 6)
 Annual Financial Statements 64
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
257. Novatel EOOD, Sofia 1.230. 100.00 11,056,430 BGN 11,681 391 BGN 2)
258. OOO Deutsche Telekom IT RUS,
Sankt Petersburg 1.459. 1.00 10,000 RUB 1,020,922 320,340 RUB 2)
258. OOO Deutsche Telekom IT RUS,
Sankt Petersburg 1.448. 99.00 10,000 RUB 1,020,922 320,340 RUB 2)
259. OOO T-Systems RUS, Sankt Petersburg 1.459. 100.00 6,700,000 RUB – – RUB 9)
260. ORBIT Gesellschaft für Applikations-
und Informationssysteme mbH, Bonn 1.91. 100.00 128,000 EUR 9,779 666 EUR 2)
261. OT-Optima Telekom d.d., Zagreb 1.192. 17.41 694,432,640 HRK 14,262 13,428 HRK 2)
262. OT-Optima Telekom d.o.o., Kober 1.261. 100.00 8,763 EUR 100 (123) EUR 2)
263. OTE ASFALISI INSURANCE AGENCY
SOCIETE ANONYME, Athens 1.193. 99.90 86,000 EUR 1,053 221 EUR 3)
263. OTE ASFALISI INSURANCE AGENCY
SOCIETE ANONYME, Athens 1.66. 0.10 86,000 EUR 1,053 221 EUR 3)
264. OTE Academy S.A., Athens 1.193. 100.00 1,761,030 EUR (1,247) 84 EUR 3)
264. OTE Academy S.A., Athens 1.314. 0.00 1,761,030 EUR (1,247) 84 EUR 3)
265. OTE Estate S.A., Athens 1.193. 100.00 335,344,766 EUR 803,393 68,927 EUR 3)
265. OTE Estate S.A., Athens 1.66. 0.00 335,344,766 EUR 803,393 68,927 EUR 3)
266. OTE International Investments Limited,
Limassol 1.193. 100.00 477,366,811 EUR 178,026 (106,477) EUR 3)
267. OTE International Solutions S.A., Athens 1.193. 100.00 102,354,799 EUR 137,959 3,798 EUR 3)
267. OTE International Solutions S.A., Athens 1.314. 0.00 102,354,799 EUR 137,959 3,798 EUR 3)
268. OTE Plc., London 1.193. 100.00 50,000 GBP 32,326 (15) GBP 3)
269. OTE Rural North SPV, Athens 1.193. 100.00 1,775,112 EUR (2,073) (585) EUR 3)
270. OTE Rural South SPV, Athens 1.193. 100.00 2,255,520 EUR 172 865 EUR 3)
271. OmegaTowers 1 Funkdienste GmbH & Co. KG,
Münster 1.69. 100.00 100 EUR 3,896 697 EUR 2)
271. OmegaTowers 1 Funkdienste GmbH & Co. KG,
Münster 1.272. 100 EUR 3,896 697 EUR 2)
272. OmegaTowers 1 Funkdienste Komplementär
GmbH, Münster 1.69. 100.00 25,000 EUR 28 1 EUR 2)
273. OmegaTowers 2 Funkdienste GmbH & Co. KG,
Münster 1.69. 100.00 100 EUR 13,304 2,140 EUR 2)
273. OmegaTowers 2 Funkdienste GmbH & Co. KG,
Münster 1.274. 100 EUR 13,304 2,140 EUR 2)
274. OmegaTowers 2 Funkdienste Komplementär
GmbH, Münster 1.69. 100.00 25,000 EUR 28 1 EUR 2)
275. OmegaTowers 3 Funkdienste GmbH,
Münster 1.69. 100.00 25,000 EUR 10,025 – EUR 1)
276. One 2 One Limited, Hertfordshire 1.95. 100.00 2 GBP – – GBP 4)
277. One 2 One Personal Communications Ltd.,
Hertfordshire 1.95. 100.00 1 GBP – – GBP 2)
278. Optima Telekom za upravljanje nekretninama
i savjetovanje d.o.o., Zagreb 1.261. 100.00 20,000 HRK 8 – HRK 2)
279. Optima direct d.o.o., Buje 1.261. 100.00 19,216,000 HRK (1,490) 52 HRK 2)
280. P & I Travel GmbH, Darmstadt 100.00 4,000,000 EUR (38) 966 EUR 2)
281. P & I Verwaltungs GmbH, Darmstadt 100.00 25,000 EUR 19 (1) EUR 2)
282. PASM Power and Air Condition Solution
Management Beteiligungs GmbH, Bonn 100.00 25,000 EUR 35 – EUR 2)
283. PASM Power and Air Condition Solution
Management GmbH, Munich 100.00 10,025,000 EUR 137,787 – EUR 1)
284. PCTV Gold II, LLC, Overland Park, Kansas City 1.53. 100.00 1 USD 641,154 17,125 USD 6)
285. PCTV Sub, LLC, Overland Park, Kansas City 1.53. 100.00 1 USD 12,360 (1,193) USD 6)
286. PR Wireless PR, LLC, Overland Park,
Kansas City 1.386. 100.00 1 USD 12,537 (28,575) USD 6)
287. PT T Systems Indonesia, Jakarta 1.447. 0.40 2,500,000,000 IDR (2,685,414) (3,677,216) IDR 2)
287. PT T Systems Indonesia, Jakarta 1.459. 99.60 2,500,000,000 IDR (2,685,414) (3,677,216) IDR 2)
288. PTI PR TOWERS I, LLC, Bellevue 1.436. 100.00 1 USD – – USD 4)
289. PTI US TOWERS II, LLC, Bellevue 1.443. 100.00 1 USD – – USD 4)
 Annual Financial Statements 65
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
290. PTI US Towers I, LLC, Bellevue 1.441. 100.00 1 USD – – USD 4)
291. Pan-Inform Kutatás-Fejlesztési és Innovácios
Kft., Budapest 1.461. 100.00 3,000,000 HUF 177,569 102,862 HUF 2)
292. Pelsoft Informatika Kft., Balatonfüred 1.461. 100.00 3,000,000 HUF (95,100) (98,304) HUF 2)
293. People’s Choice TV of Houston, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 71,214 (5,165) USD 6)
294. People’s Choice TV of St. Louis, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 99,115 (1,968) USD 6)
295. Planet A, a.s., Praha 4 1.408. 100.00 20,946,275 CZK 20,946 3,056 CZK 2)
296. PosAm spol. s.r.o., Bratislava 1.317. 51.00 170,000 EUR 15,444 2,754 EUR 2)
297. PreHCM Services GmbH, Miltenberg 1.69. 100.00 25,000 EUR 1,503 209 EUR 2)
298. PushSpring, Inc., Bellevue 1.441. 100.00 32,580,234 USD 30,583 (1,631) USD 2)
299. Qingdao DETECON Consulting Co., Ltd.,
Qingdao 1.91. 100.00 2,000,000 USD 9,000 283 USD 2)
300. SFE 1, LLC, Overland Park, Kansas City 1.386. 100.00 1 USD 2,650,375 (8,621) USD 6)
301. SFE 2, LLC, Overland Park, Kansas City 1.380. 100.00 1 USD 4,730,034 1,058,596 USD 6)
302. SIHI Mexico S. de R.L. de C.V.,
Col. Amplicion Granada 1.353. 99.00 100 MXN (878) (204) USD 6)
302. SIHI Mexico S. de R.L. de C.V.,
Col. Amplicion Granada 1.355. 1.00 100 MXN (878) (204) USD 6)
303. SIHI New Zealand Holdco, Inc,
Overland Park, Kansas City 1.353. 100.00 100 USD 2,002 15 USD 6)
304. SIHI Scandinavia AB, Stockholm 1.353. 100.00 1,000 SEK 2,843 64 USD 6)
305. SN Holdings (BR I) LLC,
Overland Park, Kansas City 1.353. 100.00 100 USD – – USD
306. SPV HOLDINGS Sp. z o.o., Warsaw 1.117. 100.00 60,000 PLN 28 (15) PLN 2)
307. STC Five, LLC, Overland Park, Kansas City 1.380. 100.00 100 USD (112,374) (10,628) USD 6)
308. STC Four, LLC, Overland Park, Kansas City 1.380. 100.00 100 USD (3,359) (331) USD 6)
309. STC One, LLC, Overland Park, Kansas City 1.364. 100.00 100 USD (16,249) (1,595) USD 6)
310. STC Six Company, Overland Park,
Kansas City 1.307. 100.00 100 USD (4,331) (451) USD 6)
311. STC Three LLC, Overland Park, Kansas City 1.3. 100.00 100 USD (4,024) (390) USD 6)
312. STC Two LLC, Overland Park, Kansas City 1.386. 100.00 100 USD (58,825) (5,715) USD 6)
313. Satellic NV, Machelen 1.459. 76.00 10,000,000 EUR 16,671 18,365 EUR 2)
314. Satellite and Maritime Telecommunications
S.A., Piraeus 1.193. 94.08 5,463,750 EUR 8,618 77 EUR 3)
314. Satellite and Maritime Telecommunications
S.A., Piraeus 1.66. 0.01 5,463,750 EUR 8,618 77 EUR 3)
315. Sigma Telekommunikationsdienste GmbH,
Bonn 100.00 25,000 EUR 27 – EUR 1)
316. Simpel.nl B.V., Amsterdam 1.60. 100.00 0 EUR 27,466 16,151 EUR 2)
317. Slovak Telekom, a.s., Bratislava 1.117. 100.00 864,117,321 EUR 1,199,250 111,899 EUR 3)
318. Software Daten Service Gesellschaft m.b.H.,
Vienna 1.459. 100.00 290,691 EUR 28,244 7,655 EUR 2)
319. Sophia Invest GmbH, Bonn 1.491. 100.00 25,000 EUR 82,890 132 EUR 2)
320. Speedchoice of Detroit, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 99,518 (5,816) USD 6)
321. Speedchoice of Phoenix, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 44,956 (1,416) USD 6)
322. Sprint (Bay Area), LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 31,587 (260) USD 6)
323. Sprint (Thailand) Limited, Bangkok 1.326. 0.00 5,775,000 THB 928 2 USD 6)
323. Sprint (Thailand) Limited, Bangkok 1.353. 100.00 5,775,000 THB 928 2 USD 6)
323. Sprint (Thailand) Limited, Bangkok 1.355. 0.00 5,775,000 THB 928 2 USD 6)
324. Sprint Brasil Servicos de Telecomunicacoes
Ltda., Sao Paulo 1.353. 1.00 6,149,999 BRL 4,330 357 USD 6)
324. Sprint Brasil Servicos de Telecomunicacoes
Ltda., Sao Paulo 1.362. 99.00 6,149,999 BRL 4,330 357 USD 6)
 Annual Financial Statements 66
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
325. Sprint Capital Corporation,
Overland Park, Kansas City 1.326. 100.00 250 USD 3,397,822 117,206 USD 6)
326. Sprint Communication, Inc.,
Overland Park, Kansas City 1.331. 100.00 5,904,772 USD 22,831,750 (343,871) USD 6)
327. Sprint Communications Company of New
Hampshire, Inc., Overland Park, Kansas City 1.329. 100.00 1,000 USD – – USD
328. Sprint Communications Company of Virginia,
Inc, Overland Park, Kansas City 1.329. 100.00 1,000 USD – – USD
329. Sprint Communications Company, LP,
Overland Park, Kansas City 1.502. 4.94 100 USD 5,360,384 241,786 USD 6)
329. Sprint Communications Company, LP,
Overland Park, Kansas City 1.326. 95.06 100 USD 5,360,384 241,786 USD 6)
330. Sprint Connect, LLC,
Overland Park, Kansas City 1.334. 100.00 100 USD – – USD
331. Sprint Corporation (DE),
Overland Park, Kansas City 1.441. 100.00 34,453,745 USD 25,854,996 (338,393) USD 6)
332. Sprint Corporation (KS),
Overland Park, Kansas City 1.326. 100.00 100 USD – – USD
333. Sprint Corporation (MO),
Overland Park, Kansas City 1.326. 100.00 10 USD – – USD
334. Sprint Enterprise Mobility, LLC,
Overland Park, Kansas City 1.386. 100.00 100 USD – – USD
335. Sprint Enterprise Network Services, Inc.,
Overland Park, Kansas City 1.326. 100.00 1,000 USD 13,519 (1,849) USD 6)
336. Sprint Federal Mangement, LLC,
Overland Park, Kansas City 1.385. 100.00 1 USD (7) – USD 6)
337. Sprint Federal Operations LLC,
Overland Park, Kansas City 1.329. 100.00 1 USD 149,922 39,299 USD 6)
338. Sprint HoldCo, LLC,
Overland Park, Kansas City 1.326. 57.86 100,000 USD – – USD
339. Sprint Hong Kong Limited, Hong Kong 1.353. 50.00 100 HKD (1,965) 167 USD 6)
339. Sprint Hong Kong Limited, Hong Kong 1.355. 50.00 100 HKD (1,965) 167 USD 6)
340. Sprint Intermediate HoldCo II, LLC,
Overland Park, Kansas City 1.331. 0.00 100 USD 141,832 32,255 USD 6)
340. Sprint Intermediate HoldCo II, LLC,
Overland Park, Kansas City 1.381. 100.00 100 USD 141,832 32,255 USD 6)
341. Sprint Intermediate HoldCo III, LLC,
Overland Park, Kansas City 1.331. 0.00 100 USD 736,823 192,124 USD 6)
341. Sprint Intermediate HoldCo III, LLC,
Overland Park, Kansas City 1.370. 100.00 100 USD 736,823 192,124 USD 6)
342. Sprint Intermediate HoldCo, LLC,
Overland Park, Kansas City 1.331. 0.00 100 USD (1,980,212) 1,440,786 USD 6)
342. Sprint Intermediate HoldCo, LLC,
Overland Park, Kansas City 1.371. 100.00 100 USD (1,980,212) 1,440,786 USD 6)
343. Sprint International Argentina SRL,
Buenos Aires 1.353. 90.00 6,789,399 ARS (92) (102) USD 6)
343. Sprint International Argentina SRL,
Buenos Aires 1.355. 10.00 6,789,399 ARS (92) (102) USD 6)
344. Sprint International Australia Pty. Limited,
Sydney 1.353. 100.00 1,112,079 AUD (4,594) 12 USD 6)
345. Sprint International Austria GmbH, Vienna 1.353. 100.00 1 EUR 701 47 USD 6)
346. Sprint International Caribe, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 6,504 (1,330) USD 6)
347. Sprint International Chile Limitada, Santiago 1.353. 99.90 712,098,562 CLP 830 2 USD 6)
347. Sprint International Chile Limitada, Santiago 1.355. 0.10 712,098,562 CLP 830 2 USD 6)
348. Sprint International Colombia Ltda,
Bogota, D.C. 1.353. 99.93 120,140,669 COP 3,450 (13) USD 6)
348. Sprint International Colombia Ltda,
Bogota, D.C. 1.355. 0.07 120,140,669 COP 3,450 (13) USD 6)
349. Sprint International Communications Canada
ULC, Halifax, N.S. 1.353. 100.00 1 CAD 237 75 USD 6)
350. Sprint International Communications
Corporation, Overland Park, Kansas City 1.355. 100.00 268,641 USD 55,808 7,475 USD 6)
 Annual Financial Statements 67
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
351. Sprint International Communications
Singapore Pte. Ltd., Singapore 1.353. 100.00 4,172,002 SGD (2,785) 110 USD 6)
352. Sprint International Czech Republic s.r.o.,
Praha 1 1.353. 100.00 200,000 CZK 72 (1) USD 6)
353. Sprint International Holding, Inc.,
Overland Park, Kansas City 1.326. 100.00 1,000 USD 106,996 (2,662) USD 6)
354. Sprint International Hungary Korlátolt
Felelösségü Társaság, Budapest 1.353. 100.00 1 HUF 74 (11) HUF 6)
355. Sprint International Incorporated,
Overland Park, Kansas City 1.326. 100.00 1,000 USD 362,982 17,074 USD 6)
356. Sprint International Japan Corp., Tokio 1.353. 100.00 200 JPY (4,245) 96 USD 6)
357. Sprint International Korea, LLC, Seoul 1.353. 100.00 92,524 KRW 3,862 32 USD 6)
358. Sprint International Network Company, LLC,
Overland Park, Kansas City 1.350. 100.00 1 USD 71,494 10,147 USD 6)
359. Sprint International Norway AS, Oslo 1.353. 100.00 200 NOK 593 2 USD 6)
360. Sprint International Spain, S.L., Madrid 1.353. 98.00 43,630 EUR 197 (2) USD 6)
360. Sprint International Spain, S.L., Madrid 1.355. 2.00 43,630 EUR 197 (2) USD 6)
361. Sprint International Taiwan Limited, Taipei 1.353. 100.00 1 TWD 413 4 USD 6)
362. Sprint International do Brasil Ltda.,
Rio de Janeiro/RJ 1.353. 50.00 21,114,412 BRL 4,527 357 USD 6)
362. Sprint International do Brasil Ltda.,
Rio de Janeiro/RJ 1.355. 50.00 21,114,412 BRL 4,527 357 USD 6)
363. Sprint Intl New Zealand, Auckland City 1.303. 100.00 100 USD 412 3 USD 6)
364. Sprint PCS Assets, LLC, Overland Park,
Kansas City 1.380. 100.00 100 USD (54,481) (131,208) USD 6)
365. Sprint RUS LLC, Moscow 1.353. 99.00 53,300,000 RUB 779 11 RUB 6)
365. Sprint RUS LLC, Moscow 1.355. 1.00 53,300,000 RUB 779 11 RUB 6)
366. Sprint Solutions, Inc., Overland Park,
Kansas City 1.326. 100.00 100 USD – – USD
367. Sprint Spectrum Co. II, LLC, Overland Park,
Kansas City 1.376. 100.00 1 USD 141,832 32,255 USD 6)
368. Sprint Spectrum Co. III, LLC, Overland Park,
Kansas City 1.377. 100.00 1 USD 736,823 192,124 USD 6)
369. Sprint Spectrum Co. LLC, Overland Park,
Kansas City 1.378. 100.00 100 USD (1,980,212) 1,440,786 USD 6)
370. Sprint Spectrum Depositer III, LLC,
Overland Park, Kansas City 1.380. 100.00 1 USD 1,406,507 192,124 USD 6)
371. Sprint Spectrum Depositor, LLC,
Overland Park, Kansas City 1.45. 100.00 1 USD 4,225,961 1,671,231 USD 6)
372. Sprint Spectrum Holding Company, LLC,
Overland Park, Kansas City 1.386. 100.00 100 USD 8,792,623 (1,563,601) USD 6)
373. Sprint Spectrum License Holder II, LLC,
Overland Park, Kansas City 1.367. 100.00 1 USD 237,820 37,686 USD 6)
374. Sprint Spectrum License Holder III, LLC,
Overland Park, Kansas City 1.368. 100.00 1 USD 1,275,356 222,594 USD 6)
375. Sprint Spectrum License Holder, LLC,
Overland Park, Kansas City 1.369. 100.00 1 USD 2,517,098 1,695,243 USD 6)
376. Sprint Spectrum PledgeCo II, LLC,
Overland Park, Kansas City 1.340. 100.00 100 USD 141,832 32,255 USD 6)
376. Sprint Spectrum PledgeCo II, LLC,
Overland Park, Kansas City 1.331. 0.00 100 USD 141,832 32,255 USD 6)
377. Sprint Spectrum PledgeCo III, LLC,
Overland Park, Kansas City 1.341. 100.00 100 USD 736,823 192,124 USD 6)
377. Sprint Spectrum PledgeCo III, LLC,
Overland Park, Kansas City 1.331. 0.00 100 USD 736,823 192,124 USD 6)
378. Sprint Spectrum PledgeCo, LLC,
Overland Park, Kansas City 1.342. 100.00 100 USD (1,980,212) 1,440,786 USD 6)
378. Sprint Spectrum PledgeCo, LLC,
Overland Park, Kansas City 1.331. 0.00 100 USD (1,980,212) 1,440,786 USD 6)
379. Sprint Spectrum Realty Company, LLC,
Overland Park, Kansas City 1.380. 100.00 1 USD 5,696,833 (12) USD 6)
380. Sprint Spectrum, L.P., Overland Park,
Kansas City 1.243. 1.00 100 USD 8,882,913 (1,578,922) USD 6)
 Annual Financial Statements 68
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
380. Sprint Spectrum, L.P., Overland Park,
Kansas City 1.372. 99.00 100 USD 8,882,913 (1,578,922) USD 6)
381. Sprint Spectrum Depositer II, LLC,
Overland Park, Kansas City 1.386. 100.00 1 USD 287,920 32,255 USD 6)
382. Sprint Telecom India Private Limited,
Mumbai 1.353. 100.00 5,001,000 INR (3,097) (2,238) USD 6)
382. Sprint Telecom India Private Limited,
Mumbai 1.355. 0.00 5,001,000 INR (3,097) (2,238) USD 6)
383. Sprint eBusiness, Inc., Overland Park,
Kansas City 1.326. 100.00 100 USD 6,529 (31,897) USD 6)
384. Sprint eWireless, Inc., Overland Park,
Kansas City 1.326. 100.00 100 USD 141,185 2,358 USD 6)
385. Sprint/United Management Company,
Overland Park, Kansas City 1.326. 100.00 1,000 USD 48,456 2,919 USD 6)
386. SprintCom, Inc., Overland Park, Kansas City 1.326. 100.00 250 USD 2,230,345 (162,014,542) USD 6)
387. SprintLink Belgium BV, Brussels 1.353. 99.96 54,260 EUR 767 16 USD 6)
387. SprintLink Belgium BV, Brussels 1.355. 0.04 54,260 EUR 767 16 USD 6)
388. SprintLink Denmark ApS, Copenhagen 1.353. 100.00 151 DKK 2,307 49 USD 6)
389. SprintLink France SAS, Paris 1.353. 100.00 5,085 EUR 6,487 102 USD 6)
390. SprintLink Germany GmbH,
Frankfurt/Main 1.353. 100.00 1 EUR 51,977 239 USD 6)
391. SprintLink International (Switzerland) GmbH,
Zurich 1.353. 94.93 138,000 CHF 3,243 30 CHF 6)
391. SprintLink International (Switzerland) GmbH,
Zurich 1.355. 5.07 138,000 CHF 3,243 30 CHF 6)
392. SprintLink International Philippines, Inc.,
Makati City, Manila 1.353. 100.00 91,837 PHP 121 (159) USD 6)
393. SprintLink Ireland Limited, Dublin 1.353. 100.00 1 EUR 1,633 (2) USD 6)
394. SprintLink Italy S.r.l., Milan 1.353. 99.00 10,400 EUR 4,798 112 USD 6)
394. SprintLink Italy S.r.l., Milan 1.355. 1.00 10,400 EUR 4,798 112 USD 6)
395. SprintLink Netherlands B.V., HB Hoofddorp 1.353. 100.00 200 EUR 4,686 (12) USD 6)
396. SprintLink UK Limited, London 1.353. 100.00 2 GBP (2,451) 999 USD 6)
397. Sprintlink India Private Limited, Mumbai 1.353. 100.00 13,920,314 INR 2,998 53 USD 6)
397. Sprintlink India Private Limited, Mumbai 1.355. 0.00 13,920,314 INR 2,998 53 USD 6)
398. Sprintlink International Malaysia SDN. BHD.,
Kuala Lumpur 1.353. 100.00 3,600,000 MYR 764 (26) USD 6)
398. Sprintlink International Malaysia SDN. BHD.,
Kuala Lumpur 1.355. 0.00 3,600,000 MYR 764 (26) USD 6)
399. Sprintlink Poland Sp. z o.o, Warsaw 1.353. 99.00 6,100 PLN 737 1 USD 6)
399. Sprintlink Poland Sp. z o.o, Warsaw 1.355. 1.00 6,100 PLN 737 1 USD 6)
400. Stonebridge Communication AD, Skopje 1.230. 100.00 12,064,051,780 MKD 13,151,415 906,135 MKD 2)
401. T-Mobile (UK Properties), Inc., Denver 1.95. 100.00 1 USD – – USD
402. T-Mobile (UK) Ltd., Hertfordshire 1.95. 100.00 1 GBP – – GBP 2)
403. T-Mobile (UK) Retail Limited, Hertfordshire 1.95. 100.00 105 GBP – – GBP 2)
404. T-Mobile Airtime Funding LLC, Bellevue 1.433. 100.00 1 USD 7,304 1,599 USD 2)
405. T-Mobile Austria GmbH, Vienna 1.406. 98.97 60,000,000 EUR 1,875,107 220,138 EUR 2)
406. T-Mobile Austria Holding GmbH, Vienna 1.117. 100.00 15,000,000 EUR 3,342,000 (2,915) EUR 2)
407. T-Mobile Central LLC, Bellevue 1.441. 100.00 1 USD 9,386,595 64,983 USD 2)
408. T-Mobile Czech Republic a.s., Prague 1.117. 100.00 520,000,080 CZK 520,000 5,470,951 CZK 3)
409. T-Mobile Financial LLC, Wilmington 1.441. 100.00 100,000 USD 4,310,396 823,736 USD 2)
410. T-Mobile Global Care Corporation, Bellevue 1.441. 100.00 10 USD 1,237 574 USD 2)
411. T-Mobile Global Holding GmbH, Bonn 1.412. 100.00 50,000 EUR 9,897,725 – EUR 1)
412. T-Mobile Global Zwischenholding GmbH, Bonn 100.00 26,000 EUR 21,069,848 – EUR 1)
413. T-Mobile Handset Funding LLC, Bellevue 1.409. 100.00 1 USD 344,887 77,706 USD 2)
414. T-Mobile Holdings Limited, Milton Keynes 1.42. 100.00 706,540,268 GBP 2,770,104 210,257 GBP 2)
415. T-Mobile HotSpot GmbH, Bonn 1.489. 100.00 26,000 EUR 5,970 – EUR 1)
416. T-Mobile Infra B.V., The Hague 1.117. 100.00 10,000 EUR 403,914 (912) EUR 2)
 Annual Financial Statements 69
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
417. T-Mobile Innovations LLC, Wilmington DE 1.326. 100.00 1 USD – – USD 9)
418. T-Mobile International Austria GmbH, Vienna 1.405. 100.00 37,000 EUR 2,260 148 EUR 2)
419. T-Mobile International Limited, Hertfordshire 1.95. 100.00 1 GBP – – GBP 2)
420. T-Mobile International UK Pension Trustee
Limited, Welwyn Garden City 1.95. 100.00 1 GBP – – GBP 2)
421. T-Mobile Leasing LLC, Bellevue 1.441. 100.00 1 USD 326,443 154,445 USD 2)
422. T-Mobile License LLC, Bellevue 1.441. 100.00 1 USD 11,767,621 – USD 2)
423. T-Mobile Ltd., Hertfordshire 1.95. 100.00 1 GBP – – GBP 2)
424. T-Mobile Netherlands B.V., The Hague 1.426. 100.00 1,250,628 EUR 1,755,576 183,994 EUR 4)
425. T-Mobile Netherlands Finance B.V.,
The Hague 1.426. 100.00 124,105 EUR – – EUR 4)
426. T-Mobile Netherlands Holding B.V.,
The Hague 1.117. 75.00 121,008,100 EUR 1,470,945 (4,702) EUR 2)
427. T-Mobile Netherlands Retail B.V., The Hague 1.424. 100.00 18,000 EUR – – EUR 4)
428. T-Mobile Newco Nr. 3 GmbH, Bonn 100.00 25,000 EUR 25 – EUR 1)
429. T-Mobile Newco Nr. 4 GmbH, Bonn 100.00 25,000 EUR 27 – EUR 1)
430. T-Mobile No. 1 Limited, London 1.95. 100.00 1 GBP – – GBP 5)
431. T-Mobile No. 5 Limited, London 1.95. 100.00 1 GBP – – GBP 5)
432. T-Mobile Northeast LLC, Bellevue 1.441. 100.00 1 USD 8,297,258 332,945 USD 2)
433. T-Mobile PCS Holdings LLC, Bellevue 1.441. 100.00 1 USD (15,818,227) (1,383,083) USD 2)
434. T-Mobile Polska S.A., Warsaw 1.117. 100.00 711,210,000 PLN 5,913,736 52,122 PLN 2)
435. T-Mobile Puerto Rico Holdings LLC, Bellevue 1.441. 100.00 1 USD – – USD
436. T-Mobile Puerto Rico LLC, Bellevue 1.435. 100.00 1 USD 522,170 4,697 USD 2)
437. T-Mobile Resources Corporation, Bellevue 1.441. 100.00 1 USD (69,149) (40,359) USD 2)
438. T-Mobile South LLC, Bellevue 1.441. 100.00 1 USD 3,242,196 (44,692) USD 2)
439. T-Mobile Thuis B.V., The Hague 1.426. 100.00 1 EUR – – EUR 4)
440. T-Mobile US, Inc., Bellevue 1.140. 43.37 12,418 USD 28,789,000 3,468,000 USD 2)
441. T-Mobile USA, Inc., Bellevue 1.440. 100.00 5,353 USD 26,655,614 3,466,758 USD 2)
442. T-Mobile Ventures LLC, Bellevue 1.441. 100.00 1 USD 5,000 – USD 2)
443. T-Mobile West LLC, Bellevue 1.441. 100.00 1,000 USD 16,819,072 1,078,934 USD 2)
444. T-Systems Argentina S.A., Buenos Aires 1.459. 98.00 2,425,252 ARS 18,568 (24,545) ARS 2)
444. T-Systems Argentina S.A., Buenos Aires 1.447. 2.00 2,425,252 ARS 18,568 (24,545) ARS 2)
445. T-Systems Austria GesmbH, Vienna 1.459. 100.00 185,000 EUR 57,960 5,347 EUR 2)
446. T-Systems Belgium Road Charging NV,
Machelen 1.459. 100.00 550,000 EUR – – EUR 9)
447. T-Systems Beteiligungsverwaltungs­
gesellschaft mbH, Frankfurt/Main 1.459. 100.00 25,600 EUR 697 132 EUR 2)
448. T-Systems CIS, Moscow 1.100. 100.00 4,630,728 RUB 678,689 84,211 RUB 2)
449. T-Systems Client Services GmbH, Bonn 1.459. 100.00 25,000 EUR 1,629 287 EUR 2)
450. T-Systems Data Migration Consulting AG,
Kreuzlingen 1.472. 100.00 100,000 CHF 7,777 268 CHF 2)
451. T-Systems France SAS, Rueil-Malmaison 1.459. 100.00 1,638,485 EUR 3,021 1,357 EUR 2)
452. T-Systems Hong Kong Limited, Hong Kong 1.459. 100.00 1,000,000 HKD – – HKD 9)
453. T-Systems IT Eta GmbH, Bonn 1.459. 100.00 25,000 EUR 25 – EUR 1)
454. T-Systems IT Gamma GmbH, Bonn 1.459. 100.00 25,000 EUR 25 – EUR 1)
455. T-Systems IT Zeta GmbH, Bonn 1.459. 100.00 25,000 EUR 25 – EUR 1)
456. T-Systems ITC Iberia, S.A., Barcelona 1.459. 100.00 1,245,100 EUR 74,497 8,590 EUR 2)
457. T-Systems Information Services GmbH,
Berlin 1.459. 100.00 5,000,000 EUR 5,427 – EUR 1)
458. T-Systems Information and Communication
Technology India Private Limited, Pune 1.447. 0.00 95,500,000 INR 640,339 371,740 INR 6)
458. T-Systems Information and Communication
Technology India Private Limited, Pune 1.459. 100.00 95,500,000 INR 640,339 371,740 INR 6)
459. T-Systems International GmbH,
Frankfurt/Main 100.00 154,441,900 EUR 2,000 – EUR 1)
460. T-Systems Limited, London 1.459. 100.00 550,001 GBP 15,581 3,201 GBP 2)
 Annual Financial Statements 70
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
461. T-Systems Magyarország Zrt., Budapest 1.230. 100.00 2,002,000,000 HUF 34,467,459 1,859,150 HUF 2)
462. T-Systems Malaysia Sdn. Bhd., Kuala Lumpur 1.459. 100.00 4,000,000 MYR 20,942 (14,647) MYR 2)
463. T-Systems Mexico, S.A. de C.V., Puebla 1.459. 100.00 32,000,000 MXN 809,923 50,754 MXN 2)
464. T-Systems Multimedia Solutions GmbH,
Dresden 1.459. 100.00 4,090,400 EUR 4,132 – EUR 1)
465. T-Systems Nederland B.V., Utrecht 1.459. 100.00 2,003,287 EUR 82,231 9,313 EUR 2)
466. T-Systems Nordic A/S, Ballerup 1.459. 100.00 5,500,000 DKK 16,712 7,677 DKK 2)
467. T-Systems North America, Inc., Wilmington 1.465. 100.00 34 USD 55,534 6,362 USD 2)
468. T-Systems P.R. China Ltd., Beijing 1.459. 100.00 31,500,000 EUR 39,524 9,431 CNY 2)
469. T-Systems Polska Sp. z o.o., Wroclaw 1.434. 100.00 46,827,000 PLN 71,282 (1,316) PLN 2)
470. T-Systems Public Network Services GmbH,
Berlin 1.459. 100.00 25,000 EUR 25 – EUR 2)
471. T-Systems Road User Services GmbH, Bonn 1.459. 100.00 25,000 EUR 25 – EUR 1)
472. T-Systems Schweiz AG, Münchenbuchsee 1.459. 100.00 13,000,000 CHF 9,646 (14,423) CHF 2)
473. T-Systems Singapore Pte. Ltd., Singapore 1.459. 100.00 38,905,000 SGD 51,275 7,107 SGD 2)
474. T-Systems South Africa (Proprietary)
Limited, Johannesburg 1.475. 70.00 6,000 ZAR 611,218 370,520 ZAR 2)
475. T-Systems South Africa Holdings
(Proprietary) Limited, Joahnnesburg 1.459. 100.00 4,100,085 ZAR 1,214,556 277,290 ZAR 2)
476. T-Systems Telecomunicacoes e Servicos Ltda.,
Sao Bernardo do Campo 1.477. 100.00 4,182,560 BRL 14 5 BRL 2)
476. T-Systems Telecomunicacoes e Servicos Ltda.,
Sao Bernardo do Campo 1.447. 0.00 4,182,560 BRL 14 5 BRL 2)
477. T-Systems do Brasil Ltda., Sao Paulo 1.459. 100.00 30,000,000 BRL 165,524 16,395 BRL 2)
477. T-Systems do Brasil Ltda., Sao Paulo 1.447. 0.00 30,000,000 BRL 165,524 16,395 BRL 2)
478. T-Systems on site services GmbH, Berlin 1.459. 100.00 154,000 EUR 154 – EUR 1)
479. TAMBURO Telekommunikationsdienste GmbH,
Bonn 100.00 25,000 EUR 48 – EUR 2)
480. TDI Acquisition Sub., LLC, Overland Park,
Kansas City 1.45. 100.00 1 USD 1,274,535 (619) USD 6)
481. TELE HAUS SERWIS SPÓŁKA Z OGRA-­
NICZONA ODPOWIEDZIALNOSCIA, Gadki 1.487. 99.00 5,000 PLN – – PLN
482. TELEKOM ROMANIA COMMUNICATIONS S.A.,
Bucharest 1.266. 54.01 5,975,037,351 RON 1,572,963 (881,063) RON 3)
483. TELEKOM ROMANIA MOBILE
COMMUNICATIONS S.A., Bucharest 1.482. 30.00 2,571,234,275 RON 299,068 (36,512) RON 3)
483. TELEKOM ROMANIA MOBILE
COMMUNICATIONS S.A., Bucharest 1.193. 70.00 2,571,234,275 RON 299,068 (36,512) RON 3)
484. TMUS Assurance Corporation, Honolulu 1.441. 100.00 10 USD 218,065 607,074 USD 2)
485. TMUS International LLC, Bellevue 1.441. 100.00 1 USD 1,126 – USD 2)
486. TOB T-Systems Ukraine i. L., Kiev 1.447. 0.10 35,000 UAH – – UAH 5)
486. TOB T-Systems Ukraine i. L., Kiev 1.459. 99.90 35,000 UAH – – UAH 5)
487. Tele Haus Polska Sp. z o.o. (Poland),
Tarnowo Podgórne 1.434. 100.00 12,445,516 PLN 37,642 4,454 PLN 2)
488. Tele2 finance B.V., Diemen 1.426. 100.00 18,000 EUR – – EUR
489. Telekom Deutschland GmbH, Bonn 100.00 1,575,000,000 EUR 2,103,000 – EUR 1)
490. Telekom Deutschland Multibrand GmbH, Bonn 1.489. 100.00 25,000 EUR 27 – EUR 1)
491. Telekom Innovation Pool GmbH, Bonn 100.00 26,000 EUR 288,900 – EUR 1)
492. Telekom New Media Zrt., Budapest 1.230. 100.00 669,930,000 HUF 932,867 64,661 HUF 2)
493. Telekom Sec, s.r.o., Bratislava 1.317. 100.00 71,639 EUR 56 (1) EUR 2)
494. The Digitale GmbH, Bonn 1.491. 100.00 25,000 EUR 988 281 EUR 2)
495. Theory Mobile, Inc., Bellevue 1.298. 100.00 1 USD – – USD
496. Theta Telekommunikationsdienste GmbH,
Bonn 100.00 25,000 EUR 27 – EUR 1)
 Annual Financial Statements 71
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
497. Thor Telekommunikationsdienste GmbH, Bonn 1.489. 100.00 25,000 EUR 27 – EUR 1)
498. Toll4Europe GmbH, Berlin 1.459. 55.00 25,000,000 EUR 59,313 (33,196) EUR 2)
499. Transworld Telecom II, LLC, Overland Park,
Kansas City 1.53. 100.00 1 USD 34,191 (499) USD 6)
500. Trust2Core GmbH, Berlin 1.491. 100.00 25,000 EUR 458 (15) EUR 2)
501. USST of Texas, Inc., Overland Park, Kansas City 1.329. 100.00 1,000 USD – – USD 6)
502. Utelcom, LLC, Overland Park, Kansas City 1.326. 100.00 1 USD 267,027 12,064 USD 6)
503. VB Run, LLC, Wilmington, DE 1.441. 100.00 1 USD – – USD 9)
504. VBT Sub 2, LLC, Wilmington, DE 1.441. 100.00 1 USD – – USD 9)
505. VIOLA Kabelgesellschaft (Deutschland) mbH,
Bonn 1.70. 100.00 1,000,000 EUR 962 (6) EUR 2)
506. VMU GP, LLC, Overland Park, Kansas City 1.386. 100.00 1 USD 2 (2) USD 6)
507. Vesta Telekommunikationsdienste GmbH,
Bonn 1.491. 100.00 25,000 EUR 27 – EUR 2)
508. Vidanet Zrt., Gyõr 1.205. 22.50 2,000,000,000 HUF 7,639,899 1,846,884 HUF 2)
508. Vidanet Zrt., Gyõr 1.230. 67.50 2,000,000,000 HUF 7,639,899 1,846,884 HUF 2)
509. Virgin Mobile USA – Evolution, LLC, Overland
Park, Kansas City 1.27. 100.00 100 USD (6,965) – USD 6)
510. Vulcanus Telekommunikationsdienste GmbH,
Bonn 1.491. 100.00 25,000 EUR 27 – EUR 2)
511. WBS of America, LLC, Overland Park,
Kansas City 1.53. 100.00 1 USD 1,828 (117) USD 6)
512. WBS of Sacramento, LLC, Overland Park,
Kansas City 1.53. 100.00 3,239 USD 10,348 (362) USD 6)
513. WBSY Licensing, LLC, Overland Park,
Kansas City 1.45. 100.00 1 USD 116,448 81 USD 6)
514. WCOF, LLC, Overland Park, Kansas City 1.53. 100.00 1 USD 70,279 (328) USD 6)
515. Wireless Broadband Svcs of America, LLC,
Overland Park, Kansas City 1.53. 100.00 1 USD 1,764 (39) USD 6)
516. Wireline Leasing Co., Inc, Overland Park,
Kansas City 1.502. 4.94 100 USD 6,044 (88) USD 6)
516. Wireline Leasing Co., Inc, Overland Park,
Kansas City 1.326. 95.06 100 USD 6,044 (88) USD 6)
517. Zweite DFMG Deutsche Funkturm
Ver­mögens-GmbH, Bonn 1.489. 100.00 100,000 EUR 37,125 – EUR 1)
518. bodyconcept GmbH, Bonn 1.491. 100.00 100,001 EUR 246 (8) EUR 2)
519. congstar GmbH, Cologne 1.489. 100.00 25,000 EUR 32 – EUR 1)
520. congstar Services GmbH, Cologne 1.519. 100.00 30,000 EUR 4,092 – EUR 1)
521. emetriq GmbH, Bonn 1.489. 100.00 100,000 EUR (6,652) 1,373 EUR 2)
522. goingsoft Deutschland GmbH,
Schrobenhausen 1.190. 100.00 150,000 EUR 278 59 EUR 2)
523. operational services Beteiligungs-GmbH,
Frankfurt/Main 1.524. 100.00 25,000 EUR 41 1 EUR 2)
524. operational services GmbH & Co. KG,
Frankfurt/Main 1.459. 50.00 250,000 EUR 28,710 11,225 EUR 2)
524. operational services GmbH & Co. KG,
Frankfurt/Main 1.523. 250,000 EUR 28,710 11,225 EUR 2)
525. rola Security Solutions GmbH, Cologne 1.459. 100.00 800,000 EUR 11,299 – EUR 1)
 Annual Financial Statements 72
Notes to the financial statements – Other disclosures

2. Associated and other related companies

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
1. 1nce GmbH, Cologne 1.491. 31.00 250,000 EUR 271 (7,976) EUR 2)
2. BT Group plc, London 1.414. 12.00 498,406,386 GBP 14,763,000 1,734,000 GBP 7) 8)
3. BUYIN S.A., Brussels 50.00 123,000 EUR 252 1,412 EUR 2)
4. CTDI GmbH, Malsch 1.489. 15.50 4,016,393 EUR 75,171 28,115 EUR 2)
5. Callahan Nordrhein-Westfalen GmbH, Cologne 1.505. 45.00 2,595,000 EUR – – EUR
6. Cellwize Wireless Technologies Pte. Ltd.,
Singapore 1.81. 23.91 22,818 USD 9,990 (12,814) USD 2)
7. Central Georgian Communications Co. Ltd.,
Roustavi 1.66. 25.00 280,000 GEL 5,288 309 GEL 3)
8. Clipkit GmbH, Berlin 1.171. 35.63 122,641 EUR – – EUR 5)
9. DETECON AL SAUDIA Co. Ltd., Riyadh 1.91. 46.50 4,000,000 SAR 241,620 35,277 SAR 2)
10. Devas Multimedia Private Limited, Bangalore 1.94. 20.73 177,313 INR 1,110,165 69,216 INR 2)
11. Donbass Telecom Ltd., Donetsk 1.66. 49.00 342,700 UAH – – UAH
12. Droniq GmbH, Frankfurt/Main 1.491. 49.00 2,000,000 EUR 8,265 (1,735) EUR 2)
13. E2 Hungary Energiakereskedelmi es
Szolgaltato Zrt., Budapest 1.230. 50.00 200,000,000 HUF 2,810,100 810,098 HUF 4)
14. Electrocycling GmbH, Goslar 1.489. 25.35 4,750,000 EUR 22,501 2,502 EUR 2)
15. Enio GmbH, Vienna 1.69. 34.11 45,150 EUR 260 (533) EUR 2)
16. Glasfaser NordWest GmbH & Co. KG,
Oldenburg 1.489. 50.00 15,000,000 EUR 16 0 EUR 2)
17. HMM Deutschland GmbH, Moers 38.46 197,758 EUR 14,639 1,683 EUR 2)
17. HMM Deutschland GmbH, Moers 1.171. 10.97 197,758 EUR 14,639 1,683 EUR 2)
18. HWW – Höchstleistungsrechner für
Wissenschaft und Wirtschaft GmbH, Stuttgart 1.459. 20.00 50,000 EUR 1,216 12 EUR 2)
18. HWW – Höchstleistungsrechner für
Wissenschaft und Wirtschaft GmbH, Stuttgart 1.457. 20.00 50,000 EUR 1,216 12 EUR 2)
19. Home Credit US, LLC, Omaha, NE 1.383. 49.90 100 USD – – USD
20. JP Hrvatske telekomunikacije d.d. Mostar,
Mostar 1.194. 39.10 315,863,250 BAM 332,823 116 BAM 2)
21. Keepler Data Tech, S.L., Madrid 1.105. 42.82 259,302 EUR 490 (450) 4)
22. Közbringa Kft., Budapest 1.461. 25.00 20,000,000 HUF 124,250 27,340 HUF 2)
23. LeanIX GmbH, Bonn 1.109. 18.19 71,631 EUR 10,033 (8,915) EUR 2)
23. LeanIX GmbH, Bonn 1.111. 3.25 71,631 EUR 10,033 (8,915) EUR 2)
23. LeanIX GmbH, Bonn 1.112. 1.05 71,631 EUR 10,033 (8,915) EUR 2)
24. MGRID B.V., Amsterdam 1.171. 21.05 22,800 EUR 514 46 EUR 2)
25. MNP Deutschland GbR, Düsseldorf 1.489. 33.33 0 192 147 2)
26. MVS Net, S.A. de C.V., Ciudad de Mexico 1.48. 26.27 10,000 USD – – USD
27. Melon Health Limited, Wellington 1.384. 2.86 100 USD – – USD
28. Mobile Telephony Companies Association,
Athens 1.40. 33.33 5,000,699 EUR 112 (1,081) EUR 2)
29. NetWorkS! Sp.z.o.o, Warsaw 1.434. 50.00 30,000,000 PLN 35,416 5,416 PLN 3)
30. PC Topco Limited, Guernsey 1.105. 25.00 1,000 GBP – – GBP
31. Pie Digital, Inc., Newark 1.171. 49.99 57 USD 0 – USD 5)
32. Portavita B.V., Amsterdam 1.171. 21.05 22,800 EUR 271 (251) EUR 2)
33. Project Panther, Ltd., New York 1.335. 33.00 1,000 USD – – USD
34. SK Gaming Beteiligungs GmbH, Cologne 1.489. 33.33 36,939 EUR 7,241 88 EUR 2)
35. SL3TV, LLC, Bellevue 1.223. 49.00 200,000 USD – – USD
36. SYFIT GmbH, Aalen 1.491. 33.33 37,500 EUR 243 (75) EUR 2)
37. Smarkets Ltd., London 1.171. 24.97 13,052 GBP (6,870) (497) GBP 2)
38. Spearhead AG, Zollikofen 1.491. 18.73 267,000 CHF (1,702) (2,265) CHF 2)
 Annual Financial Statements 73
Notes to the financial statements – Other disclosures

Shareholders’
Indirectly Directly Total nominal equity Net income/loss Reporting
No. Name and registered office Via % % value Currency in thousands in thousands currency Note
39. Stratospheric Platforms Limited, Douglas
(Isle of Man) 1.319. 38.05 136 GBP 17,477 (15,354) GBP 4)
40. Ströer SE & Co. KGaA, Cologne 9.69 56,646,571 EUR 1,369,028 72,152 EUR 2) 8)
41. T-Mobile USA Tower LLC, Wilmington 1.441. 100.00 1 USD (1,049,190) (31,253) USD 2)
42. T-Mobile West Tower LLC, Wilmington 1.443. 100.00 1 USD (1,254,618) (39,406) USD 2)
43. TELEGNOUS – Provider of solvency
Assessment Information in the Tele­com­
munications Sector – Private Company, Athens 1.40. 33.33 6,000 EUR 17 9 EUR 2)
44. Techmaker GmbH, Bonn 50.00 25,000 EUR – – EUR 9)
45. Tehnoloski centar Split d.o.o., Split 1.194. 29.76 3,900,000 HRK 931 726 HRK 4)
46. Trans Jordan For Communication Services
Company Ltd., Amman 1.193. 40 3,500,000 JOD – – JOD 5)
46. Trans Jordan For Communication Services
Company Ltd., Amman 1.66. 10 3,500,000 JOD – – JOD 5)
47. XCM JV, LLC, Wilmington 1.441. 33.33 81,400,000 USD 23,925 (4,075) USD 2)
48. Yemen Public Payphone Company Ltd., Sanaʼa 1.193. 10 2,960,000 USD – – USD 5)
48. Yemen Public Payphone Company Ltd., Sanaʼa 1.66. 15 2,960,000 USD – – USD 5)
49. ZENKEY LLC, Wilmington 1.441. 33.33 34,300,000 USD 15,658 (11,361) USD 2)
50. eValue 2nd Fund GmbH i. L., Berlin 1.109. 33.33 25,000 EUR 0 – EUR 5)
51. iesy Holdings GmbH, Oberursel 1.505. 35 1,000,000 EUR – – EUR
52. tooz technologies Inc., New York 1.491. 50 50,000 USD 6,470 (6,131) EUR 2)

1)
Net income/loss taking into account profit and loss transfer agreements as of Dec. 31, 2019
2)
Shareholders’ equity and net income/loss as per annual financial statements prepared in accordance with the respective national accounting standards as of Dec. 31, 2019
3)
Shareholders’ equity and net income/loss (IFRS) as of Dec. 31, 2019
4)
Shareholders’ equity and net income/loss as per annual financial statements prepared in accordance with the respective national accounting standards as of Dec. 31, 2018
5)
in liquidation
6)
Shareholders’ equity and net income/loss as per annual financial statements prepared in accordance with the respective national accounting standards as of Mar. 31, 2020
7)
Shareholders’ equity/net income/loss based on consolidated IFRS figures as of Mar. 31, 2020
8)
Shares are held in trust by Deutsche Telekom Trust e.V.
9)
Company was founded in 2020
10)
Not required to prepare local annual financial statements as of Dec. 31, 2019
 Annual Financial Statements 75
Notes to the financial statements – Other disclosures

Responsibility Statement

Independent auditor’s report

 Annual Financial Statements 76
Responsibility statement – Other disclosures

Responsibility statement

To the best of our knowledge, and in accordance with the applicable reporting principles, the financial statements give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the management report
of Deutsche Telekom AG, which is combined with the Group management report, includes a fair review of the development
and performance of the business and the position of the Company, together with a description of the principal opportunities
and risks associated with the expected development of the Company.

Bonn, February 16, 2021

Deutsche Telekom AG
Board of Management

Timotheus Höttges

Adel Al-Saleh Birgit Bohle Srini Gopalan Dr. Christian P. Illek

Thorsten Langheim Dominique Leroy Claudia Nemat

 Annual Financial Statements 77
Independent auditor’s report – Other disclosures

The following copy of the auditor’s report also includes a “Report on the audit of the electronic renderings of the financial
statements and the management report prepared for disclosure purposes in accordance with § 317 Abs. 3b HGB” (“Separate
report on ESEF conformity”). The subject matter (ESEF documents to be audited) to which the separate report on ESEF
­conformity relates is not attached. The audited ESEF documents can be inspected in or retrieved from the Federal Gazette.

Independent auditor’s report

To Deutsche Telekom Aktiengesellschaft, Bonn

REPORT ON THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS AND OF THE

­MANAGEMENT REPORT
Audit Opinions

We have audited the annual financial statements of Deutsche Telekom Aktiengesellschaft, Bonn, which comprise the
balance sheet as at December 31, 2020, the income statement for the financial year from January 1 to December 31, 2020,
and the notes to the financial statements, including the presentation of the recognition and measurement policies. In
addition, we have audited the management report of Deutsche Telekom Aktiengesellschaft, which is combined with the
group management report, for the financial year from January 1 to December 31, 2020. In accordance with the German
legal requirements, we have not audited the content of those parts of the management report listed in the “Other ­Information”
section of our auditor’s report.

In our opinion, on the basis of the knowledge obtained in the audit,

ƒ the accompanying annual financial statements comply, in all material respects, with the requirements of German
commercial law and give a true and fair view of the assets, liabilities and financial position of the Company as at
­December 31, 2020 and of its financial performance for the financial year from January 1 through December 31, 2020
in compliance with German Legally Required Accounting Principles, and

ƒ the accompanying management report as a whole provides an appropriate view of the Company’s position. In all material
respects, this management report is consistent with the annual financial statements, complies with German legal
­requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the
management report does not cover the content of those parts of the management report listed in the “Other Information”
section of our auditor’s report.

Pursuant to Article 322 paragraph 3 sentence 1 HGB German Commercial Code, we declare that our audit has not led to
any reservations relating to the legal compliance of the annual financial statements and of the management report.

Basis for the Audit Opinions

We conducted our audit of the annual financial statements and of the management report in accordance with Article 317
German Commercial Code and the EU Audit Regulation (No. 537/2014, referred to subsequently as “EU Audit Regulation”)
in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institute of
Public Auditors in Germany (IDW). We performed the audit of the annual financial statements in supplementary compliance
with the International Standards on Auditing (ISAs). Our responsibilities under those requirements, principles and standards
are further described in the “Auditor’s Responsibilities for the Audit of the Annual Financial Statements and of the
­Management Report” section of our auditor’s report. We are independent of the Company in accordance with the
­requirements of German commercial and professional law, and we have fulfilled our other German professional responsibil-
ities in accordance with these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation,
we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the ­annual
financial statements and on the management report.
 Annual Financial Statements 78
Independent auditor’s report – Other disclosures

Key Audit Matters in the Audit of the Annual Financial Statements

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual
financial statements for the financial year from January 1 to December 31, 2020. These matters were addressed in the
context of our audit of the annual financial statements as a whole, and in forming our audit opinion thereon; we do not
provide a separate audit opinion on these matters.

In our view, the matters of most significance in our audit were as follows:

1 Recoverability of shares in affiliated companies

2 Spin-off of the Deutsche Telekom Global Carrier (DTGC) business to Telekom Deutschland GmbH

Our presentation of these key audit matters has been structured in each case as follows:
1 Matter and issue
2 Audit approach and findings
3 Reference to further information

Hereinafter we present the key audit matters:

1 Recoverability of shares in affiliated companies

1 Shares in affiliated companies amounting to EUR 78.5 billion (67% of total assets) are reported in the annual financial
statements of Deutsche Telekom Aktiengesellschaft as of December 31, 2020. Shares in affiliated companies are measured
in accordance with German commercial law at the lower of cost and fair value. As of the balance sheet date, Deutsche Telekom
Aktiengesellschaft tested its equity investments for impairment. Expert opinions from accounting firms were obtained for
calculating the fair values of investments with carrying amounts of EUR 44.4 billion; Deutsche Telekom Aktiengesellschaft
adopted the results of these opinions as its own. For all other shares in material affiliated companies, Deutsche Telekom
­Aktiengesellschaft conducted its own business and equity valuations for the purpose of calculating the fair values. Based on
the expert opinions obtained, the Company’s valuations and other documentation, it was necessary to recognize a
EUR 1.4 billion impairment for the 2020 financial year, primarily in relation to the shares in CTA Holding GmbH, Bonn, (which
indirectly holds a 12% interest in BT Group plc, London, United Kingdom, via T-Mobile Holdings Limited, Milton Keynes, United
Kingdom), as well as a EUR 1.0 billion reversal of write-downs, primarily in relation to the shares in Hellenic ­Telecommunications
Organization S.A. (OTE), Athens, Greece. The fair values of the investments in subsidiaries were in each case calculated as the
present value of the expected future cash flows using discounted cash flow models on the basis of the budget projections
prepared by management. The fair value for BT Group plc, London, United Kingdom, was based on publicly available
­consensus data with regard to the company’s future net assets, financial position and results of operations. The results of
these measurements depend in particular on the executive directors’ estimates of future cash inflows and the respective
discount rates used. The measurements are thus subject to uncertainty. Against this background and due to its material
­significance for the assets, liabilities and financial performance of Deutsche Telekom Aktiengesellschaft, this matter was of
particular significance in the context of our audit.

2 As part of our audit, we assessed the usability of the valuations conducted by the external experts as of December 31, 2020,
in particular whether they were prepared in observance of the relevant professional measurement standards. We also
gained an understanding of the raw data underlying the expert opinions, the assumptions made, the methods used and
how consistent these were in comparison to prior periods. Our analysis did not give rise to any reservations with regard to
the usability of the expert opinions obtained for the annual financial statements.

In terms of the valuations that Deutsche Telekom Aktiengesellschaft conducted itself, we assessed whether the fair values had
been properly calculated using DCF methods in accordance with the relevant professional measurement standards. We
­reviewed whether the underlying future cash inflows and the costs of capital used form, as a whole, an appropriate basis. We
based our assessment, among other things, on a comparison with general and sector-specific market expectations as well as
the executive directors’ detailed explanations regarding key planning value drivers. With the knowledge that even
 Annual Financial Statements 79
Independent auditor’s report – Other disclosures

r­ elatively small changes in the discount rate applied can in some cases have material effects on values, we focused our
testing in ­particular on the parameters used to determine the discount rate applied, and evaluated the measurement
model. In our view, the measurement inputs and assumptions used by the executive directors were properly derived with
respect to reviewing recoverability.

3 The Company’s disclosures relating to financial assets and their recoverability are contained in the section entitled
­“Summary of accounting policies” and notes 1 “Non-current assets”, 20 “Other operating income” and 25 “Finance costs” in
the notes to the annual financial statements.

2 Spin-off of the “Deutsche Telekom Global Carrier” business to Telekom Deutschland GmbH

1 On August 20, 2019, the Board of Management of Deutsche Telekom Aktiengesellschaft resolved to bundle tele­
communications services for business customers within the subsidiary Telekom Deutschland GmbH. In that connection,
pursuant to the Spin-off and Transfer Agreement dated April 20, 2020, Deutsche Telekom Aktiengesellschaft transferred
its ­“Deutsche Telekom Global Carrier” (DTGC) business in its entirety to Telekom Deutschland GmbH by way of spin-off
and transfer pursuant to Article 123 paragraph 3 No. 1 UmwG [Reorganization Act] with effect from January 1, 2020
against the granting of a new share in Telekom Deutschland GmbH. The DTGC business comprises the “Telekom Global
Carrier” (TGC) and “Network Infrastructure” (NWI) segments. The assets and liabilities attributable to these two segments
were held in two different company codes at Deutsche Telekom Aktiengesellschaft. In order to implement the intragroup
transaction, it was necessary to separate the assets, equity and liabilities to be transferred and migrate the data in the data
processing systems accordingly. From the perspective of Deutsche Telekom Aktiengesellschaft’s annual financial state-
ments prepared in accordance with German commercial law, the transaction constituted an exchange. In accordance with
the general principles relating to exchanges under German commercial law, the costs to acquire the new share in Telekom
Deutschland GmbH may be recognized at the book value, at fair value or an intermediate value outside profit or loss for the
transferred assets. Deutsche Telekom Aktiengesellschaft has exercised the option permitting it to use the fair value of the
DTGC business of EUR 1,147 million as determined in an expert opinion as the cost to acquire the new share. Taking into
account the disposal of he book values of transferred assets, equity and liabilities of EUR 345 million, Deutsche Telekom
Aktiengesellschaft recognized other operating income of EUR 802 million. In its tax accounts, the Company used the book
values of the spun-off segment as the basis for the exchange in accordance with Article 20 paragraph 2 UmwStG
­[Reorganization Tax Act]. The fair value as of December 31, 2019 determined for accounting in accordance with German
commercial law was calculated by an external expert as the present value of the expected future cash flows using the
German income approach [Ertragswertverfahren], with the projections prepared by the executive directors serving as a
basis. The result of this measurement depends in particular on management’s estimates of future cash inflows and the
discount rate used. The valuation is therefore subject to uncertainty. Against this background and due to its significance
for Deutsche Telekom Aktiengesellschaft’s financial position and financial performance, this matter was of particular
­significance in the context of our audit.

2 As part of our audit, we assessed the usability of the calculation of fair value conducted by the external expert as of
­December 31, 2019, in particular whether it was prepared in observance of the relevant professional measurement standards.
We also gained an understanding of the raw data underlying the expert opinion, the assumptions made and the methods
used, and assessed their appropriateness. In addition, we assessed the technical concept prepared for the implementation of
the spin-off in the Company’s IT systems, reviewed the data migration based on defined test cases and conducted a
­reconciliation to assess whether the assets and liabilities spun-off from Deutsche Telekom Aktiengesellschaft were allocated
fully and correctly to Telekom Deutschland GmbH in the IT system. Furthermore, we reviewed whether the spun-off assets
and liabilities were defined in accordance with the provisions of the spin-off and transfer agreement. We also assessed
whether the arising difference between the purchase price of the new share in the commercial accounts and the tax
­accounts was adequately taken into consideration by the Company in its recognition of deferred taxes. We confirmed that
the assumptions made and methods used to determine fair value form, as a whole, an appropriate basis. The proper
­treatment of the transaction in the IT system and the annual financial statements was verified by us.

3 The Company’s disclosures relating to the spin-off, including the presentation of the spin-off balance sheet, are
­contained in the section of the notes entitled “Summary of accounting policies”. Further information is provided in note 1
“Non-current assets” and note 20 “Other operating income”.
 Annual Financial Statements 80
Independent auditor’s report – Other disclosures

Other Information

The executive directors are responsible for the other information. The other information comprises the following
non-audited parts of the management report:

ƒ the statement on corporate governance pursuant to Article 289f German Commercial Code and Article 315d
­German Commercial Code included in section “Other Disclosures – Corporate Governance Statement in a­ ccordance
with Articles 289f, 315d German Commercial Code” of the management report
ƒ the non-financial statement pursuant to Article 289b paragraph 1 German Commercial Code and Article 315b
paragraph 1 German Commercial Code included in section “Corporate Responsibility and Non-Financial ­Statement”
of the management report

The other information furthermore comprises the remaining sections of the annual report – excluding further cross-­
references to external information – with the exception of the audited financial statements, the audited management
­report and our auditor’s report.

Our audit opinions on the annual financial statements and on the management report do not cover the other ­information,
and consequently we do not express an audit opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the
other information

ƒ is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in
the audit, or

ƒ otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Executive Directors and the Supervisory Board for the Annual Financial Statements and the
­Management Report

The executive directors are responsible for the preparation of the annual financial statements that comply, in all ­material
respects, with the requirements of German commercial law, and that the annual financial statements give a true and fair
view of the assets, liabilities, financial position and financial performance of the Company in compliance with German
Legally Required Accounting Principles. In addition, the executive directors are responsible for such internal control as
they, in accordance with German Legally Required Accounting Principles, have determined necessary to enable the
preparation of annual financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the annual financial statements, the executive directors are responsible for assessing the Company’s a­ bility
to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going
concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting,
­provided no actual or legal circumstances conflict therewith.

Furthermore, the executive directors are responsible for the preparation of the management report that as a whole
provides an appropriate view of the Company’s position and is, in all material respects, consistent with the annual
­financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks
of future development. In addition, the executive directors are responsible for such arrangements and measures
­(systems) as they have considered necessary to enable the preparation of a management report that is in accordance
with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the
­assertions in the management report.

The Supervisory Board is responsible for overseeing the Company’s financial reporting process for the preparation of
the annual financial statements and the management report.
 Annual Financial Statements 81
Independent auditor’s report – Other disclosures

Auditor’s Responsibilities for the Audit of the Annual Financial Statements and of the Management Report

Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free
from material misstatement, whether due to fraud or error, and whether the management report as a whole provides an
appropriate view of the Company’s position and, in all material respects, is consistent with the annual financial
­statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately
presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our audit
opinions on the annual financial statements and on the management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Article 317 German Commercial Code and the EU Audit Regulation and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) and supplementary
compliance with the ISAs will always detect a material misstatement. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the e­ conomic
decisions of users taken on the basis of these annual financial statements and this management report.

We exercise professional judgment and maintain professional skepticism throughout the audit. We also

ƒ Identify and assess the risks of material misstatement of the annual financial statements and of the management
report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a ­material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls.

ƒ Obtain an understanding of internal control relevant to the audit of the annual financial statements and of
­arrangements and measures (systems) relevant to the audit of the management report in order to design audit
­procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the
effectiveness of these systems of the Company.

ƒ Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness of e­ stimates
made by the executive directors and related disclosures.

ƒ Conclude on the appropriateness of the executive directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
­significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor’s report to the related disclosures in the annual financial
­statements and in the management report or, if such disclosures are inadequate, to modify our respective audit ­opinions.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to be able to continue as a going concern.

ƒ Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures,
and whether the annual financial statements represent the underlying transactions and events in a manner that the
annual financial statements give a true and fair view of the assets, liabilities, financial position and financial
­performance of the Company in compliance with German Legally Required Accounting Principles.

ƒ Evaluate the consistency of the management report with the annual financial statements, its conformity with German
law, and the view of the Company’s position it provides.

ƒ Perform audit procedures on the prospective information presented by the executive directors in the management report.
On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the
executive directors as a basis for the prospective information and evaluate the proper derivation of the prospective
­information from these assumptions. We do not express a separate audit opinion on the prospective information and on
the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the
prospective information.
 Annual Financial Statements 82
Independent auditor’s report – Other disclosures

We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

We also provide those charged with governance with a statement that we have complied with the relevant i­ ndependence
requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, the related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the annual financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.
 Annual Financial Statements 83
Independent auditor’s report – Other disclosures

OTHER LEGAL AND REGULATORY REQUIREMENTS

Assurance Report in Accordance with Article 317 paragraph 3b HGB on the E­ lectronic
Reproduction of the Annual Financial Statements and the Management Report
­Prepared for Publication Purposes
Reasonable Assurance Conclusion

We have performed an assurance engagement in accordance with Article 317 paragraph 3b German Commercial Code
to obtain reasonable assurance about whether the reproduction of the annual financial statements and the m ­ anagement
report (hereinafter the “ESEF documents”) contained in the attached electronic file deutschetelekomag_ja_lb_20201231.zip
and prepared for publication purposes complies in all material respects with the requirements of Article 328 paragraph 1
German Commercial Code for the electronic reporting format (“ESEF format”). In accordance with German legal
­requirements, this assurance engagement only extends to the conversion of the information contained in the annual
financial statements and the management report into the ESEF format and therefore relates neither to the information
contained within this reproduction nor to any other information contained in the above-mentioned electronic file.

In our opinion, the reproduction of the annual financial statements and the management report contained in the
above-mentioned attached electronic file and prepared for publication purposes complies in all material respects with
the requirements of Article 328 paragraph 1 German Commercial Code for the electronic reporting format. We do not
express any opinion on the information contained in this reproduction nor on any other information contained in the
above-mentioned electronic file beyond this reasonable assurance conclusion and our audit opinion on the
­accompanying annual financial statements and the accompanying management report for the financial year from
­January 1 to December 31, 2020 contained in the “Report on the Audit of the Annual Financial Statements and on the
Management Report” above.

Basis for the Reasonable Assurance Conclusion

We conducted our assurance engagement on the reproduction of the annual financial statements and the management
report contained in the above-mentioned attached electronic file in accordance with Article 317 paragraph 3b
­German Commercial Code and the Exposure Draft of IDW Assurance Standard: Assurance in Accordance with Article 317
paragraph 3b German Commercial Code on the Electronic Reproduction of Financial Statements and ­Management
Reports Prepared for Publication Purposes (ED IDW AsS 410) and the International Standard on ­Assurance
­Engagements 3000 (Revised). Accordingly, our responsibilities are further described below in the ­“Auditor’s
­Responsibilities for the Assurance Engagement on the ESEF Documents” section. Our audit firm has applied the IDW
Standard on Quality Management: Requirements for Quality Management in the Audit Firm (IDW QS 1).

Responsibilities of the Executive Directors and the Supervisory Board for the ESEF Documents

The executive directors of the Company are responsible for the preparation of the ESEF documents including the
­electronic reproduction of the annual financial statements and the management report in accordance with Article 328
paragraph 1 sentence 4 No. 1 HGB.

In addition, the executive directors of the Company are responsible for such internal control as they have considered
necessary to enable the preparation of ESEF documents that are free from material non-compliance with the
­requirements of Article 328 paragraph 1 German Commercial Code for the electronic reporting format, whether due to
fraud or error.

The executive directors of the Company are also responsible for the submission of the ESEF documents together with
the auditor’s report and the attached audited annual financial statements and audited management report as well as
other documents to be published to the operator of the German Federal Gazette [Bundesanzeiger].

The Supervisory Board is responsible for overseeing the preparation of the ESEF documents as part of the financial
­reporting process.
 Annual Financial Statements 84
Independent auditor’s report – Other disclosures

Auditor’s Responsibilities for the Assurance Engagement on the ESEF Documents

Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material non-compliance
with the requirements of Article 328 paragraph 1 German Commercial Code, whether due to fraud or error. We exercise
professional judgment and maintain professional skepticism throughout the assurance engagement. We also

ƒ Identify and assess the risks of material non-compliance with the requirements of Article 328 paragraph 1 German
Commercial Code, whether due to fraud or error, design and perform assurance procedures responsive to those risks,
and obtain assurance evidence that is sufficient and appropriate to provide a basis for our assurance conclusion.

ƒ Obtain an understanding of internal control relevant to the assurance engagement on the ESEF documents in order
to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing an
assurance conclusion on the effectiveness of these controls.

ƒ Evaluate the technical validity of the ESEF documents, i.e., whether the electronic file containing the ESEF documents
meets the requirements of the Delegated Regulation (EU) 2019/815 in the version applicable as at the balance sheet
date on the technical specification for this electronic file.

ƒ Evaluate whether the ESEF documents enables a XHTML reproduction with content equivalent to the audited annual
financial statements and to the audited management report.

Further Information pursuant to Article 10 of the EU Audit Regulation

We were elected as auditor by the ordinary general meeting on June 19, 2020. We were engaged by the Supervisory
Board on July 2, 2020. We have been the auditor of the Deutsche Telekom Aktiengesellschaft, Bonn, without ­interruption
since the company first has met the requirements as a Public Interest Entity according to Article 319a paragraph 1
­German Commercial Code in financial year 1996.

We declare that the audit opinions expressed in this auditor’s report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
 Annual Financial Statements 85
Independent auditor’s report – Other disclosures

GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT

The German Public Auditor responsible for the engagement is Thomas Tandetzki.

Frankfurt am Main, February 16, 2021

PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft

sgd. Dr. Peter Bartels sgd. Thomas Tandetzki

Wirtschaftsprüfer Wirtschaftsprüfer

(German Public Auditor) (German Public Auditor)

 Annual Financial Statements 86
Independent auditor’s report – Other disclosures
 Annual Financial Statements 87
Independent auditor’s report – Other disclosures

Further Information
89 List of abbreviations
91 Contacts
Annual Financial Statements 88
Statement of income –
 89

List of abbreviations
AG Aktiengesellschaft (stock corporation under German law)
AktG Aktiengesetz (German Stock Corporation Act)
Art. Article
BilMoG Bilanzrechtsmodernisierungsgesetz (German Accounting Law Modernization Act)
CEO Chief Executive Officer
CTA Contractual Trust Arrangement
Dr. Doctor
e.g. for example
EGHGB Einführungsgesetz zum Handelsgesetzbuch (Introductory Act to the German Commercial Code)
ESEF European Single Electronic Format
EStG Einkommenssteuergesetz (German Income Tax Act)
EUR Euro
e.V. eingetragener Verein (registered association under German law)
Federal Agency Deutsche Bundespost Federal Posts and Telecommunications Agency
Federal Republic Federal Republic of Germany
GAAP Generally accepted accounting principles
GBP Pound sterling
GmbH & Co. KG Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft
(limited company under German law)
GmbH Gesellschaft mit beschränkter Haftung (limited liability company under German law)
HGB Handelsgesetzbuch (German Commercial Code)
HKD Hong Kong dollars
HR Human Resources
HRB Handelsregister, Abteilung B (Commercial register, section B)
IDW ERS HFA Accounting standard (draft) prepared by the Expert Committee of the Institute
of Public Auditors in Germany (IDW)
IDW RS HFA Accounting standard prepared by the Expert Committee of the Institute
of Public Auditors in Germany (IDW)
IFRS International Financial Reporting Standard
Inc. Incorporated
IT Information technology
KfW KfW Bankengruppe, Frankfurt/Main
KG Kommanditgesellschaft (limited partnership under German law)
KGaA Kommanditgesellschaft auf Aktien (limited partnership under German law)
Ltd. Limited
mbH mit beschränkter Haftung (limited liability)
no. Number
PBeaKK Postbeamtenkrankenkasse (Civil Service Health Insurance Fund)
PostPersRG Postpersonalrechtsgesetz (Act concerning the Legal Provisions
for the Former Deutsche Bundespost Staff)
Prof. Professor
PTNeuOG Postneuordnungsgesetz (German Posts and Telecommunications Reorganization Act)
SE Societas Europea
T-Systems T-Systems International GmbH, Frankfurt/Main
Telekom Deutschland Telekom Deutschland GmbH, Bonn
USA United States of America
USD U.S. dollar
VAP Versorgungsanstalt der Deutschen Bundespost (Supplementary Retirement Pensions Institution)
ver.di Vereinte Dienstleistungsgewerkschaft (service industry trade union)
VVaG Versicherungsverein auf Gegenseitigkeit (mutual insurance association)
WpHG Wertpapierhandelsgesetz (German Securities Trading Act)
 91

Contacts
Deutsche Telekom AG
Friedrich-Ebert-Allee 140
53113 Bonn

Corporate Communications:
Phone +49 228 181 49494
Email [email protected]

Investor Relations:
Phone +49 228 181 88880
Email [email protected]

Further information on Deutsche Telekom is available at: www.telekom.com

The English version of the report is a translation of the German version of the report.
The German version of this report is legally binding.
Annual Financial Statements 92
Contacts –
 Annual Financial Statements 93
Contacts –

Combined Management Report

– Excerpt form the 2020 annual report of Deutsche Telekom –
= p q Combined management report 25

Combined management report

Deutsche Telekom at a glance Corporate responsibility and non-financial statement
79 Creating transparency
Group organization 80 Explanation of the business model
28 Business activities and segment structure 80 Strategic and organizational approach to sustainability
30 Management and supervision 81 Process for determining significant topics
81 Aspect 1: Environmental concerns
Group strategy 84 Aspect 2: Employee concerns
31 Our corporate strategy: Leading European Telco 86 Aspect 3: Social concerns
33 Strategic areas of operation 91 Aspect 4: Respecting human rights
35 Supporting areas of operation 93 Aspect 5: Fighting corruption

Management of the Group Innovation and product development

37 Finance strategy 94 VTI strategy: we enable today’s business and shape
38 Performance management system the future
95 Innovation priorities
The economic environment 96 Three-pronged innovation strategy
40 Macroeconomic development 99 Innovation governance
41 Telecommunications market 100 Patent portfolio
44 Major regulatory decisions 100 Investment in research and development

Development of business in the Group Employees

46 Statement of the Board of Management on business 100 Supporting people. Driving performance.
development in 2020 100 Our HR work based on the priorities
47 Comparison of the Group’s expectations with actual 105 Headcount development
figures
49 Results of operations of the Group Forecast
54 Net assets of the Group 107 Statement by the Board of Management on the
57 Financial position of the Group and profitability expected development of the Group
107 Economic outlook
Development of business in the operating segments 108 Expectations for the Group
62 Germany 111 Expectations for the operating segments
64 United States
67 Europe Risk and opportunity management
72 Systems Solutions 118 Board of Management’s assessment of the aggregate
73 Group Development risk and opportunity position
74 Group Headquarters & Group Services 118 Risk and opportunity management system
120 Risk assessment and risk containment
Development of business at Deutsche Telekom AG 121 Risks and opportunities
76 Results of operations of Deutsche Telekom AG
77 Financial position of Deutsche Telekom AG Other disclosures
79 Risk management in hedge accounting 134 Significant events after the reporting period
134 Accounting-related internal control system
135 Corporate Governance Statement in accordance with
§§ 289f, 315d HGB
135 Legal structure of the Group
138 Compensation report

This report combines the Group management report of the Deutsche Telekom Group, comprising Deutsche Telekom AG and its consolidated subsidiaries, and
the management report of Deutsche Telekom AG.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 26

Deutsche Telekom at a glance

Net revenue
We look back on a successful 2020 financial year and are well on track to meeting our growth billions of €
forecast: Net revenue increased by 25.4 % to EUR 101.0 billion. In organic terms, revenue
increased by EUR 2.9 billion or 3.0 %. 120
101.0
Including the revenue contributions from the acquired entity Sprint and including exchange rate
80 80.5
differences, our United States segment posted an increase in revenue of 51.4 %. In organic terms, 75.7

revenue was up 5.0 % against the prior year.

40
In our Germany and Europe segments, revenue on an organic basis remained on a par with the
prior-year level. Revenue in the Europe segment was down 2.2 % on account of exchange rate
0
effects.
2018 2019 2020
In our Systems Solutions operating segment, revenue decreased by 5.6 % year-on-year due to
the decline in both traditional IT business and project business. The development of the digital
solutions business was particularly affected by the impact of the coronavirus pandemic.
In our Group Development segment, the 3.1 % increase in revenue was driven mainly by
operational growth at T‑Mobile Netherlands and DFMG.

EBITDA AL (adjusted for special factors)a

Adjusted EBITDA AL grew by 41.6 % to EUR 35.0 billion. All segments, with the exception of billions of €
Systems Solutions, contributed to this growth. Excluding exchange rate effects and changes in the
composition of the Group, our adjusted EBITDA AL increased by EUR 2.6 billion or 7.9 %. 40
35.0
Adjusted EBITDA AL rose sharply by 88.6 % in our United States segment as a result of the 30
acquisition of Sprint and, in particular, the growth in service and terminal equipment revenues. In 23.1 24.7
20
organic terms, adjusted EBITDA AL grew by 10.8 % year-on-year.
Our Germany segment recorded an increase in adjusted EBITDA AL of 1.6 %. In Europe the trend 10
remained stable, with adjusted EBITDA AL up 2.1 % in organic terms. Adjusted EBITDA AL grew
0
substantially in our Group Development segment, by 6.6 %.
2018 2019 2020
At 34.7 %, the Group’s adjusted EBITDA AL margin increased by 4.0 percentage points against the
prior-year level. The adjusted EBITDA AL margin was 38.8 % in Germany, 34.5 % in Europe, and
34.3 % in the United States.

EBIT
EBIT increased by EUR 3.3 billion to EUR 12.8 billion. billions of €
EBITDA AL was negatively affected by special factors of EUR 1.8 billion compared to expenses of
EUR 1.6 billion in the prior year. Expenses of EUR 1.5 billion were recorded in connection with the 15
12.8
business combination of T‑Mobile US and Sprint; this contrasted with expenses of EUR 0.5 billion
in the prior year. Further expenses of EUR 0.4 billion in the first half of 2020, primarily in 10 9.5
8.0
connection with the coronavirus pandemic, had been classified as special factors in the United
5
States segment. Positive special factors in the amount of EUR 1.6 billion related to the partial
reversal of impairment losses on spectrum licenses at T‑Mobile US. Other special factors in both
0
the reporting year and the prior year were primarily attributable to staff-related measures.
2018 2019 2020
Depreciation and amortization were EUR 7.8 billion higher than in the prior year due in particular
to the acquisition of Sprint.
Impairment losses on non-current assets reduced EBIT by EUR 0.8 billion.

Net profit
Net profit increased by EUR 0.3 billion to EUR 4.2 billion. billions of €
Loss from financial activities increased by EUR 1.9 billion to EUR 4.1 billion, largely due to an
increase in finance costs of EUR 1.9 billion as a result of the financial liabilities acquired from 6

Sprint and the restructuring begun in connection with this business combination and the related
3.9 4.2
increase in financing, including the handling charges incurred for a briefly utilized bridge loan 4

facility. Other financial income/expense was unchanged at EUR 0.1 billion. This was attributable, 2.2
2
on the one hand, to positive effects from the measurement of the stock options to buy shares
in T‑Mobile US received from SoftBank and, on the other, to lower measurement effects from
0
embedded derivatives at T‑Mobile US compared with the prior year and higher interest expense
2018 2019 2020
from the measurement of provisions and liabilities.
Tax expense came to EUR 1.9 billion compared with EUR 2.0 billion in the prior year.
Profit attributable to non-controlling interests increased by EUR 1.2 billion to EUR 2.6 billion,
mainly in our United States segment.
Adjusted earnings per share amounted to EUR 1.20 compared with EUR 1.04 in the prior year.

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined in 2019 following the introduction of the IFRS 16 accounting standard.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 27

Net debt
Net debt increased by EUR 44.2 billion to EUR 120.2 billion compared with the end of 2019. billions of €
This increase was mainly attributable to the transfer of liabilities in connection with the business
combination with Sprint (EUR 43.5 billion) and additions of lease liabilities (EUR 14.3 billion) 150

primarily as a result of the modification of existing agreements with American Tower on the lease 120.2
and use of cell sites in the United States. Other factors with an increasing effect were dividend 100
76.0
payments (EUR 3.1 billion), including to non-controlling interests, as well as the acquisition of 55.4
50
spectrum (EUR 1.7 billion) and forward-payer swaps concluded for borrowings at T‑Mobile US
(EUR 1.1 billion).
0
Free cash flow (EUR 10.8 billion), exchange rate effects (EUR 8.0 billion) as well as the sale of Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020
Sprint’s prepaid business to DISH (EUR 1.2 billion) in particular reduced net debt.

Cash capex (before spectrum investment)

Cash capex (before spectrum investment) increased by EUR 3.9 billion to EUR 17.0 billion, largely billions of €
on account of the inclusion of Sprint and the ongoing 5G network build-out in the United States.
In Germany and Europe we continued to invest in the provision of broadband and fiber-optic 20
17.0
technology and in 5G as part of our integrated network strategy. 15
13.1
Cash capex (including spectrum investment) increased by EUR 4.3 billion to EUR 18.7 billion. In 12.2
10
the reporting period, the United States segment acquired spectrum licenses for a total amount
of EUR 1.1 billion. A further EUR 0.4 billion was attributable to spectrum acquisitions in the Europe 5
segment and EUR 0.2 billion to spectrum acquisitions in the Group Development segment. The
0
prior-year figure included EUR 1.2 billion for the acquisition of mobile spectrum licenses, which
2018 2019 2020
primarily related to the United States segment.

Free cash flow AL (before dividend payments and spectrum investment)a, b

Free cash flow AL (before dividend payments and spectrum investment) decreased by billions of €
EUR 0.7 billion year-on-year to EUR 6.3 billion.
Excluding interest payments for zero-coupon bonds and the premature termination of forward- 8
7.0
payer swaps in the United States segment, net cash from operating activities increased by 6 6.1 6.3
EUR 4.4 billion. This was attributable in particular to the sustained positive performance of the
4
operating segments, especially in the United States including Sprint.
The increase was partially offset by EUR 3.9 billion higher cash capex (before spectrum 2
investment) and in particular by higher interest payments, mainly as a result of the financial
0
liabilities recognized and the restructuring begun in connection with the acquisition of Sprint, and
2018 2019 2020
the related increase in financing. Our contractual termination of a revolving factoring agreement
in the Germany segment, and higher repayments of lease liabilities primarily in the United States
segment, also had a negative effect.

ROCE
ROCE (return on capital employed) decreased by 0.5 percentage points in the reporting period to %
4.6 %.
This was due to stronger percentage growth in average operating assets (NOA) than in net 6
5.1
operating profit after taxes (NOPAT). Both NOPAT and average NOA were affected by the business 4.7 4.6
combination of T‑Mobile US and Sprint. 4

Average NOA increased due in particular to the spectrum licenses; property, plant and equipment;
2
and right-of-use assets acquired in the Sprint transaction, as well as the modification of the leases
concluded with American Tower. In addition, the development of NOA reflects our consistently
0
high investment volume. The positive development in NOPAT was driven primarily by a substantial
2018 2019 2020
increase in EBIT at T‑Mobile US.

For further information, please refer to the section “Development of business in the Group.”

For further information on the level of achievement of our main financial and non-financial key performance indicators, please refer to the relevant section “Development of business in the
Group – Comparison of the Group’s expectations with actual figures.”

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined in 2019 following the introduction of the IFRS 16 accounting standard.
b Before interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 28

Group organization
Business activities and segment structure
Business activities. With 242 million mobile customers, 27 million fixed-network lines, and 22 million broadband customers,
we are one of the leading integrated telecommunications companies worldwide. We offer our consumers fixed-network/
broadband, mobile, internet, and internet-based TV products and services, as well as ICT solutions for our business and
corporate customers. We have an international focus and are represented in more than 50 countries. With 226,291 employees
worldwide (as of December 31, 2020), we generated revenue of EUR 101.0 billion in the 2020 financial year, despite the
negative effects of the coronavirus pandemic. The successful business combination of T‑Mobile US and Sprint raised the
proportion of net revenue generated internationally to 75.5 %.

Fixed-network business includes all voice and data communications activities based on fixed-network and broadband
technology. This includes the sale of terminal equipment and other hardware, as well as the sale of services to resellers. Our
mobile communications business offers mobile voice and data services to consumers and business customers; in addition, we
sell mobile devices and other hardware. We also sell mobile services to resellers and to companies that buy network services
and market them to third parties (mobile virtual network operators, or MVNOs). Drawing on a global infrastructure of data
centers and networks, we operate information and communication technology (ICT) systems for multinational corporations and
public-sector institutions.

Our responsible corporate governance and business success are based on our shared corporate values and our Guiding
Principles revised in February 2020. SDG 8 RELATIONSHIPS

For further information on our Guiding Principles, please refer to the section “Employees” and online at www.telekom.com/en/blog/group/article/our-new-
purpose-and-revised-guiding-principles-594406

Our identity describes the mission of Deutsche Telekom: Why are we here, what does our Company stand for, and what is our
purpose? It defines our corporate purpose and describes what we at Deutsche Telekom stand for: We want to be a sustainably
growing company that delights its customers, creates value for its investors, and in which employees enjoy their work. Our
network is fast, reliable, secure, and should be easily accessible for everyone. At the same time, we are more than just another
company that provides society with infrastructure. We want to connect people and make their lives permanently easier and
more enriched. This is our mission. We are a close and trusted companion to the customer; transparent, fair, and open to dialog.
We identify innovative products at an early stage and develop them in collaboration with our partners. It is our contribution
to social togetherness. Our identity reflects all of this and is summarized in one short purpose statement: We won’t stop until
everyone is connected.

Segment structure. SDG 8 FINANCE Our financial reporting conforms with our Group strategy and is organized
according to the following structure:

Deutsche Telekom Group

Group Headquarters & Group Services

Germany United States Europe Systems Solutions Group

Development
Fixed network Mobile Fixed network Global ICT Selected
and mobile communications and mobile solutions subsidiaries and
communications communications equity investments

Our Group is divided into five operating segments plus the Group Headquarters & Group Services segment, each of which we
describe in detail below.

Our Germany operating segment comprises all fixed-network and mobile business activities for consumers and business
customers, including separate sales entities in Germany to allow a customer-centric sales approach. As a pioneer of
digitalization, the segment offers its customers an individual service and product portfolio that is designed to be innovative
while at the same time secure and simple.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 29

Consistent with our efforts to implement our Group strategy pillar “Lead in business productivity,” we realigned our business-
to-business (B2B) telecommunications services in the course of the year. To this end, TC Services and Classified ICT, portfolio
units previously assigned to the Systems Solutions operating segment, as well as Telekom Global Carrier (TGC) and Network
Infrastructure (NWI), which had formerly been reported under the Europe operating segment and the Group Headquarters &
Group Services segment respectively, and which together form the business area designated as Deutsche Telekom Global
Carrier (DTGC), have been combined in the Germany operating segment. Effective the start of the third quarter of 2020, the
management of the Deutsche Telekom Group and hence also the reporting structure were both based on this new segment
allocation. As part of these transactions, the assets and liabilities assigned to the business areas were transferred to the
Germany operating segment. Prior-year comparatives in these segments (development of operations, customer development,
headcount development, and order entry) were adjusted retrospectively. The transactions were consummated under company
law on July 1, 2020 (TC Services and Classified ICT) and on October 1, 2020 (DTGC).

The Germany operating segment also focuses on the wholesale business to provide telecommunications services for carriers
and, up until the realignment of our B2B telecommunications business, also for our Group’s other operating segments. The
bundling of customer service activities places a further focus on customer satisfaction and quality assurance. Build-out of the
mobile and fixed networks is managed by the Technology business unit in this segment.

Our United States operating segment combines all mobile activities in the U.S. market. The business combination of
T‑Mobile US and Sprint was completed on April 1, 2020, forming the all-new, larger T‑Mobile US. The transaction had previously
passed through various approval processes involving numerous national and regional courts and authorities in the United
States. Business in the United States developed extremely positively on the back of the various Un-carrier initiatives of the last
few years. The new business combination serves to further strengthen this trend. T‑Mobile US has the largest 5G network in the
United States.

The business combination of T‑Mobile US and Sprint took the form of an all-stock transaction. At the completion of the
transaction, Deutsche Telekom held around 43.6 % of the shares in T‑Mobile US. However, under a proxy agreement reached
with SoftBank, at the time the business combination took effect Deutsche Telekom controlled a majority of the voting power of
around 68.3 % of shares in the new T‑Mobile US. On June 22, 2020, Deutsche Telekom received call options from SoftBank to
buy around 101 million T‑Mobile US shares, thus securing itself long-term access to the majority shareholding in T‑Mobile US.
In return, we granted SoftBank the option to immediately sell around 198 million T‑Mobile US shares. The sale of the shares
held by SoftBank reduced the proportion of T‑Mobile US shares for which we can exercise voting rights to around 52.5 % as of
August 5, 2020.

The structure of the new T‑Mobile US factors in the agreement reached with the U.S. Department of Justice (DoJ), one
condition of which was that Sprint divested its prepaid business to satellite TV operator DISH. The agreement also includes the
sale of part of the 800 MHz spectrum held by Sprint to DISH. As of July 1, 2020, the U.S. authorities’ requirements regarding
the divestiture of Sprint’s prepaid business were duly met and the agreement to sell spectrum to DISH duly confirmed.

Our Europe operating segment comprises all fixed-network and mobile operations of the national companies in Greece,
Romania, Hungary, Poland, the Czech Republic, Croatia, Slovakia, Austria, North Macedonia, and Montenegro. We are now an
integrated provider of telecommunications services in all of our national companies. On November 6, 2020, OTE concluded an
agreement with Orange Romania concerning the sale of the 54 % stake in Telekom Romania Communications, which operates
the Romanian fixed-network business. The transaction is subject to approval by the authorities. In addition to consumer
business, most of the national companies also offer ICT solutions for business customers.

As a leading ICT service provider, our Systems Solutions operating segment offers business customers a portfolio of integrated
products and solutions. With offerings for connectivity, digital solutions, cloud and infrastructure, and security, in addition
to strategic partnerships, we offer our customers help and guidance to implement digital business models. We have been
implementing a comprehensive transformation program since 2018, under which we realigned our organization and workflows,
adjusted capacities, and developed a new strategy for our portfolio. The portfolio-oriented approach now focuses on six
portfolio areas: Managed Infrastructure Services & Private Cloud, Public Cloud Managed Services, SAP, Digital Solutions
(including Dedicated System Integration and Health), Road Charging, and Security – comprising both established IT business
areas and growth areas. For information on the realignment of the B2B telecommunications business, please refer to the
information provided above in connection with the Germany operating segment.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 30

Our Group Development operating segment actively manages entities, subsidiaries, and equity investments to grow their value
while giving them the entrepreneurial freedom they need to promote their continued strategic development. This approach
led to the creation of GD Towers – comprising Deutsche Funkturm (DFMG) and the Dutch cell tower business – within the
Group Development segment. Following the integration of Tele2 Netherlands as of the start of 2019, the Dutch MVNO and SIM
provider, Simpel, was taken over effective December 1, 2020. This acquisition secures mobile market shares, creates synergies,
and makes the Company more competitive in the consumer market. Deutsche Telekom Capital Partners (DTCP) and the Group
functions of Mergers & Acquisitions and Strategic Portfolio Management have also been assigned to Group Development.

Group Headquarters & Group Services comprises all Group units that cannot be allocated directly to one of the operating
segments, and reports on our Board of Management department for Technology and Innovation. As the organization that sets
the direction and provides momentum, it defines strategic aims for the Group, ensures they are met, and becomes directly
involved in selected Group projects. Group Services provides services to the entire Group; in addition to typical services
provided by Deutsche Telekom Services Europe, such as financial accounting, human resources services, and operational
procurement, Group Services also includes placement services provided by our personnel service provider, Vivento. It is
in charge of securing external employment opportunities for employees, mainly civil servants, predominantly in the public
sector. Further units are Group Supply Services (GSUS) for our real estate management and our strategic procurement, and
MobilitySolutions, which is a full-service provider for fleet management and mobility services.

Our Technology and Innovation Board of Management department unites the cross-segment technology, innovation, IT, and
security functions of our Germany, Europe, and Systems Solutions operating segments. These include Deutsche Telekom IT,
which focuses on the Group’s internal national IT projects, and our central innovation unit, Product Innovation and Customer
Experience (PIC), which works closely with our operating segments to drive topics such as digitalization, big data, software-
defined networks, voicification, virtualization, and cloud services. Our Innovation Hub (IHUB) pools all of the expertise required
for future innovation projects in an agile working environment to ensure we stay flexible and innovative. Additional units are
Strategy & Technology Innovation (S&TI) and International Technology and Service Delivery (ITS). ITS harmonizes the planning,
development, and operation of products, services, and platforms at the national companies in Europe, taking technological and
commercial aspects into account. S&TI ensures efficient and customized research and innovation with a focus on mobile and
fixed-network communications.

Changes to the organizational structure in 2021

Transfer of the Internet of Things (IoT) growth area. Effective January 1, 2021, Deutsche Telekom assigned the responsibility
for business and profit and loss for Deutsche Telekom IoT GmbH from the Systems Solutions operating segment to the business
customer unit in the Germany operating segment. The Group subsidiary established in summer 2020 is responsible for the
IoT business of Deutsche Telekom. This reassignment puts us in a position to serve the IoT market more quickly and thus to
strengthen Deutsche Telekom’s position on this growth market.

Transfer of the Austrian cell tower business. As of January 1, 2021, Deutsche Telekom transferred its Austrian cell tower
business from the Europe operating segment to GD Towers in the Group Development operating segment to enhance the
management efficiency in cell tower business. In addition, GD Towers will increase its efforts to expand third-party business,
increase profitability, and develop growth areas.

Combination of the cell tower business in the Netherlands and creation of an infrastructure fund. On January 21, 2021,
Deutsche Telekom, Cellnex Telecom S.A., the newly established, independently managed investment company Digital
Infrastructure Vehicle I SCSp (DIV), and others signed an agreement to merge Deutsche Telekom’s and Cellnex’s respective
Dutch subsidiaries for mobile infrastructure. Under the deal, the Dutch cell tower company T‑Mobile Infra B.V. will be sold to
DIV and subsequently merged into Cellnex Netherlands B.V.

Management and supervision

As of December 31, 2020, Board of Management responsibilities were distributed across eight Board departments. Four of
these cover cross-functional management areas:

Chairman of the Board of Management

and the Board of Management departments

Finance
Human Resources and Legal Affairs
Technology and Innovation.
In addition, there are four segment-based Board of Management departments:

Germany
Europe
T‑Systems
USA and Group Development.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 31

Changes in the composition of the Board of Management. At its meeting on May 22, 2019, the Supervisory Board of
Deutsche Telekom AG resolved to dissolve the Data Privacy, Legal Affairs and Compliance (DRC) Board department effective
December 31, 2019. The Internal Audit and Risk Management units were assigned to the Finance Board of Management
department. Group Security Governance was assigned to the Board of Management department for Technology and
Innovation. The Data Privacy, Legal Affairs, and Compliance units were assigned to the Human Resources Board of Management
department and are led by Dr. Claudia Junker, who in her capacity as General Counsel and Executive Vice President reports
directly to Birgit Bohle. Birgit Bohle has headed up the extended Human Resources and Legal Affairs Board of Management
department since January 1, 2020. Dr. Thomas Kremer left the Group for reasons of age effective March 31, 2020. Until his
departure, Dr. Kremer supported the transition to the new structures as part of a designated mandate.

Dr. Dirk Wössner, the Board of Management member for Germany, informed the Supervisory Board of Deutsche Telekom AG in
early 2020 of his intention to leave the Group upon expiry of his service contract as of December 31, 2020. On June 18, 2020,
the Supervisory Board of Deutsche Telekom AG appointed the former Board of Management member for Europe, Srini Gopalan,
as the new Board of Management member for Germany effective November 1, 2020. Dr. Wössner resigned from his position
effective midnight on October 31, 2020. On September 7, 2020, the Supervisory Board of Deutsche Telekom AG appointed
Dominique Leroy to succeed Srini Gopalan as the Board of Management member for Europe effective November 1, 2020.

Composition of the Board of Management as of December 31, 2020

Members of the Board of Management Department

Timotheus Höttges Chairman of the Board of Management (CEO)
Adel Al-Saleh T‑Systems
Birgit Bohle Human Resources and Legal Affairs
Srini Gopalan Germany
Dr. Christian P. Illek Finance (CFO)
Thorsten Langheim USA and Group Development
Dominique Leroy Europe
Claudia Nemat Technology and Innovation

The members of the Board of Management are appointed and discharged in accordance with § 84 and § 85 of the German
Stock Corporation Act (Aktiengesetz – AktG) and § 31 of the German Codetermination Act (Mitbestimmungsgesetz –
MitbestG).

The Supervisory Board of Deutsche Telekom AG advises the Board of Management and oversees its management of business.
It is composed of 20 members: 10 represent the shareholders and 10 the employees. The employees’ representatives were
most recently appointed at the delegates’ assembly on November 20, 2018.

Amendments to the Articles of Incorporation are made pursuant to § 179 and § 133 AktG and § 18 and § 21 of the Articles of
Incorporation. According to § 21 of the Articles of Incorporation, the Supervisory Board is authorized, without a resolution by
the shareholders’ meeting, to adjust the Articles of Incorporation to comply with new legal provisions that become binding for
the Company and to amend the wording of the Articles of Incorporation.

The compensation system for our Board of Management is oriented towards the long-term performance of our Group. Since
2013, the compensation for our Supervisory Board has no longer included any long-term remuneration components. We
complied with the recommendations of the German Corporate Governance Code (GCGC), as amended on February 7, 2017.

For a description of the compensation systems for the Board of Management and the Supervisory Board, please refer to the section “Other disclosures –
Compensation report.”

Group strategy
Our corporate strategy: Leading European Telco
SDG 8 FINANCE

Since 2014, we have been aligning all of our corporate activities with our Leading European Telco strategy – with the aim of
becoming Europe’s leading telecommunications provider.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 32

This strategy has proved very successful: In terms of market capitalization, we are Europe’s highest-value telecommunications
company (as of December 31, 2020). Not only is our Group stable, but it is growing, too – as confirmed by our key financial
KPIs and customer development on both sides of the Atlantic. We raised our full-year guidance for 2020 in the course of the
year, despite the coronavirus pandemic. Nevertheless, the pandemic has not left us unscathed. For example, temporary travel
restrictions have resulted in lower roaming and visitor revenues. Our terminal equipment business also felt the squeeze, as did
our corporate customer business. While it is impossible to quantify the long-term impact of the coronavirus pandemic, we see
it as both a risk and an opportunity: One the one hand, we expect to see appreciable effects on the economy as a whole, while
on the other the pandemic has given a boost to the digitalization trend. Additional trends are emerging that affect both us as a
Group and society as a whole:

The parallel build-out of broadband and mobile infrastructure (optical fiber and 5G) calls for high investments and innovative
approaches to implementation.
Competition in the telecommunications sector is intense and changing: Not only are telecommunications companies using
the digital transformation to enhance their core business efficiency, but we are also seeing companies from other industries
pushing onto the market with lean, software-based production models. Providers such as Google and Microsoft are
expanding into the global connectivity field.
As data availability continues to grow and artificial intelligence becomes more advanced, new usage scenarios are opening
up both in internal production processes (such as data-driven network build-out) and in business-to-customer interaction
(e.g., hyper-personalization). At the same time, we need to equip people with the relevant skills and expertise to keep pace
with these developments, and define new standards for handling data responsibly in the digital society.
The rising tide of digitalization and data availability goes hand in glove with the potential for abuse – reflected in trends
such as the huge surge in cybercrime, which has rapidly escalated from targeted attacks to high-volume crime. These trends
can both dramatically affect the stability of critical infrastructure and influence political relations. Political and economic
relations are under increasing influence from the growing importance and economic power of a handful of global tech
enterprises, known as hyperscalers that primarily operate from the United States (Microsoft, Google, Amazon) and China
(Tencent, Alibaba).
Sustained economic globalization, world population growth, and increasing use of digital technologies all put a strain on the
available resources. It is thus imperative that we find a sustainable, more ecological way of doing business and act with a
greater focus on social responsibility.
We are tackling these developments head on – and with measurable success: Unlike our European competitors, our share price
recovered to pre-crisis levels following the general downturn at the height of the first coronavirus wave. This is thanks not
least to our coherent Group strategy. We continue to systematically implement our Leading European Telco strategy. Despite
over 50 % of our revenue coming from the United States, we are still pursuing our ambition to become the Leading European
Telco. Because this is how we see ourselves: We are a European company with a strong U.S. arm. In parallel, we leverage
our international footprint to generate synergies across the Group and to carry weight alongside the global tech giants. Our
goal here is not to micromanage all local units, but to provide a strategic framework and to utilize local strengths (networks,
competitive standing).

Our claim to leadership ranges over the dimensions of customer experience, technology, and business customer productivity.
From this we derive three specific areas of operation with which we are creating the foundation for future organic growth.
Because only if we grow can we sustainably secure our earnings performance and continue to meet the demands of our
investors. Two areas of operation contribute to this growth target and provide a framework for our actions: “Save for growth
investments,” and “Simplify, digitalize, accelerate & act responsibly.”

Corporate strategy: Leading European Telco

GROW

Lead in customer experience Lead in technology Lead in business productivity

One connectivity & Integrated gigabit Secure ICT solutions &

perfect service networks big IoT

Save for growth investments

Simplify, digitalize, accelerate & act responsibly

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 33

Strategic areas of operation

One connectivity & perfect service
We want to offer our customers a seamless and technology-neutral telecommunications experience. That’s why we market
fixed-network and mobile communications in convergent products (fixed-mobile convergence (FMC)). By the end of the
reporting year, some 5.0 million customers in Germany had opted for MagentaEINS; that is over 0.36 million more than in the
prior year. The national companies of our Europe operating segment won more than 0.9 million new customers for MagentaOne
and similar FMC offerings in 2020. Because we want to continue on this path of growth, we work continuously to improve and
expand our convergent portfolio. We took another step in this direction with our new MagentaEINS Plus offering, which bundles
all connectivity services for home and on the move in a single contract – with flexible terms, unlimited data, and the option to
add family, friends, or acquaintances to the contract via Community Cards.

While having the best networks is essential for us as Europe’s Leading Telco, it is not the only prerequisite. We want to go
beyond the pure technical line: the customer’s network experience is decisive for us. For this reason we offer our customers
additional services that provide genuine added value and turn our “Lead in technology” aspiration into a first-hand experience.
We reached some key milestones in this regard in the reporting year. Our MagentaTV product has been repositioned to
aggregate linear TV, including extensive features, with access to content from the biggest video-on-demand providers, and
exclusive content. In 2020 we enhanced its appeal further: in Germany, for instance, with new partnerships with key content
providers (including Disney+, RTL TVNOW) and the launch of the MagentaTV stick for a provider-independent TV experience,
and in our European subsidiaries with a new user interface to add even more personalization to the user experience. The
addition of around 0.25 million TV customers in Germany and 0.1 million in our European subsidiaries shows that we are on
the right track. We also revamped our TVision television offering in the United States with new content packages, a new
streaming device, and new price structures. Our digital voice assistant, Hallo Magenta, is enhancing the customer experience in
interactions with our services while safeguarding data security and personal privacy in compliance with European data privacy
standards. We work together with our customers to continually develop and test new services and further strengthen our
entertainment portfolio. That includes MagentaGaming, for example, which we released as a beta version in Germany in 2019
and launched commercially just twelve months later.

Our aspiration to deliver perfect customer service is yet another powerful tool to help set us apart from the competition. For
this reason, we launched several initiatives in the reporting year that aim to enhance the quality of our customer service. In
Germany these include a Concierge Service (where a dedicated personal advisor looks after customers seeking to switch to
Telekom from a competitor, move house, or build their own home) and the promise of assistance for customers struggling to
set up and optimize their Wi-Fi at home. Awards such as the Connect hotline test’s prize for best-in-test of the German fixed-
network providers (issue 9/2020) validate our efforts. We will continue our efforts in 2021 to offer customers the best service;
for example, by further improving our first-call resolution rate for customer queries. In the United States, too, we are reaping the
rewards of measures such as the new Team of Experts approach: Several surveys on service quality place T‑Mobile US ahead
of its competitors (including being rated best for postpaid customer satisfaction for the sixth time in succession in the J.D.
Power test), while the Net Promoter Score in Customer Service stands at 79 % – putting it at an all-time high. At our national
companies in Europe, we are currently focusing on increasing the level of digitalization in customer interaction; for example,
using our updated service app. Following successful international rollout, this app improves the customer experience (e.g., with
setting up and managing their routers via the app, plus an option to chat with an employee or service bot) and enables us to
monetize our offerings (e.g., with customer-specific approaches).

We measure customer satisfaction using the globally recognized TRI*M method. We use the results of this performance
indicator to improve our customer contact processes, and our products and services. At the same time, we determine the
loyalty of our customers towards Deutsche Telekom. The results are presented as a performance indicator, the TRI*M index,
which ranges between minus 66 and plus 134 points. At the end of the reporting year, the indicator for the Group (excluding
T‑Mobile US) came in at 72.2 points versus an adjusted value of 67.9 points at the start of the year (determined on a comparable
basis). Our goal for the coming years is to again achieve an improvement in customer satisfaction.

Integrated gigabit networks

Convergent products require integrated networks. That is why we are systematically building out and interlinking our fixed
and mobile networks so that we can offer our customers the fastest possible connection at top quality, anytime, anyplace.
We invested around EUR 17 billion (not including spectrum investment) primarily in building and operating networks in Europe
and the United States, with around EUR 5.5 billion of this figure earmarked for Germany alone. This makes us the biggest
investor among all of our German competitors. In pursuit of outstanding quality, we are also striking out in new directions,
for example, with innovative technologies like fixed-network substitution using wireless technology, or the use of artificial
intelligence to ensure infrastructure is built out in line with demand, as well as exploring partnerships and joint ventures.
Integrated management improves the capacity utilization of our infrastructure and increases efficiency in operations and
maintenance. SDG 9 STRUCTURE

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= p q Combined management report 34

Fiber optic-based fixed networks are the basis for an integrated network experience. In virtually all of our European national
companies, we are leading the build-out of fiber-optic lines to over 9 million households. In Hungary, for example, we can
now offer fiber-optic lines to 2.6 million households – that’s over 50 %. In the Germany operating segment, we have now laid
more than 590,000 kilometers of fiber-optic cable. Since the start of 2020, we have made fiber-optic lines available to around
600,000 more households. Looking ahead, we are set to substantially increase the pace of the fiber-optic build-out further.

In mobile communications, we set ourselves apart from our competitors with the outstanding quality of our network. We have
regularly come out on top in independent network tests. Our German network once again won the “big three” network tests
in 2020 (Connect, issue 1/2021; CHIP, issue 01/2021, 11th time in succession; and Computer Bild, issue 25/2020). The network
experts from Umlaut tested four of our European national companies (Austria, the Netherlands, Poland, and Croatia) in the
reporting year and rated them all “best in test overall.” We intend to achieve these results on a regular basis in future, and hence
are further building out our LTE networks: In our European national companies, we already covered 97.6 % of the population
with LTE as of December 31, 2020; in Germany, household coverage stood at 98.7 %.

With the fifth-generation mobile communications standard (5G), we will create a highly reliable mobile network with
extremely low latency and high data throughput. To this end, network functions will be decoupled from the access medium
(e.g., optical fiber, copper, or air). By distributing computing power in the network (mobile edge computing) and creating
dedicated network layers for individual applications (network slicing), 5G creates the basis for future technologies such
as virtual reality, autonomous driving, and the Internet of Things. With our clear goal of also leading in 5G, we intend to
work closely with policy-makers and industry to build the most powerful digital infrastructure across our footprint. And we
are moving closer to achieving this goal: With the largest 5G campaign in Germany, two thirds of the population can now
experience the new mobile communications standard – in both rural and urban areas. In the United States, too, we have the
largest 5G network nationwide covering some 280 million people via the 600 MHz band and 106 million people with Ultra
Capacity 5G in the 2.5 GHz band. This is thanks in large part to our superior spectrum position from the business combination
with Sprint (effective from April 1, 2020). In Austria, not only do we have the largest 5G network nationwide but we were also the
first telecommunications company to offer 5G there. Magenta Telekom is deploying innovative network technology to expedite
the build-out of 5G in Austria and offers unlimited 5G internet at over 1,200 locations country-wide (reaching more than 40 % of
Austrian households). At the Netherlands’ first-ever 5G spectrum auction, which ended on July 21, 2020, T‑Mobile Netherlands
purchased total spectrum of 70 MHz for which it paid EUR 400 million. Going forward, we will continue to invest heavily in
building out 5G infrastructure. For this, we need conditions to be in place that are both fair and reliable.

Secure ICT solutions & big IoT

In the reporting year, we once again maintained our market-leading position (in terms of revenue) as a provider of
telecommunications services for business customers in Germany and based growth on the level reached in recent years.
Secure, reliable global connectivity is essential to the advancing digitalization of critical processes in companies and industry
associations. We remain a dependable partner to German industry thanks to our product portfolio of international
communications solutions that combine the strengths of our national network infrastructure with our international networks.
We also continued to post growth in IT revenue from business customers in our Germany operating segment (up 3.4 %
compared with 2019).

We again demonstrated our strengths and expertise throughout the coronavirus pandemic. With our products and services, we
made an important contribution to maintaining normal operations as far as possible for our society and economy: Over 50 % of
businesses in Germany work on the Telekom network and during the first wave of coronavirus from March through June 2020
we sold 69,000 remote-working solutions to help maintain business as usual when working from home. During lockdown our
networks were put to the test and they all coped well. Compared with pre-crisis levels, mobile voice traffic jumped by up to
70 % in the first week and in the fixed network by up to 100 % on specific days. Yet the coronavirus pandemic is not leaving our
B2B business unscathed. Our core business is feeling the strain of lower roaming revenues, and IT business is impacted by IT
budget cuts and project delays, for example. At the same time, as a catalyst for the digital transformation, the coronavirus crisis
represents an opportunity. At Deutsche Telekom, we want to be the preferred partner for digitalization and to grow our business
with business customers. With our IT solutions, we help our customers – from microenterprises, SMEs, major corporations
through to public authorities – to profitably deploy the technologies of the future. The Internet of Things and cybersecurity are
just two of the focus topics gaining relevance in this context. SDG 8 FINANCE

Our business with “traditional” IT outsourcing services for international corporate customers has been in decline for a number
of years now, mainly due to persistent intense competition. It is for this reason our Systems Solutions operating segment is
currently undergoing a profound transformation. For our corporate customers, we are pursuing a “Digital enabler” strategy.
In concrete terms, this means we are bridging the gap between known platforms (Microsoft Office, SAP Hana, etc.) and
the individual demands of complex organizations. To achieve this, we have expanded the software development, software
integration, and digitalization process units in particular and will continue to further strengthen them. The focus here is on
profitable growth. We are redoubling our efforts to implement existing transformation initiatives, such as reducing indirect
costs, strengthening the offshoring rate, and transforming the revenue mix, despite some minor delays in the reporting year
due to the coronavirus pandemic and other factors.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 35

As part of our ongoing efforts to consistently implement the Group’s strategy pillar “Lead in business productivity” and
continue building on the positive trend, in 2020 we implemented several more structural measures:

We plan to offer our business customers “connectivity from a single source” (one connectivity) and established a dedicated
integrated unit for this purpose in the reporting year: TC Services and Classified ICT, portfolio units previously assigned
to the Systems Solutions operating segment, were combined in the business customer unit of the Germany operating
segment effective July 1, 2020. The transition to the new structure will affect T‑Systems’ telecommunications operations
both on a national and international level. It not only establishes end-to-end responsibility – from production and product
development to service delivery management and technical sales – within one unit, which reduces the number of interfaces,
but also enables us to even better orient our services to the customer. We also expect greater scalability and improved
competitiveness from the resulting economies of scale alongside the benefit of being able to zero in even more closely on our
growth areas (e.g., software-defined network solutions (SD-x) and data-driven business models) on the basis of standardized
production processes.
At the same time, we want to ensure we stay flexible and agile in the fast-moving IoT and security growth markets. To this
end, effective July 1, 2020 the Security and IoT portfolio units were spun off into independent legal entities (limited liability
companies under German law (GmbHs)) under the Deutsche Telekom AG umbrella. The spin-off move gives them greater
entrepreneurial freedom, more speed and innovation, and strengthens the mandate for IoT in the Group. We see the most
growth potential for IoT business in the digitalization of the SME sector and in the global scaling of IoT platforms.
These structural changes mark an important milestone in the transformation of T‑Systems, and will continue to be pursued
systematically in 2021.

Supporting areas of operation

Save for growth investments
Future growth requires adequate investment. To this end, we are investing in our own innovativeness as well as integrating
successful new developments from outside our Company. Thanks to our strict cost discipline, we generate the funds we need
to finance this investment and safeguard our competitiveness. We will therefore systematically continue on this path of cost
transformation. In the long term, we also want to be Europe’s leading telecommunications provider in terms of efficiency.

We take a value-oriented approach to managing our investment portfolio. Business areas that cannot be adequately developed
within the Group are disposed of. Consequently, we concluded an agreement concerning the sale of the 54 % stake in Telekom
Romania Communications S.A., which operates the Romanian fixed-network business, to Orange Romania. The transaction,
which comprises a purchase price of EUR 268 million, is subject to approval by the authorities as well as other closing
conditions. The transaction is expected to be closed in the second half of 2021. On the other hand, we bolster our growth
ambitions by means of equity investments and acquisitions. In this context, T‑Mobile US and Sprint combined their two
businesses effective April 1, 2020 to form the “all-new,” larger T‑Mobile US. The new T‑Mobile US created by the business
combination has market capitalization of around USD 167 billion (based on the share price of the new T‑Mobile US on
December 31, 2020). Moreover, we secured call options to increase our holding in T‑Mobile US (from SoftBank shares) and
appointed an experienced new management team. Not only is the combination of business activities under an all-new
T‑Mobile US consistent with our strategy of successfully developing our U.S. business (including market capitalization growth
of over 400 % so far in the last five years), it will also bolster the customer-oriented Un-carrier strategy and allow us to roll
out 5G technology across the United States faster and better than our competitors. The course is already set: In the reporting
year we moved up to the #2 spot in terms of customer numbers in the U.S. mobile communications market, we won more
than 5.5 million new customers in 2020 alone, and we continue to grow. Going forward our focus is on becoming #1 in the
U.S. market and leveraging the planned synergies from the business combination worth around USD 43 billion (after integration
costs). In the Netherlands, too, we have completed the integration of Tele2 Netherlands and continue to grow on this stronger
basis. We successfully launched ourselves as an FMC provider and secured the spectrum necessary to maintain our leading
position in terms of network coverage. We also acquired the Dutch MVNO and SIM provider Simpel as of December 1, 2020
along with its customer base of around 1 million customers nationwide. With a total of 6.8 million customers, we are now the
Netherlands’ largest provider of mobile communications.

Simplify, digitalize, accelerate & act responsibly

Simplicity in our offers and in our organization makes the digital transformation of our core business easier. In this way, we
increase our implementation speed – both in the interaction with customers and in the implementation of new, strategic
initiatives. This is why we want to become simpler, more digital, and ultimately more agile.

There are two main thrusts to our pursuit of simplicity. First, we want to offer our customers intuitive products and simple
rate plans, like MagentaEINS Plus, MagentaTV, or the unlimited MagentaMobil XL plan. Going forward, we want to significantly
further reduce product complexity. Second, we want our internal operation to be as efficient as possible, i.e., in terms of time
and costs. Hence we will scrutinize our organization, processes, and decision-making procedures and further optimize them
wherever possible.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 36

The digitalization of our core business is helping us to improve customer experience and increase our efficiency. Our service
apps are now firmly established in Germany and Europe as central, digital customer interfaces and we have worked to
continually add more services. We interact with 62 % of customers in our European national companies digitally, via the service
apps. The MeinMagenta app in Germany also has a penetration rate of over 56 % and receives positive ratings, with the iOS
version rated 4.3/5 stars, for example. Thanks to our ongoing investments in digitalizing our processes, we were also able to
respond rapidly to the unexpected challenges posed by the coronavirus pandemic, transitioning our 16,000 service center
employees in Germany to home working within one weekend. 80,000 colleagues in Germany and up to 180,000 employees
worldwide have represented Deutsche Telekom from their own homes. Throughout all of this, we maintained our productivity
levels. Employee satisfaction increased considerably in parallel, reaching 80 % in the pulse survey taken in November 2020,
thus it is around 8 percentage points higher than the level in the employee survey in November 2019. SDG 3 EMPLOYEES

Long term, our plan is to digitalize virtually all value creation stages in their entirety. To this end, we are implementing more
agile IT solutions and systematically expanding our expertise in innovative technologies like artificial intelligence. Data-based
analyses are already helping us to maintain our hardware more proactively, understand customer needs better, and manage our
networks more efficiently.

Yet, to achieve simplicity and take the digital transformation forward, we need new organizational forms, expertise, and a
cultural change – in short, we need to master a whole host of new skills if we are to handle current and future challenges. We
tackled these developments head on with measures such as the introduction of the Youlearn initiative to promote a culture
of self-paced learning in our everyday working life. What is more, we rolled out Percipio (an intelligent learning platform also
dubbed the “Netflix of learning”) and integrated Coursera as a provider of digital further-training courses offered by top-ranking
universities, thus providing our employees with a high-quality training service. The increase in our digital learning rate from
46 % to 63 % and over 170,000 registrations for Percipio since the third quarter of 2019 validate our efforts in this area. We do
this because we firmly believe that providing a state-of-the art learning environment is central to our obligation as an employer
to act responsibly. SDG 8 EMPLOYEES

In parallel, we fulfill our responsibility to society by systematically aligning our core business processes with the principle
of sustainability. We have expanded our existing climate strategy to include a new Group program. Our aim with “We care
for our Planet” is to make a meaningful contribution toward protecting the climate and conserving resources. With over 2.1
million devices either refurbished and reintroduced into circulation or sent by us directly for recycling, our customers actively
help to conserve resources and protect the climate. In the fixed network alone, more than 800,000 routers and receivers
distributed under our lease model were returned, professionally refurbished, and made ready for re-use. Moreover, in 2020
we introduced a sustainability standard for our packaging, removing single-use plastics in favor of recyclable materials and
environmentally friendly colorings. All new Telekom-branded (or “T-branded”) devices and already up to 25 % of devices
from third-party manufacturers fulfill these requirements. Our Group entities in Germany, Magyar Telekom in Hungary, OTE in
Greece, T‑Mobile Netherlands, T‑Systems Iberia, T‑Systems in India as well as all T‑Systems and GBS entities in Russia met
100 % of their electricity requirements from renewable sources. By the end of 2021, we also plan to have fully converted
our entire Deutsche Telekom network, across the entire gamut from mobile telecommunications to the high-speed DSL
network, to renewable electricity. Above and beyond this, we are supporting a responsible approach to digitalization, e.g.,
with our campaigns for digital civil courage (#TAKEPART – No hate speech) and promoting digital democracy projects
(dabei-geschichten.telekom.com). SDG 13 ENVIRONMENT SDG 16 RELATIONSHIPS

In summary, our Leading European Telco strategy is reflected in our goal to be

the leading European telecommunications provider.

We want to be a leader in terms of customer experience, technology, and the implementation of advances in productivity for
our business customers. Because only when we lead can we grow and meet the demands of our investors in the long term.
This growth will be made possible by carefully managing our financial resources and systematically transforming the
Company to be simple, digital, and agile in every sense.
We play a responsible and active role in society. We are a partner, not just at a social level, but also at a political one,
and we work in the interests of ensuring the open, forward-looking development of all countries in which we are active.
SDG 8 RELATIONSHIPS

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= p q Combined management report 37

Management of the Group

We are committed to the concept of value-oriented corporate governance. We want to strike a balance between the
contrasting expectations of our stakeholders so that sufficient funding is available for an attractive dividend, debt repayment,
responsible staff restructuring, and new investment for a positive customer experience.

Shareholders expect an appropriate, reliable return on their capital employed.

Providers of debt capital expect an appropriate return and that Deutsche Telekom is able to repay its debts.
Employees expect jobs that are secure, prospects for the future, and that any necessary staff restructuring will be done in a
responsible manner.
“Entrepreneurs within the enterprise” expect sufficient investment funding to be able to shape Deutsche Telekom’s future
business and develop products, innovations, and services for the customer.
Society expects us to do everything within our power to protect the environment, encourage a fair and democratic co-
existence, and shape the digital transformation in a responsible manner. SDG 17 RELATIONSHIPS

Finance strategy
We announced our finance strategy for the years 2018 through 2021 at the Capital Markets Day in late May 2018. Our forecast
for growth through to 2021 remains at the same high level we anticipated at our Capital Markets Day in 2015 for the period
2014 through 2018.

Part of our finance strategy was to achieve our target financial ratios – relative debt (ratio of net debt to adjusted EBITDA)
and equity ratio – along with a liquidity reserve that covers our maturities of the coming 24 months at least. With these clear
statements we intend to maintain our rating in a corridor from A- to BBB and safeguard undisputed access to the capital market.

There is a sustainable dividend policy for shareholders, which is subject to approval by the relevant bodies and the fulfillment of
other legal requirements. The new dividend policy introduced in 2019 sets out a minimum dividend of EUR 0.60 per dividend-
bearing share. The dividend is to continue to reflect the relative growth in adjusted earnings per share (EPS). For the 2020
financial year, we will propose a dividend of EUR 0.60 for each dividend-bearing share. We thus offer our shareholders both an
attractive return and planning reliability.

We will also take share buy-backs into consideration, both of Deutsche Telekom AG shares and shares in T‑Mobile US.

Total capital expenditure is also to remain high in the next few years. The scope for investment is to be used to further
roll out our broadband infrastructure and to accelerate the transformation of the Company. In mobile communications, the
infrastructure build-out will focus on the LTE and 5G standards and, in the fixed network, on optical fiber and vectoring. The
finance strategy supports the transformation of our Group into the Leading European Telco. In order to generate a sustainable
increase in value, we intend to earn at least our cost of capital. We plan to meet this target by optimizing the utilization of our
non-current assets on the one hand, and pursuing strict cost discipline and sustainable profitable revenue growth on the other.

Our finance strategy through 2021

Equity Leading European Telco – ROCE > WACC Debt

Reliable shareholder GROW Undisputed access

remuneration policy to debt capital markets
Lead in customer Lead in Lead in business
Dividend a experience technology productivity Rating
EUR 0.60/share for 2020 A- to BBB
(payout in 2021) One connectivity & Integrated Secure ICT Net debt/adjusted EBITDA c
The dividend will reflect the perfect service gigabit networks solutions & big IoT 2.25 to 2.75x
relative growth in adjusted
earnings per share (EPS) b Equity ratio
25 to 35 %
Floor at € 0.60/share Save for growth investments
Liquidity reserve
Buy-backs
covers maturities of coming
Taken into consideration Simplify, digitalize, accelerate & act responsibly 24 months
Deutsche Telekom AG shares
or increase of the stake in
T-Mobile US Based on existing low-risk country portfolio

a Subject to approval by the relevant bodies and the fulfillment of other legal requirements.
b Adjusted earnings per share 2019 as starting point.
c Deviation from the target range for a short period as a result of the business combination of T‑Mobile US and Sprint.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 38

We will provide information about the further development of our finance strategy for the years following 2021 at our Capital
Markets Day, which is planned for 2021.

Performance management system

In order to set and achieve our strategic goals more effectively, we pursue a Group-wide, value-oriented performance
management approach. We use a specific set of performance indicators to reliably and transparently measure success. The
following tables and information provide an overview of our key financial and non-financial performance indicators.

Financial performance indicators

2020 2019 2018 2017 2016

ROCE % 4.6 5.1 4.7 5.8 5.7
Net revenue billions of € 101.0 80.5 75.7 74.9 73.1
Profit (loss) from operations (EBIT) billions of € 12.8 9.5 8.0 9.4 9.2
EBITDA AL (adjusted for special factors)a billions of € 35.0 24.7 23.1 n.a. n.a.
Free cash flow AL (before dividend payments
and spectrum investment)a, b billions of € 6.3 7.0 6.1 n.a. n.a.
Cash capex (before spectrum investment) billions of € (17.0) (13.1) (12.2) (12.1) (11.0)
Rating (Standard & Poor’s, Fitch) BBB, BBB+ BBB+ BBB+ BBB+ BBB+
Rating (Moody’s) Baa1 Baa1 Baa1 Baa1 Baa1

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.
b Before interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.

Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account
when determining our financial performance indicators. The calculation of ROCE was adjusted in line with IFRS 16 with minimal
impact on the overall amount. Following this change, we now measure our operating earnings performance on the basis of
EBITDA AL and no longer on the basis of EBITDA. Free cash flow was replaced by free cash flow AL. For purposes of better
comparability, comparative figures were calculated on a pro forma basis for the 2018 financial year; all other prior-year figures
were not adjusted retrospectively.

Profitability
We have incorporated sustainable growth in enterprise value into our medium-term aims and implemented it as a separate
KPI (key performance indicator) for the entire Group. Return on capital employed (ROCE) is a key performance indicator at
Group level. ROCE is the ratio of operating result after depreciation, amortization and impairment losses plus imputed taxes
(net operating profit after taxes, NOPAT) to the average value of the assets tied up in the course of the year (net operating
assets, NOA).

Our goal is to achieve or exceed the return targets imposed on us by providers of debt capital and equity on the basis of capital
market requirements. We measure return targets using the weighted average cost of capital (WACC).

NOPAT is an earnings indicator derived from the income statement, taking an imputed tax expense into consideration. It does
not include cost of capital.

NOA includes all assets that make a direct contribution to revenue generation. These include all elements on the asset side
of the consolidated statement of financial position that are essential to the rendering of services. Operating working capital is
calculated from trade receivables, inventories, and trade and other payables. The figure for other provisions is deducted as no
return target exists for this.

Revenue and earnings

Revenue corresponds to the value of our operating activities. Absolute revenue depends on how well we are able to sell our
products and services on the market. The development of our revenue is an essential indicator for measuring the Company’s
success. New products and services as well as additional sales activities are only successful if they increase revenue.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 39

EBITDA corresponds to EBIT (profit/loss from operations) before depreciation, amortization and impairment losses. EBIT and
EBITDA measure the short-term operational performance and the success of individual business areas. In order to ensure
maximum comparability with our previous KPIs following the application of IFRS 16 as of January 1, 2019, starting in the 2019
financial year we have measured our operating earnings performance on the basis of EBITDA AL – i.e., EBITDA adjusted for
depreciation of right-of-use assets and for interest expenses on recognized lease liabilities. In addition to these absolute
indicators, we also use the EBIT and EBITDA AL margins to show how these indicators develop in relation to revenue. This makes
it possible to compare the earnings performance of profit-oriented units of different sizes. Taking unadjusted EBIT/EBITDA AL
as performance indicators means special factors are also taken into account. This promotes a holistic view of our expenses.
However, special factors have an impact on the presentation of operations, making it more difficult to compare performance
indicators with corresponding figures for prior periods. For this reason, we additionally adjust our performance indicators to
provide transparency. Without this adjustment, statements about the future development of earnings are only possible to a
limited extent. The adjusted values are calculated on the basis of the unadjusted performance indicators.

For the reconciliation of EBITDA AL, EBIT, and net profit/loss to the respective figures adjusted for special factors, please refer to the section “Development
of business in the Group.”

Financial flexibility
Free cash flow AL (before dividend payments and spectrum investment) is calculated as net cash from operating activities less
net cash outflows for investments in intangible assets (excluding goodwill) and property, plant and equipment, as well as the
principal portion of repayment of lease liabilities – excluding finance leases at T‑Mobile US. Free cash flow AL is a key yardstick
for providers of debt capital and equity. It measures the potential for further developing our Company, for generating organic
growth, and for the ability to pay dividends and repay debt.

Cash capex (before spectrum investment) relates to cash outflows for investments in intangible assets (excluding goodwill)
and property, plant and equipment, which are relevant for cash outflows as a component of free cash flow.

A rating is an assessment or classification of the creditworthiness of debt securities and its issuer according to uniform criteria.
Assessment of creditworthiness by rating agencies influences interest rates on debt securities and thus also our borrowing
costs. As part of our finance policy, we have defined a target range for our ratings. We believe that with a rating between A-
and BBB (Standard & Poor’s, Fitch) or between A3 and Baa2 (Moody’s) we essentially have the necessary entry to the capital
markets to generate the required financing.

Non-financial performance indicators

2020 2019 2018 2017 2016

Customer satisfaction (TRI*M index) 72.2 67.3 67.7 68.6 70.2
Employee satisfaction
(commitment index)a 4.0 4.0 4.1 4.1 4.1
Fixed-network and mobile customers
Mobile customersb millions 241.8 184.0 178.4 168.4 165.0
Fixed-network lines millions 27.4 27.5 27.9 27.9 28.5
Broadband customersc, d millions 21.7 21.0 20.2 18.9 18.4
Systems Solutions
Order entrye millions of € 4,588 4,740 6,776 5,241 6,851

a Commitment index determined on the basis of the employee surveys carried out in 2019 and 2017.
b Including T‑Mobile US wholesale customers.
c Excluding wholesale.
d Starting in the second quarter of 2018, we no longer report the number of broadband lines from a technical perspective. Instead, we report the number of
broadband customers. The figures for 2016 and 2017 have been adjusted accordingly.
e Order entry for the 2019 financial year was adjusted retrospectively in connection with the realignment of the B2B telecommunications business.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 40

We want our customers to be satisfied – or even delighted – as satisfied customers act as multipliers for our Company’s
success. As a responsible, service-oriented company, the needs and opinions of our customers are of great importance to us,
and we want them to stay with our Company in the long term. For this reason we measure customer retention/satisfaction in
our companies using the globally recognized TRI*M method. The results of systematic surveys are expressed by an indicator
known as the TRI*M index. To underscore the major significance of customer retention/satisfaction for our operations, in
2010 we made this key indicator one of four parameters for the long-term variable remuneration (Variable II) for our Board of
Management members and in 2015 included it as part of the Long-Term Incentive Plan (LTIP) for managers (excluding Board
of Management members). We take the TRI*M indexes calculated for the operating entities (excluding T‑Mobile US) as an
approximation of the respective entities’ percentage of total revenue to create an aggregate TRI*M Group value. Over a period
of four years, the eligible managers can benefit from the development of customer retention/satisfaction across the Group.

For further information on customer satisfaction, please refer to the section “Group strategy.”

Our employees want to contribute to the further development of the Company and identify with it. We want to establish an
open dialog and a productive exchange with our employees: New ways of working and modern means of communication help
us achieve this, as do regular surveys. The most important feedback instruments across the Group (excluding T‑Mobile US)
for assessing employee satisfaction include regular employee surveys and the pulse survey carried out twice a year. In our
Company, we measure the employee satisfaction performance indicator using the commitment index – derived from the
results of the last employee survey. SDG 8 EMPLOYEES

For further information about employee satisfaction, please refer to the section “Employees.”

In view of the major significance of employee satisfaction for the success of the Company, Board of Management members are
now also being managed and incentivized by means of the long-term variable performance-based remuneration (Variable II).
Employee feedback as one of four parameters has been relevant for Variable II since 2010, and for the Long-Term Incentive Plan
(LTIP) which was launched in 2015 for our managers (excluding Board of Management members). This allows Board members
and eligible managers to benefit from the development of employee satisfaction across the Group.

As one of the leading providers of telecommunications and information technology worldwide, the development of our Group
– and thus also our financial performance indicators – is closely linked to the development of customer figures. Acquiring and
retaining customers are thus essential to the success of our Company. We have different ways of measuring the development
of our customer figures according to the business activity in our operating segments: Depending on the activities of each
segment, we measure the number of mobile customers and/or the number of broadband customers and fixed-network lines.

In our Systems Solutions operating segment, we use order entry as a non-financial performance indicator. We define and
calculate order entry as the total of all amounts resulting from customer orders received in the financial year. Order entry in the
form of long-term contracts is of great significance to the Group in order to estimate revenue potential. In other words, order
entry is an indicator that provides a high degree of planning reliability.

The economic environment

Macroeconomic development
The outbreak of the coronavirus pandemic in spring 2020 plunged the global economy into a deep recession. As the virus began
its spread worldwide, countries responded with copious containment measures, including restrictions on social contact and
travel, business closures, and bans on mass events. States and central banks rolled out far-reaching monetary and fiscal policy
measures to cushion the economic downturn.

As the crisis progressed, leading economic research institutes made substantial downward adjustments to their outlooks for
world economic output. The International Monetary Fund (IMF) projects a 4.4 % decline in world economic output for 2020.
Economic output in our core markets also shrank in the reporting year. After bottoming out in the second quarter of 2020,
economic activity had moved into a period of recovery as containment measures were lifted and infection rates went down.
However, the rate of recovery began to slow again in fall 2020 due to the renewed acceleration of the pandemic, resulting in
tighter containment measures in many areas and changes in people’s behavior. The IMF expects the global economy to only
partially recover in 2021 given that economic activity will remain significantly below the level that had been projected before
the emergence of the coronavirus crisis.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 41

GDP in Germany decreased by 5.0 % year-on-year. The coronavirus crisis affected individual industry sectors to varying extents.
The Bitkom-ifo-Digitalindex, calculated on the basis of the business situation and expectations, dropped sharply in the first
months of 2020. After reaching its lowest level in April, the index returned to significant growth through December but
remained well below its pre-pandemic level. The business climate in the ICT sector remained relatively buoyant compared with
the economy as a whole.

Economic output in the United States declined by 3.5 % in the reporting year, with the U.S. economy hitting its lowest point
in April 2020. This was followed by a period of recovery as social contact restrictions were lifted, although this recovery lost
momentum in the second half of 2020 as infection rates began to rise again. In the countries of our Europe operating segment,
those economies that are heavily reliant on the service sector were hit particularly hard by the coronavirus pandemic. Domestic
consumption declined across all footprint countries; rising unemployment rates were kept in check primarily thanks to state aid
programs in many places.

The following table shows the GDP growth rate trends and the unemployment/non-employment rates in our most important
markets. The unemployment rate for Germany and the non-employment rates for the other countries are presented in
conformance with ILO standards.

%
Estimated
GDP estimate Unemployment/ Unemployment/ unemployment/
GDP for 2018 GDP for 2019 for 2020 non- non- non-
compared compared compared employment employment employment
with 2017 with 2018 with 2019 rate in 2018 rate in 2019 rate in 2020
Germany 1.3 0.6 (5.0) 5.2 5.0 5.9
United States 2.9 2.3 (3.5) 3.9 3.7 7.7
Greece 1.6 1.9 (9.0) 19.3 17.3 18.0
Romania 4.5 4.2 (5.2) 4.2 3.9 5.9
Hungary 5.4 4.6 (6.4) 3.7 3.4 4.4
Poland 5.4 4.5 (3.6) 3.9 3.3 4.0
Czech Republic 3.2 2.3 (6.9) 2.2 2.0 2.7
Croatia 2.8 2.9 (9.6) 8.5 6.6 7.7
Netherlands 2.4 1.7 (5.3) 3.8 3.4 4.4
Slovakia 3.8 2.3 (7.5) 6.5 5.8 6.9
Austria 2.6 1.4 (7.1) 4.9 4.5 5.5

Source: Eurostat, European Commission, national authorities. Last revised: December 2020.

Telecommunications market
Demand for high-speed broadband – over the fixed and mobile networks – remains high. According to estimates by Analysys
Mason, data traffic over the fixed network grew by 26 % worldwide in 2020. Estimates by Dialog Consult put the average data
volume per fixed-network line and month in Germany in the reporting year at 168 gigabytes (GB) – an increase of 25 % year-on-
year. According to Analysys Mason, mobile data traffic grew worldwide by 55 % in 2020. In Germany, the average data volume
per SIM card and month stood at 3.0 GB in the reporting year, up by 45 % year-on-year (according to estimates by Dialog
Consult). For the telecommunications industry, these developments present both a challenge and the opportunity to monetize
the strong growth in volume.

Worldwide, revenues on the market for information and communications technologies (ICT) decreased by 0.4 % in the reporting
year to EUR 3.6 trillion as a result of the coronavirus pandemic. The German digital association for information technology,
telecommunications and new media Bitkom and the European Information Technology Observatory (EITO) expect the
telecommunications market segment (services and equipment) to record a decrease of 2.1 % worldwide to EUR 1.7 trillion and
the information technology (IT) market segment to record a slight increase of 1.2 % for 2020.

In the European Union (EU), revenues in the telecommunications market segment decreased by 3.3 % in 2020. Revenues from
telecommunications equipment declined by 6.2 %, while revenues from telecommunications services were down by 2.2 %. In
the United States, revenues with telecommunications equipment declined by 2.4 % in the reporting year and revenues with
telecommunications services were down slightly by 0.1 % in the same period.

The telecommunications industry continues to be characterized by intense competition. Consumers benefit from a greater
range of products to choose from. Each of our markets is occupied by three or four mobile operators with their own network
infrastructure. On top of this, we are seeing MVNOs becoming established in many markets using the network infrastructure
of traditional mobile network operators. In the fixed network, too, established telecommunications companies are competing
intensively with cable network operators, city network operators, and resellers, who predominantly make use of regulated
wholesale products. Added to this are internet companies with over-the-top (OTT) communication services that further
intensify the competitive pressure.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 42

The rapid technological transformation in the telecommunications sector calls for high investments to build out next-
generation network infrastructure. GSMA Intelligence estimates that mobile operators will invest some USD 1 trillion worldwide
in the rollout of 5G networks (excluding spectrum) over the next few years. Telecommunications networks are continually being
upgraded with optical fiber. Established telecommunications companies like Deutsche Telekom are investing a substantial
portion of their revenues in building out network infrastructure and acquiring spectrum. To ensure that these efforts can
continue, we expect political and regulatory conditions that allow network investors to plan ahead reliably and generate
appropriate returns for their investments.

Germany
According to EITO, revenue from IT products and services, telecommunications, and consumer electronics decreased by 0.1 %
to EUR 143.5 billion in Germany in the reporting year, largely driven by the impact of the coronavirus pandemic. The decline
was felt mainly in telecommunications revenue (telecommunications services, terminal equipment, and infrastructure), which
decreased by 0.6 % to EUR 56.8 billion. Revenue with information technology increased slightly by 0.3 % to EUR 86.7 billion.

The number of broadband lines in Germany grew by 2.4 % in 2020 to around 36.7 million at year-end, according to EITO.
For 2021, the number of broadband lines is expected to grow by a further 2.5 % to 37.5 million. Companies with their own
infrastructure benefited the most from this market growth, along with resellers and regional providers. High-bandwidth lines
are increasingly marketed in cable and VDSL/vectoring networks. The offerings in this area are supported by innovative
hybrid connection technologies. The availability of high bandwidths in Germany and the large choice of HD content and
video-on-demand services are stimulating customer growth in IPTV business. Convergent offers comprising fixed-network
and mobile communications (fixed-mobile convergence, FMC) offer customers many advantages and help increase customer
retention. The trend for convergence products continued in the reporting year. We tapped into this trend with the addition of
MagentaEINS Plus to our convergent offerings in September 2020. The original MagentaEINS was launched back in fall 2014 –
Vodafone and O2 have since followed suit with convergence products of their own.

In the German mobile market, service revenues increased by 0.4 % against 2019 to approximately EUR 20.0 billion. This revenue
growth was driven largely by the continued rise in data usage, which was offset by regulatory effects as well as sustained price
and competitive pressure. Mobile data usage continues to increase strongly on the back of growing use of products such as
mobile video apps. The percentage of voice and data rate plans is rising steadily. Traditional voice and text messaging services
are increasingly being replaced by free IP messaging services like WhatsApp and social networks like Facebook. Connected
products such as smartphones and tablets, as well as other connected devices such as watches, shoes, bicycles, and much
more, are growing ever more popular, pushing up demand for mobile broadband speeds and for large data volumes in the rate
plan portfolios.

Digitalization is continuing apace, and as a result there is also growing demand by the industry for more connectivity to allow
machines and production sites to be networked and to tap efficiencies in value chains. Extensive IT and cloud solutions, as well
as intelligent approaches to M2M communication are needed in order to meet these demands.

United States
In the United States, the coronavirus pandemic dampened the economy and the mobile communications sector due in part to
the temporary closure of shops and offices. In parallel, the increased use of video conferencing and streaming services caused a
sharp rise in data traffic over the networks. Despite the higher loads, both the mobile networks and the mobile communications
industry as a whole proved resilient during these times.

In the U.S. mobile communications market, the business combination of T‑Mobile US and Sprint has created a market with
three national mobile providers alongside various regional network operators. Additionally, an array of mobile virtual network
operators (MVNOs) offer mobile services, using the networks of one or more of the three national carriers to transmit their voice
and data traffic.

The market remains highly dynamic, largely due to the competition posed by cable operators. Comcast, Charter, and Altice
use their own existing Wi-Fi networks to deliver mobile communications services, with Comcast and Charter falling back
on Verizon’s network and Altice previously/so far on Sprint’s network (which now belongs to T‑Mobile US) when out of their
respective Wi-Fi footprints. Altice also has a roaming agreement with AT&T. These offerings from cable operators and MVNOs
have slowly churned customers away from the traditional mobile providers, intensifying the competitive pressure and
bolstering the ongoing efforts of cable operators to gain traction in the mobile market.

The entry of satellite TV operator DISH into the market is expected to add new competitive pressure: DISH holds licenses to
vast swaths of airwaves and has announced plans for building its own 5G network in 2021. DISH benefited from the business
combination of T‑Mobile US and Sprint, consummated in 2020, which included the sale of Sprint’s prepaid business to DISH
effective July 1, 2020 as a major prerequisite for the U.S. authorities approving the merger.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 43

In the United States, 5G commercialization continues to move at a swift pace. All three nationwide mobile providers have
launched 5G services, as have a number of regional providers. 5G is being built out in the United States utilizing both sub-6 GHz
spectrum and millimeter wave (mmWave). T‑Mobile US’s 5G network now covers 280 million people in the United States. All
carriers will continue to expand their networks in the coming months according to different models which, for the time being,
emphasize different spectrum bands.

For its part, the U.S. Federal Communications Commission (FCC) has taken various steps to encourage investment in mobile
communications. For example, to help providers prepare for the deployment of 5G networks, the FCC has cleared regulatory
hurdles, and preempted several state and local obstacles, in efforts to streamline the build-out. Additionally, in 2020 the FCC
held several auctions for spectrum integral to the 5G build-out. The C-band auction for spectrum in the 3,700 to 4,200 MHz
band began on December 8, 2020 and ended on January 15, 2021.

Europe
The traditional telecommunications markets in our segment were primarily impacted by the coronavirus pandemic in the
reporting year. This resulted, among other effects, in a substantial year-on-year decline in mobile roaming revenues due to
travel restrictions. Full and partial lockdowns in our footprint countries over the course of the year led to the temporary
closure of shops and other measures. Public life moved online to a large extent, driving a corresponding increase in demand
for broadband and TV services. According to Analysys Mason, fixed-network business (excluding systems solutions business)
proved robust and was able to offset the decline in revenues from voice telephony. Despite posting losses in roaming business,
revenue from mobile communications remained stable year-on-year. Overall, revenues were on a par with the prior-year level.

Following a sustained period of market consolidation in our European footprint driven by a number of mergers and takeovers
in recent years, activities in this area continued in 2020 albeit to a much lesser extent. For instance, in Poland Iliad took over
Play and in Greece United Group took over Forthnet. Furthermore, no new market entrants were identified, for instance, as
participants in the 2020 5G auctions. Investments in the 5G network were stepped up in the reporting year. Auctions were held
in various countries, including Hungary, Greece, Austria, the Czech Republic, and Slovakia.

The unabated strong trend towards convergent product packages combining fixed-network and mobile communications (FMC)
gained further momentum. The experts at Analysys Mason expect FMC revenues to grow year-on-year, bolstered on the one
hand by the takeover of selected Liberty Global cable operations by Vodafone, e.g., in Hungary and Romania in 2019, and on
the other by attractive retail offers, such as Orange Love in Poland, but also MagentaOne and CosmoteOne in our subsidiaries.
These integrated convenience packages are enjoying strong growth in our companies and, in some areas, already address the
majority of consumers, which is having a positive impact on customer satisfaction and churn rates.

Subscription-based streaming services such as Netflix and Prime Video still only have limited potential for substituting
traditional pay TV in the markets of our Europe operating segment. Analysys Mason puts the share at around just 8 %, partly
due to the fixed international pricing of the majority of these services – prices that are not (or only marginally) localized to
purchasing power – and partly because content is not or only to a limited extent dubbed into local languages and thus only
appeals to small sections of the population. Despite this, the appeal of this business model is evidenced by the year-on-year
trend: according to Analysys Mason, revenues with streaming services in Europe posted above-average growth – the customer
base grew by almost 50 %.

For the business customer area, 2020 was a year of manifold opportunities and challenges alike. The latter include not least the
record low hit by roaming revenues in the European telecommunications market as just one of the effects of the coronavirus
pandemic. Nevertheless, the telecommunications industry is emerging as one of the winners of the worldwide coronavirus
crisis, with most businesses posting stable to rising revenues across their mobile communications, fixed-network, and ICT/
cloud divisions. So, too, were most of Deutsche Telekom’s European subsidiaries able to leverage the opportunities arising
from the crisis despite falling revenues from hard-hit industries, especially tourism, or from postponed tendering processes for
corporate customer projects. Attractive mobile data bundles, home-working solutions, and collaboration tools were marketed
with great success, particularly at our Polish and Austrian subsidiaries. Cisco Webex and Microsoft Teams were some of the
most popular services from our ICT/cloud portfolio in the reporting year across all business customer segments and in the
public sector.

Systems Solutions
In the information technology (IT) industry in our core market of Western Europe, the volume addressed by our Systems
Solutions operating segment and the T‑Systems brand decreased by 2.6 % in the reporting year to EUR 185 billion largely due to
the coronavirus pandemic. The IT services market, in particular, posted revenue declines in 2020, with coronavirus the biggest
contributor to this trend. The effects of the global pandemic have negatively affected IT customer spending. Challenging
conditions across virtually all industries led to the deferral of many large-scale IT projects. However, this trend impacted the
business areas of the market in very different ways.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 44

In terms of IT services, demand has grown further for public cloud services and cybersecurity services, as has the importance
of digitalization, the Internet of Things (including Industry 4.0), and communication between machines (M2M). The health
sector also developed positively, with growth reaching double digits in some areas. By contrast, demand was down in the
market segments for traditional infrastructure, project business, and SAP services. Business with outsourcing and managed
services proved much more resilient. The market for cloud-based systems integration services grew by almost 1.5 % despite
the coronavirus pandemic.

Competitive and price pressure persisted in all submarkets of our Systems Solutions operating segment. This was due on the
one hand to competitors from traditional IT services business, such as IBM, Atos, and Capgemini, and on the other to cloud
providers such as Amazon Web Services, Google, and Salesforce. Prices were eroded further by providers of services that are
delivered primarily offshore (e.g., Tata Consultancy Services, Infosys, Wipro).

Group Development
The environment of our Group Development operating segment is largely dominated by the markets served by our companies
T‑Mobile Netherlands and Deutsche Funkturm (DFMG).

While the Dutch mobile communications market continues to be characterized by sustained high price pressure and intense
competition, this is expected to ease moderately in the coming years. The Netherlands is ahead of much of Europe with its
bundling of fixed-network and mobile products into convergent offers (FMC). The dominance of KPN and VodafoneZiggo in
fixed-network business is keeping the pressure on mobile product pricing high due to the FMC trend. Moreover, the rapid
technological transformation calls for high investments. Investments in building out 5G network infrastructure continued in
2020 following the Dutch 5G auction.

DFMG is the biggest provider of passive wireless infrastructure for mobile communications and broadcasting in Germany.
Despite the coronavirus pandemic, the market again saw increased demand for cell sites in the 2020 financial year, due on the
one hand to the fact that network operators plan to close gaps in coverage, and on the other to the fact that demand for mobile
data services is growing, which calls for a further increase in the density of mobile networks.

Major regulatory decisions

Our business activities are largely subject to national, European, and U.S. regulation, which is associated with extensive powers
to intervene in our product design and pricing, particularly in Europe. We were again subject to extensive regulation in our
mobile and fixed-network businesses in 2020.

Regulation
Amendment of telecommunications laws in the European Union. The Federal Cabinet of Germany (Bundeskabinett) approved
the draft for the amendment of the German Telecommunications Act (Telekommunikationsgesetz, TKG) on December 16, 2020.
The amendment is necessary in order to transpose European requirements from the European Electronic Communications
Code into national law. The biggest changes affect consumer protection regulations, the regulation of “very high capacity
networks” (including FTTH), spectrum regulation, and the regulations on universal service. In view of the Code’s
implementation deadlines, the amended Act should have been published by the end of 2020 at the latest. The need for further
readings in the legislative process delayed the publication of the Act. It is now expected in the first half of 2021. The Code is
also being transposed into national law in the countries of our European subsidiaries. In some, this process was completed by
the end of 2020, whereas in others implementation will take until 2021.

Roaming regulation. The European Commission launched a consultation procedure on the future regulation of international
roaming in summer 2020. The current regulation applies price caps through 2022 on the roaming charges that European mobile
network operators can bill peer operators for the use of roaming services. In addition to the future regulation of these charges,
the Commission also consulted on whether and which rules will apply in the future to roaming for the Internet of Things (IoT)
and to roaming access to value-added services and emergency call numbers.

European Commission sets termination rates from 2021. On December 18, 2020, the European Commission published a
Delegated Act setting single maximum Union-wide mobile (MTR) and fixed-network (FTR) termination rates. The Commission
proposes a phased reduction of MTRs to a uniform level of 0.2 eurocents/min. by 2024. FTRs are to be reduced sooner, to
0.07 eurocents/min. EU-wide by 2022. The Delegated Act is expected to enter into force in the first half of 2021; from the date
of effect, member states will have a transition period of two months to apply the price caps contained in the Act.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 45

Awarding of spectrum
T‑Mobile US successfully bid on total spectrum of 691 MHz at the U.S. auction in March 2020 and received the 5G licenses it
bought for USD 873 million in April 2020. A further CBRS auction in the United States for spectrum in the 3,550 to 3,650 MHz
band ended on August 25, 2020. T‑Mobile US secured eight licenses for which it paid a net sum of USD 6 million. The C-
band auction for spectrum in the 3,700 to 4,200 MHz band began on December 8, 2020 and ended on January 15, 2021. The
spectrum assignment phase, however, is still ongoing. T‑Mobile US was one of 57 auction participants.

In Europe, Deutsche Telekom and its subsidiaries received the following spectrum up to the end of 2020: Magyar Telekom in
Hungary was assigned spectrum in the 700; 2,100; 2,600; and 3,400 to 3,800 MHz bands (totaling 160 MHz) in April 2020,
which it had previously acquired at auction for EUR 152 million (when translated into euros). In the Netherlands, an auction
started on June 29, 2020 for spectrum in the 700; 1,500; and 2,100 MHz bands. The auction ended with the completion of
the allotment phase on July 21, 2020. T‑Mobile Netherlands successfully bid on a total spectrum of 70 MHz in all three bands
for an aggregate amount of EUR 400 million. In Austria the auction for spectrum in the 700; 1,500; and 2,100 MHz bands
ended on September 11, 2020. T‑Mobile Austria acquired total spectrum of 100 MHz in all three bands for EUR 89 million.
In Greece, spectrum was awarded in the 700; 2,100; 3,400 to 3,800 MHz; and 26,000 MHz bands in the fourth quarter of
2020. Given that the market’s three only active network operators took part in the award proceedings and that no scarcity of
spectrum arose in the 700; 2,100; and 26,000 MHz bands, it was possible to assign the volumes in question without the need for
auction. The second auction phase ended on December 16, 2020 for 90 MHz of available spectrum in the 3,400 to 3,800 MHz
band. OTE’s subsidiary Cosmote received total spectrum worth EUR 110 million in the first phase followed by spectrum worth
around EUR 14 million in the second phase. Slovakia successfully concluded its auction for the 700, 900, and 1,800 MHz bands
in November 2020, with Slovak Telekom acquiring spectrum for a total sum of EUR 33 million. In the Czech Republic, the
auction that had been rescheduled on account of coronavirus for the 700 MHz and 3,400 to 3,600 MHz bands was also held in
November 2020. T‑Mobile Czech Republic secured spectrum worth EUR 72 million (when translated into euros).

In Hungary, proceedings to re-award 900 and 1,800 MHz spectrum licenses that are due to expire in 2022 were held on
January 28, 2021 and concluded the same day. Magyar Telekom acquired 2x 8 MHz and 2x 20 MHz in the respective bands for
a total price of EUR 123 million (when translated into euros). While Poland has made no further announcements regarding a
new start date for the postponed auction for 3,400 to 3,800 MHz, it is expected the auction will be held in 2021. Croatia plans
to award the 700 MHz and 3,400 to 3,800 MHz bands and possibly further spectrum in the first half of 2021. Romania is set
to auction spectrum in the 700; 800; 1,500; 2,600; and 3,400 to 3,800 MHz ranges in the second half of 2021. In Slovakia the
3,400 to 3,800 MHz band is expected to be allocated in 2021.

The following table provides an overview of the main ongoing and planned spectrum awards and auctions as well as license
extensions. It also indicates spectrum to be awarded in the near future in various countries.

Main spectrum awards

Expected Expected
start of end of
award award Frequency ranges
procedure procedure (MHz) Award process Updated information
Croatia Q1 2021 Q2 2021 700 / 3,400-3,800, Auction, details tbd Implementation in 2021 under
additional bands preparation. Further bands expected
possible in 2022.
Poland Q1 2021 Q2 2021 3,400-3,800 Auction (SMRAa), details tbd Following postponement due to
coronavirus pandemic, relaunch
expected in 2021.
Poland Q3 2022 Q4 2022 700 / 2,100 / 26,000 Auction, details tbd Plans for 2022; 26,000 MHz still
unclear.
Romania Q3 2021 Q4 2021 700 / 800 / 1,500 / Auction, details tbd Additional 2,100 MHz possible.
2,600 / 3,400-3,800
Slovakia Q3 2021 Q4 2021 3,400-3,800 Auction (SMRAa), details tbd
Czech Republic Q3 2022 Q4 2022 900 / 1,800 Extension expected Previous TMCZ licenses due to expire
in 2024.
Hungary 2022 / 2022 / 1,500 / 2,300 / Auction, details tbd
2023 2023 26,000
United States Completed 3,700-4,200 Auction (clock auction) Completed: Jan. 15, 2021. The
spectrum assignment phase, however,
is still ongoing.
United States Q3 2021 Q4 2021 2,500-2,700 Auction (SMRAa) Start/end: expected in the second half
of 2021 at the earliest.

a Simultaneous electronic multi-round auction with ascending, parallel bids for all available frequency ranges.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 46

Development of business in the Group

Statement of the Board of Management on business development in 2020
Bonn, February 16, 2021

Although the coronavirus pandemic and its impact have not left us unscathed, we had a successful financial year in 2020
with very strong results. The business combination of T‑Mobile US and Sprint is a fantastic success. The inclusion of Sprint
for the first time took us to a whole new dimension: we are now a corporation with revenue of more than EUR 100 billion. We
continued our success story in Europe – with its integrated offerings, Deutsche Telekom is the market leader in the majority of
countries. In Germany, we have received great recognition for our performance in terms of service, network build-out, and our
integrated products. We are living up to our responsibility to society during the coronavirus pandemic, through stable networks,
strong customer focus, and best service, and we remain a dependable partner to German industry with a product portfolio of
international communications solutions.

Furthermore, we did not lose sight of our ambitious climate targets in the reporting year. Since early 2020, our customers
in Germany have been surfing on Deutsche Telekom’s green network, which is powered solely by electricity from renewable
sources. Since the start of 2021, this applies to all our customer worldwide.

We achieved our most important corporate targets in 2020 and even exceeded some of them, despite the impact of the
coronavirus pandemic. Net revenue increased by 25.4 % to EUR 101.0 billion. In organic terms, net revenue increased by 3.0 %,
i.e., adjusted in particular for the acquisitions of Sprint, the sale of the prepaid business of Sprint to DISH, and currency
translation effects. Given the general environment, the business performed well in the Germany, Europe, and Group
Development operating segments. This is the result of the great popularity of our mobile and broadband offerings in particular.
In the U.S. business, T‑Mobile US recorded the highest customer growth in the company’s history: on a like-for-like basis, the
number of postpaid customers increased by 5.5 million. The systems solutions business, by contrast, was impacted by the
coronavirus pandemic: in addition to the development in traditional IT business, which fell short of expectations during the year,
the coronavirus crisis resulted in the recognition of an impairment loss on non-current assets in the third quarter of 2020.

Adjusted EBITDA AL grew by 41.6 % to EUR 35.0 billion; in organic terms, it grew by 7.9 %. The main reason for this increase
is a sound operational development, driven by revenue growth and further enhanced cost efficiency. EBIT increased by
EUR 3.3 billion to EUR 12.8 billion, despite negative special factors that affected it. These mainly related to acquisition and
integration costs as well as restructuring costs to realize cost efficiencies from the business combination with Sprint. By
contrast, the partial reversal of impairment losses on spectrum licenses at T‑Mobile US had a positive impact. Depreciation and
amortization were much higher than in the prior year due to the acquisition of Sprint.

The strong operational development is also reflected in net profit, which increased by EUR 0.3 billion to EUR 4.2 billion, despite
the negative impact on our finance costs due to the financial liabilities acquired in connection with the acquisition of Sprint and
the related restructuring of financing. Measurement effects in connection with the stock options to buy shares in T‑Mobile US
received from SoftBank had a positive effect. Adjusted net profit increased by EUR 0.8 billion to EUR 5.7 billion. Adjusted
earnings per share increased to EUR 1.20 in the reporting year.

ROCE decreased year-on-year to 4.6 % due largely to the substantial increase in average net operating assets (NOA). This is
attributable in particular to the spectrum licenses acquired as part of the Sprint transaction and to the modification of existing
agreements with American Tower on the lease and use of cell sites in the United States.

Net debt increased from EUR 76.0 billion to EUR 120.2 billion. The vast majority of this increase is attributable to the business
combination of T‑Mobile US and Sprint, and the modification of leases signed with American Tower in the United States. Key
investments in spectrum licenses also had an increasing effect.

The trends in the industry, in particular on the European telecommunications markets, remain challenging due to competitive
pressure and strict regulatory requirements. In order to succeed in the future, we continue to invest heavily in the key to our
success: our network infrastructure. In 2020, we made global investments (before spectrum) of EUR 17.0 billion, with a focus on
the parallel build-out of broadband and mobile infrastructure (optical fiber and 5G). Including spectrum payments, this figure
was EUR 18.7 billion in the reporting year. Despite this high level of investment, we are still a solid investment-grade company
with access to the international capital markets. Our free cash flow AL (before dividend payments and spectrum investment)
came in at EUR 6.3 billion.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 47

There is a sustainable dividend policy for our shareholders, which is subject to approval by the relevant bodies and the
fulfillment of other legal requirements. For the 2020 financial year, we will propose a dividend of EUR 0.60 for each dividend-
bearing share. Starting from the 2021 financial year, the dividend is to continue to reflect relative growth in earnings per share
with a lower limit fixed at EUR 0.60 per dividend-bearing share. This year, the dividend will once again be paid out without any
deduction of capital gains tax, and we expect this to be also the case in the years to come.

The T-Share closed the year 2020 up 2.6 %. Deutsche Telekom AG’s share price development outpaced that of the European
telecommunications sector (Dow Jones STOXX® Europe 600 Telecommunications) in 2020, which lost 12.7 % by the end of the
year.

Although the past financial year was a successful one, that does not mean that next year will be automatically develop in the
same way. The challenges that lie ahead in 2021 are great: In the United States, an important spectrum auction ended on
January 15, 2021, but the actual spectrum assignment phase is still ongoing. The competitive pressure in Europe remains high.
The fiber-optic build-out will be a big topic for us in Germany over the next few years. And at the same time, T‑Systems will
need to continue developing the business unit in the right direction.

Thanks to our strong starting position, we are reasserting our commitment to the strategic goal of being the leading European
telecommunications provider. We want to be a leader in terms of customer experience, technology, and the implementation
of advances in productivity for our business customers. Because only when we lead can we grow and meet the demands of
our customers and, consequently, our investors in the long term. This growth will be made possible by carefully managing our
financial resources and systematically transforming the Company to be simple, digital, and agile in every sense. We play a
responsible and active role in society with what we do. We help bridge distances – something that is more important than ever
before at the moment. Because we bring people and companies together digitally. This is what we believe in and what we are
working to achieve.

Business combination of T‑Mobile US and Sprint

Sprint has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since
April 1, 2020. As a result of the change in the composition of the Group during the course of the year, the remeasured assets and
liabilities were recognized as of this date, and all income and expenses generated from the date of first-time consolidation are
included in Deutsche Telekom’s consolidated income statement. This affects the comparability of the figures for the reporting
year with the prior-year figures.

For further information on the business combination of T‑Mobile US and Sprint, please refer to the section “Group organization.”

Realignment of the B2B telecommunications business in the Germany operating segment

Our B2B telecommunications business was realigned with effect from July 1, 2020. A new B2B entity was created in the
Germany operating segment, and the assets and liabilities previously assigned to the Systems Solutions, Europe, and Group
Headquarters & Group Services segments have been transferred to the new entity. Prior-year comparatives in these segments
(development of operations, customer development, headcount development, and order entry) were adjusted retrospectively.

For further information on the realignment of the B2B telecommunications business and on the different consummation dates required under company law,
please refer to the section “Group organization.”

Coronavirus pandemic
The coronavirus pandemic affected our business in several of our business areas, impacting on revenues and earnings. For
example, temporary travel restrictions have resulted in lower roaming and visitor revenues. Our terminal equipment business
also felt the squeeze, as did our corporate customer business. At the same time, we recorded an increase in the volume of voice
calls, both in mobile communications and in the fixed network. While it is impossible to quantify the long-term impact of the
coronavirus pandemic, we see it as both a risk and an opportunity: On the one hand, we expect to see appreciable effects on
the economy as a whole, while on the other, the pandemic has given a boost to the digitalization trend.

Comparison of the Group’s expectations with actual figures

In the 2019 Annual Report, we outlined expectations for the 2020 financial year for our financial and non-financial key
performance indicators anchored in our management system. The following tables summarize the pro forma figures for 2019,
the results expected for the reporting year, and the actual results achieved in 2020. The performance indicators that we also
forecast in the 2019 Annual Report and their development are presented in the individual sections.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 48

Comparison of the expected financial key performance indicators with actual figures

Pro forma
figures Expectations Results
for 2019a for 2020 in 2020
ROCE % 5.1 n.a.b 4.6
Net revenue billions of € 80.5 increase 101.0
Profit (loss) from operations (EBIT) billions of € 9.5 increase 12.8
EBITDA AL (adjusted for special factors)c billions of € 24.7 minimum 35 35.0
Free cash flow AL
(before dividend payments and spectrum investment)c, d billions of € 7.0 minimum 6.0 6.3
Cash capex (before spectrum investment)c billions of € (13.1) (around 17) (17.0)
Rating (Standard & Poor’s, Fitch) BBB+ from A- to BBB BBB, BBB+
Rating (Moody’s) Baa1 from A3 to Baa2 Baa1

a The effects of the business combination with Sprint are not included in the pro forma figures for 2019.
b The expected ROCE published in the 2019 combined management report (2019 Annual Report) is no longer comparable due to the inclusion of Sprint since
April 1, 2020. The figure forecast in 2019 no longer reflects the impact of the business combination with Sprint on NOA and NOPAT. Based on the pro forma
figure for 2019 of 5.1 % we expected a “slight decrease” with the Group structure existing at that point in time.
c Contrary to the forecasts published in the 2019 combined management report (2019 Annual Report), we adjusted the guidance for 2020 for EBITDA AL
(adjusted for special factors), free cash flow AL (before dividend payments and spectrum investment), and cash capex (before spectrum investment)
during the course of the year (Interim Group Reports as of June 30, 2020 and September 30, 2020).
d Before interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.

Comparison of the expected non-financial key performance indicators with actual figures

Pro forma
figures Expectations Results
for 2019a for 2020 in 2020
Customer satisfaction (TRI*M index) 67.3 slight increase 72.2
Employee satisfaction (commitment index)b 4.0 stable trend 4.0
Fixed-network and mobile customers
Germany
Mobile customers millions 46.2 increase 48.5
Fixed-network lines millions 17.8 slight decrease 17.6
Retail broadband lines millions 13.7 slight increase 14.1
United States
Postpaid customers millions 47.0 increase 81.4
Prepaid customers millions 20.9 slight increase 20.7
Europe
Mobile customers millions 46.2 stable trend 45.6
Fixed-network lines millions 9.1 stable trend 9.1
Broadband customers millions 6.7 increase 7.0
Systems Solutions
Order entryc billions of € 4.7 stable trend 4.6

a The effects of the business combination with Sprint are not included in the pro forma figures for 2019.
b Commitment index as per the 2019 employee survey.
c Pro forma figure for 2019 adjusted retrospectively during the year (Interim Group Report as of September 30, 2020) in connection with the realignment of
the B2B telecommunications business.

We look back on a successful financial year. The business combination of T‑Mobile US and Sprint in the United States is a
major success. Our performance in 2019 was once again dominated by substantial growth in revenue and adjusted EBITDA AL.
At EUR 101.0 billion, revenue increased by much more than expected. This is partly due to the fact that the effects of the
transaction with Sprint had not been included in the guidance for 2020. But even assuming a comparable composition of
the Group and excluding exchange rate effects, we recorded an increase of EUR 2.9 billion or 3.0 %. Adjusted EBITDA AL
also followed this trend, increasing substantially year-on-year to EUR 35.0 billion. EBIT also echoed this clear growth trend,
up by EUR 3.3 billion. At EUR 6.3 billion, we exceeded the guidance for free cash flow AL (before dividend and spectrum
investment), which we had revised upwards in the course of the year to EUR 6.0 billion. At EUR 17.0 billion, cash capex (before
spectrum investment) exactly matched our most recent guidance figure. ROCE (return on capital employed) decreased by
0.5 percentage points in the reporting period to 4.6 %. This was mainly down to the assets acquired from Sprint, in particular
spectrum licenses.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 49

We are also well on track with our non-financial key performance indicators. In addition to substitution effects, this is thanks
to our good coronavirus crisis management: the focus on expanding digital sales channels was one factor contributing to a
near normalization of customer development. As such, the customer numbers in our Germany and Europe operating segment
developed in line with expectations. In the United States operating segment, we again recorded strong postpaid customer
additions: including the customers acquired in connection with the Sprint transaction and the adjustment of the customer
base carried out in the course of the year, the number of customers increased by 5.5 million. By contrast, the development
in the number of prepaid customers fell short of our original expectation on account of the specific adjustments made to
the customer base during the year in order to harmonize the customer definition in connection with the Sprint transaction.
Order entry in our Systems Solutions operating segment initially fell short of our expectations earlier in the year. The effects
of the coronavirus pandemic resulted in delays in current projects and the postponement of deal closures, especially with our
automotive customers in the digital solutions area. The resulting mid-year lull in order entry, however, was almost completely
offset by the year-end with a number of major deals signed in other areas.

At the end of the reporting year, customer satisfaction came in at 72.2 points compared with an adjusted baseline figure of
67.9 points at the start of the year. Following changes to the revenue shares contributed by each country and in order to create
an equivalent basis for comparing the Group’s expectations with actual figures, we recalculated the baseline figure for 2020 on
the basis of the new structures these changes entailed. The new baseline thus diverges from the figure of 67.3 reported as of
December 31, 2019. The Germany, Europe, and Systems Solutions operating segments contributed to the positive development
with improvements in customer loyalty. Our goal for the coming years is to further improve customer satisfaction in all areas.

For further information on the trends in our main financial and non-financial key performance indicators, please refer to the relevant passages in this section
as well as in the section “Development of business in the operating segments.”

Results of operations of the Group

Net revenue
In 2020, we generated net revenue of EUR 101.0 billion, which was 25.4 % or EUR 20.5 billion up on the prior-year level. In
organic terms, i.e., assuming a comparable composition of the Group in the prior year and excluding exchange rate effects,
revenue developed positively, with growth of EUR 2.9 billion or 3.0 %. For a comparison on an organic basis, net revenue in the
2019 financial year was raised by EUR 19.2 billion to account for effects of changes in the composition of the Group – primarily
from the acquisition of Sprint in the United States operating segment – and net exchange rate effects of EUR -1.6 billion were
taken into account.

Our United States operating segment in particular contributed to the positive revenue trend with an increase of 51.4 %.
Adjusted for the acquisition of Sprint and exchange rate effects, revenue was up 5.0 % against the prior-year level. Revenue
in our home market of Germany was slightly up on the prior-year level, increasing by 0.2 %. This slight increase was mainly
due to the positive trend in our fixed-network business on the back of revenue growth in the broadband business and in
variable call charges. This offset the decline in revenue in the mobile business. The coronavirus pandemic had a negative
impact on roaming, visitor, and terminal equipment revenues, and resulted in delays or postponements to current orders in
B2B telecommunications business. In our Europe operating segment, revenue decreased by 2.2 %, mainly due to exchange rate
effects. In organic terms, revenue remained stable at the prior-year level, despite the deterioration in economic conditions due
to the coronavirus pandemic. The fixed-network business performed well, recording increases in broadband and TV revenues.
Revenues from mobile business decreased slightly, primarily driven by declines in roaming and visitor revenues as a result of
travel restrictions, some of which are still in place or have been reimposed, and in low-margin terminal equipment business.
These negative effects have been partially offset by increases in higher-margin service revenues. Total revenue in our Systems
Solutions operating segment decreased by 5.6 % year-on-year, reflecting the coronavirus-induced decline of the IT market
in Western Europe. The upward revenue trend in our growth areas public cloud and security was not sufficient to offset the
declines in traditional IT and project business. The development of our growth area digital solutions was particularly affected
by the impact of the coronavirus pandemic on the automotive industry. Total revenue in our Group Development operating
segment increased by 3.1 % year-on-year, thanks to the operational growth of our two subsidiaries, T‑Mobile Netherlands and
DFMG.

For further information on revenue development in our segments, please refer to the section “Development of business in the operating segments.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 50

Contribution of the segments to net revenue

millions of €
Change
2020 2019 Change % 2018
Net revenue 100,999 80,531 20,468 25.4 75,656
Germany 23,779 23,730 49 0.2 23,662
United States 61,208 40,420 20,788 51.4 36,522
Europe 11,335 11,587 (252) (2.2) 11,312
Systems Solutions 4,178 4,424 (246) (5.6) 4,474
Group Development 2,883 2,797 86 3.1 2,185
Group Headquarters & Group Services 2,556 2,627 (71) (2.7) 2,735
Intersegment revenue (4,941) (5,055) 114 2.3 (5,234)

Contribution of the segments to net revenuea Breakdown of revenue by region

% %

2.2 14.4
0.2
Group Development Europe (excluding Germany)
Group Headquarters & 0.4
3.2 Group Services Other countries
Systems Solutions
11.0
Europe 22.8 24.5
Germany Germany

60.7
60.6 North America
United States

a For further information, please refer to Note 36 “Segment

reporting” in the
notes to the consolidated financial statements.

At 60.6 %, our United States operating segment provided by far the largest contribution to net revenue of the Group and in
particular thanks to the acquisition of Sprint was up 10.4 percentage points above the level in the prior year. In this connection,
the proportion of net revenue generated internationally also increased significantly from 69.5 % to 75.5 %.

Adjusted EBITDA AL, EBITDA AL

Adjusted EBITDA AL increased year-on-year by EUR 10.3 billion or 41.6 % to EUR 35.0 billion in 2020. But even in organic terms,
adjusted EBITDA AL increased by EUR 2.6 billion or 7.9 %. For a comparison on an organic basis, adjusted EBITDA AL in the 2019
financial year was raised by EUR 8.2 billion to account for effects of changes in the composition of the Group and net exchange
rate effects of EUR -0.5 billion were taken into account.

All segments, with the exception of the Systems Solutions operating segment, made a positive contribution to this
development: Adjusted EBITDA AL of our United States operating segment increased significantly, particularly on the back
of higher service and terminal equipment revenues in connection with the acquisition of Sprint. In organic terms,
adjusted EBITDA AL grew by 10.8 % year-on-year. These increases were offset by higher operating expenses, primarily in
connection with the acquisition of Sprint. Our Germany operating segment contributed to this result thanks to a slightly positive
revenue trend, and improved cost efficiency with 1.6 % higher adjusted EBITDA AL. Adjusted EBITDA AL in our Europe operating
segment remained stable. In organic terms, it increased by as much as 2.1 %. The main factor in this trend was savings in indirect
costs. In our Systems Solutions operating segment, adjusted EBITDA AL declined by 6.0 %; excluding negative exchange rate
effects the decline would have been 1.8 %. The decline was mainly caused by the decrease in earnings in traditional IT and
project business, partly due to the effects of the coronavirus pandemic. The increase of 6.6 % in adjusted EBITDA AL in our
Group Development operating segment was driven by revenue growth, synergies from the acquisition of Tele2 Netherlands,
and efficient management of costs at T‑Mobile Netherlands. The GD Towers business also continued to post consistent growth
on the back of rising volumes.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 51

Contribution of the segments to adjusted Group EBITDA AL

Proportion Proportion
of adjusted of adjusted
Group Group
2020 EBITDA AL 2019 EBITDA AL Change Change 2018
millions of € % millions of € % millions of € % millions of €
EBITDA AL (adjusted for special factors)
in the Groupa 35,017 100.0 24,731 100.0 10,286 41.6 23,074
Germany 9,231 26.4 9,083 36.7 148 1.6 8,829
United States 20,997 60.0 11,134 45.0 9,863 88.6 10,084
Europe 3,910 11.2 3,910 15.8 0 0.0 3,703
Systems Solutions 235 0.7 250 1.0 (15) (6.0) 209
Group Development 1,101 3.1 1,033 4.2 68 6.6 892
Group Headquarters & Group Services (429) (1.2) (650) (2.6) 221 34.0 (599)
Reconciliation (28) (0.1) (29) (0.1) 1 3.4 (44)

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.

EBITDA AL increased by EUR 10.0 billion or 43.4 % year-on-year to EUR 33.2 billion, with special factors changing from
EUR -1.6 billion to EUR -1.8 billion. Net expenses incurred in connection with staff-related measures were recorded as special
factors and decreased by EUR 0.4 billion year-on-year to EUR -1.3 billion. In addition, expenses of EUR 1.7 billion were recorded
as special factors under gains/losses from deconsolidations, disposals, and acquisitions. These expenses were incurred in
connection with the approval process for the business combination of T‑Mobile US and Sprint, with acquisition and integration
costs, with restructuring costs to realize cost efficiencies from the business combination, and with a reduction in the useful
life of leased network technology for cell sites. EUR 0.2 billion related to the derecognition of a billing software for postpaid
customers, which was still in development, in the United States operating segment. A transaction fee of EUR 0.3 billion
received from SoftBank in return for support in the immediate sale by SoftBank of T‑Mobile US shares had an offsetting
effect. In the prior year, expenses of EUR 0.5 billion had been recorded as special factors in connection with gains/losses from
deconsolidations, disposals, and acquisitions. Reversals of impairment losses recorded as special factors of EUR 1.6 billion
resulted from the partial reversal of impairment losses on spectrum licenses at T‑Mobile US. Furthermore, the agreed sale
of the Romanian fixed-network business resulted in a reversal of impairment losses on property, plant and equipment of
EUR 50 million recorded in the course of the year. Other special factors affecting EBITDA AL amounted to EUR -0.5 billion and
mainly relate to expenses incurred in the United States operating segment in the first half of 2020 in connection with the
coronavirus pandemic.

For further information on the development of (adjusted) EBITDA AL in the segments, please refer to the section “Development of business in the operating
segments.”

A reconciliation of the definition of EBITDA with the “after leases” indicator (EBITDA AL) can be found in the following table:

millions of €
2020 2019
EBITDA 38,633 27,120
Depreciation of right-of-use assetsa (4,530) (3,181)
Interest expenses on recognized lease liabilitiesa (925) (796)
EBITDA AL 33,178 23,143
Special factors affecting EBITDA AL (1,839) (1,589)
EBITDA AL (adjusted for special factors) 35,017 24,731

a Excluding finance leases at T‑Mobile US.

EBIT
Group EBIT increased from EUR 9.5 billion to EUR 12.8 billion, up EUR 3.3 billion or 35.4 % against the prior year. This increase
is due in particular to the effects described under adjusted EBITDA AL and EBITDA AL. Depreciation and amortization stood
at EUR 25.0 billion overall, up EUR 7.8 billion on the prior year. This increase is mainly attributable to Sprint, which has been
included since April 1, 2020. Impairment losses on non-current assets reduced EBIT by EUR 0.8 billion. A total of EUR 0.5 billion
of this related to the Systems Solutions operating segment and the Group Headquarters & Group Services segment,
EUR 0.2 billion to the Europe operating segment, and EUR 0.1 billion to the United States operating segment.

For further information on depreciation, amortization and impairment losses, please refer to Note 27 “Depreciation, amortization and impairment losses” in
the notes to the consolidated financial statements.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 52

Profit before income taxes

Profit before income taxes increased by EUR 1.4 billion, mainly for the aforementioned reasons. Our loss from financial activities
increased by EUR 1.9 billion to EUR 4.1 billion. This increase is primarily due to a EUR 1.9 billion increase in finance costs to
EUR 4.2 billion, mainly due to the financial liabilities recognized and the restructuring begun in connection with the acquisition
of Sprint, and the related increase in financing, including the handling charges incurred for a briefly utilized bridge loan facility.
Other financial income/expense was unchanged at EUR 0.1 billion. This development was attributable to the year-on-year
increase in gains from financial instruments, due, among other factors, to the subsequent measurement of the stock options
to buy shares in T‑Mobile US received from SoftBank in June 2020. Lower measurement effects from embedded derivatives at
T‑Mobile US compared with the prior year and higher interest expense from the measurement of provisions and liabilities had
an offsetting effect.

Net profit, adjusted net profit

Net profit increased year-on-year by EUR 0.3 billion to EUR 4.2 billion. Tax expense came to EUR 1.9 billion compared with
EUR 2.0 billion in the prior year. Profit attributable to non-controlling interests increased by EUR 1.2 billion to EUR 2.6 billion,
mainly in our United States operating segment. This increase related to the positive development in operations and the
decrease in T‑Mobile US’ capital share as a result of the Sprint transaction. Excluding special factors, which had a negative
overall effect of EUR 1.6 billion on net profit, adjusted net profit amounted to EUR 5.7 billion, up against the level in the prior
year of EUR 4.9 billion.

The following table presents a reconciliation of net profit to net profit adjusted for special factors:

millions of €
Change
2020 2019 Change % 2018
Net profit (loss) 4,158 3,867 291 7.5 2,166
Special factors affecting EBITDA AL (1,839) (1,589) (250) (15.7) (1,497)
Staff-related measures (1,268) (913) (355) (38.9) (1,159)
Non-staff-related restructuring (32) (81) 49 60.5 (109)
Effects of deconsolidations, disposals and
acquisitions (1,655) (462) (1,193) n.a. (223)
Reversals of impairment losses 1,655 0 1,655 n.a. 0
Other (539) (132) (407) n.a. (6)
Special factors affecting net profit 283 510 (227) (44.5) (882)
Impairment losses (656) (368) (288) (78.3) (707)
Profit (loss) from financial activities (25) (4) (21) n.a. (757)
Income taxes 730 461 269 58.4 401
Non-controlling interests 234 421 (187) (44.4) 181
Special factors (1,557) (1,081) (476) (44.0) (2,379)
Net profit (loss) (adjusted for special factors) 5,715 4,948 767 15.5 4,545

Earnings per share, adjusted earnings per share

Earnings per share is calculated as net profit divided by the adjusted weighted average number of ordinary shares outstanding,
which totaled 4,743 million as of December 31, 2020. This resulted in adjusted earnings per share of EUR 0.88, compared with
EUR 0.82 in the prior year. Adjusted earnings per share, adjusted for special factors affecting net profit, amounted to EUR 1.20
compared with EUR 1.04 as of December 31, 2019.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 53

Special factors
The following table presents a reconciliation of EBITDA AL, EBIT, and net profit/loss to the respective figures adjusted for
special factors.

millions of €
EBITDA AL EBIT EBITDA AL EBIT EBITDA AL EBIT
2020 2020 2019 2019 2018 2018
EBITDA AL/EBIT 33,178 12,804 23,143 9,457 21,577 8,001
Germany (751) (751) (453) (453) (628) (628)
Staff-related measures (675) (675) (418) (418) (590) (590)
Non-staff-related restructuring (18) (18) (38) (38) (46) (46)
Effects of deconsolidations, disposals
and acquisitions (18) (18) 0 0 0 0
Impairment losses 0 0 0 0 0 0
Other (40) (40) 4 4 8 8
United States (370) (370) (544) (544) (160) (160)
Staff-related measures (32) (32) (17) (17) (15) (15)
Non-staff-related restructuring 0 0 0 0 0 0
Effects of deconsolidations, disposals
and acquisitions (1,522) (1,522) (527) (527) (145) (145)
Impairment losses 0 0 0 0 0 0
Reversals of impairment losses 1,604 1,604 0 0 0 0
Other (420) (420) 0 0 0 0
Europe (188) (374) (141) (461) (122) (797)
Staff-related measures (181) (181) (111) (111) (90) (90)
Non-staff-related restructuring 0 0 0 0 0 0
Effects of deconsolidations, disposals
and acquisitions (6) (6) (23) (23) (14) (14)
Impairment losses 0 (186) 0 (320) 0 (674)
Reversals of impairment losses 50 50 0 0 0 0
Other (51) (51) (8) (8) (19) (19)
Systems Solutions (210) (636) (310) (338) (240) (296)
Staff-related measures (168) (168) (154) (154) (174) (174)
Non-staff-related restructuring (3) (3) (4) (4) (4) (4)
Effects of deconsolidations, disposals
and acquisitions 0 0 (11) (11) 0 0
Impairment losses 0 (426) 0 (27) 0 (56)
Other (39) (39) (141) (141) (63) (63)
Group Development (43) (43) 97 97 (27) (27)
Staff-related measures (11) (11) (19) (19) (6) (6)
Non-staff-related restructuring 0 0 (1) (1) 0 0
Effects of deconsolidations, disposals
and acquisitions (30) (30) 111 111 (21) (21)
Impairment losses 0 0 0 0 0 0
Other (2) (2) 4 4 (1) (1)
Group Headquarters & Group Services (277) (322) (237) (237) (318) (318)
Staff-related measures (201) (201) (195) (195) (284) (284)
Non-staff-related restructuring (11) (11) (38) (38) (59) (59)
Effects of deconsolidations, disposals
and acquisitions (78) (78) (13) (13) (44) (44)
Impairment losses 0 (44) 0 0 0 0
Other 14 14 9 9 69 69
Group (1,839) (2,496) (1,589) (1,959) (1,497) (2,204)
Staff-related measures (1,268) (1,268) (913) (913) (1,159) (1,159)
Non-staff-related restructuring (32) (32) (81) (81) (109) (109)
Effects of deconsolidations, disposals
and acquisitions (1,655) (1,655) (462) (462) (223) (223)
Impairment losses 0 (656) 0 (370) 0 (707)
Reversals of impairment losses 1,655 1,655 0 0 0 0
Other (539) (539) (132) (132) (6) (6)

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 54

millions of €
EBITDA AL EBIT EBITDA AL EBIT EBITDA AL EBIT
2020 2020 2019 2019 2018 2018
EBITDA AL/EBIT (adjusted for special
factors) 35,017 15,300 24,731 11,416 23,074 10,204
Profit (loss) from financial activities
(adjusted for special factors) (4,103) (2,192) (2,091)
Profit (loss) before income taxes
(adjusted for special factors) 11,197 9,223 8,114
Income taxes (adjusted for special
factors) (2,659) (2,454) (2,225)
Profit (loss) (adjusted for special factors) 8,538 6,770 5,889
Profit (loss) (adjusted for special factors)
attributable to
Owners of the parent (net profit (loss))
(adjusted for special factors) 5,715 4,948 4,545
Non-controlling interests (adjusted for
special factors) 2,823 1,822 1,344

Net assets of the Group

Condensed consolidated statement of financial position

millions of €
Share of total Share of total
assets/ assets/
liabilities and liabilities and
shareholders’ shareholders’
Dec. 31, equity Dec. 31, equity Dec. 31, Dec. 31, Dec. 31,
2020 % Change 2019 % 2018 2017 2016
Assets
Cash and cash equivalents 12,939 4.9 7,546 5,393 3.2 3,679 3,312 7,747
Trade receivables 13,523 5.1 2,677 10,846 6.4 9,988 9,723 9,362
Intangible assets 118,066 44.6 49,864 68,202 40.0 64,950 62,865 60,599
Property, plant and equipment 60,975 23.0 11,427 49,548 29.0 50,631 46,878 46,758
Right-of-use assets 30,302 11.4 12,304 17,998 10.5 n.a. n.a. n.a.
Current and non-current financial assets 9,640 3.6 2,390 7,250 4.2 4,432 9,045 13,599
Deferred tax assets 7,972 3.0 5,268 2,704 1.6 2,949 4,013 5,210
Non-current assets and disposal groups
held for sale 1,113 0.4 1,016 97 0.1 145 161 372
Other assets 10,387 3.9 1,753 8,634 5.1 8,601 5,337 4,838
Total assets 264,917 100.0 94,245 170,672 100.0 145,375 141,334 148,485
Liabilities and shareholders’ equity
Current and non-current financial liabilities 107,108 40.4 40,759 66,349 38.9 62,275 57,529 64,650
Current and non-current lease liabilities 32,715 12.3 12,880 19,835 11.6 n.a. n.a. n.a.
Trade and other payables 9,760 3.7 329 9,431 5.5 10,735 10,971 10,441
Provisions for pensions and other employee
benefits 7,684 2.9 1,853 5,831 3.4 5,502 8,375 8,451
Current and non-current other provisions 9,033 3.4 2,370 6,663 3.9 6,435 6,527 6,388
Deferred tax liabilities 17,260 6.5 8,306 8,954 5.2 8,240 6,967 10,007
Liabilities directly associated with non-
current assets and disposal groups
held for sale 449 0.2 420 29 0.0 36 0 194
Other liabilities 8,358 3.2 1,009 7,349 4.3 8,715 8,495 9,509
Shareholders’ equity 72,550 27.4 26,319 46,231 27.1 43,437 42,470 38,845
Total liabilities and shareholders’ equity 264,917 100.0 94,245 170,672 100.0 145,375 141,334 148,485

The IFRS 16 “Leases” accounting standard has been applied since January 1, 2019. Prior-year comparatives were not adjusted. Financial liabilities included
finance lease liabilities in accordance with IAS 17 for the last time as of December 31, 2018.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 55

Total assets amounted to EUR 264.9 billion as of December 31, 2020, up by EUR 94.2 billion against December 31, 2019. This
significant increase is mainly due to the change in the composition of the Group in connection with the acquisition of Sprint in
the United States operating segment. The acquired and remeasured assets and liabilities of Sprint were included in all items of
the statement of financial position upon consummation of the transaction on April 1, 2020.

For further information on the business combination of T‑Mobile US and Sprint, please refer to the section “Summary of accounting policies – Changes in
the composition of the Group and other transactions” in the notes to the consolidated financial statements.

Cash and cash equivalents increased by EUR 7.5 billion year-on-year.

For further information, please refer to Note 35 “Notes to the consolidated statement of cash flows” in the notes to the consolidated financial statements.

On the assets side, trade receivables amounted to EUR 13.5 billion, up by EUR 2.7 billion against the 2019 year-end. Receivables
increased by EUR 2.9 billion as of April 1, 2020 in connection with the inclusion of Sprint. Exchange rate effects, primarily from
the translation from U.S. dollars into euros, reduced the carrying amount. Excluding this effect, receivables in the United States
operating segment increased, mainly due to higher receivables from wholesale partners – in particular as a consequence of the
sale of Sprint’s prepaid business to DISH – and higher receivables under the Equipment Installment Plan – primarily as a result
of the market launch of higher-priced devices in the fourth quarter of 2020. In the Germany operating segment, receivables
increased as a result of the contractual termination of a revolving factoring agreement for receivables from consumers and
business customers. By contrast, receivables in the Europe operating segment decreased, among other factors, on account
of the agreed sale of Telekom Romania Communications, which operates the Romanian fixed network business. This entity’s
receivables were reclassified as of December 31, 2020 to non-current assets and disposal groups held for sale.

The carrying amounts of intangible assets and property, plant and equipment increased by EUR 61.3 billion overall to
EUR 179.0 billion. Effects from changes in the composition of the Group of EUR 73.0 billion in connection with the acquisitions
of Sprint and Simpel contributed to this increase, which also includes preliminary goodwill arising from the transactions;
EUR 8.7 billion from the Sprint transaction and EUR 0.2 billion from the Simpel transaction. Capital expenditure totaling
EUR 22.6 billion, especially to upgrade and build out the network in our United States operating segment, and for the
broadband/fiber-optic build-out, the IP transformation, and mobile infrastructure in the Germany and Europe operating
segments, also increased the carrying amounts. This also includes, in the United States operating segment, FCC spectrum
licenses of EUR 1.1 billion – primarily acquired at a spectrum auction that ended in March 2020 – and in the Group Development
and Europe operating segments, spectrum licenses totaling EUR 0.6 billion – mainly in the Netherlands, Hungary, Greece,
and Austria. Depreciation and amortization of EUR 20.0 billion, negative exchange rate effects of EUR 13.3 billion, primarily
from the translation of U.S. dollars into euros, and disposals of EUR 1.8 billion decreased the carrying amount. The latter
included EUR 0.2 billion in the United States for the derecognition of billing software for postpaid customers, which was still in
development. In connection with the intention to sell Telekom Romania Communications and T‑Mobile Infra, both companies
were classified as held for sale as of December 31, 2020. As a result, the carrying amount declined by EUR 0.6 billion overall.
Furthermore, the carrying amount of intangible assets and property, plant and equipment was increased by EUR 1.7 million in
total as a result of the following reversals of impairment losses and was reduced by EUR 0.7 billion overall by the following
impairment losses.

Impairment losses on spectrum licenses previously acquired by T‑Mobile US were partially reversed, increasing the carrying
amount by EUR 1.6 billion. In part, the reasons leading to the impairment loss recognized in 2012 no longer exist, thus giving
rise to the reversal. An initial reversal of the impairment in the amount of EUR 1.7 billion had already been recognized in 2017.
The measurement of Sprint’s licenses in connection with the purchase price allocation following the business combination of
T‑Mobile US and Sprint indicated a further increase in the licenses’ value.

In the Systems Solutions operating segment, the realignment of the B2B telecommunications business in combination with
the effects of the coronavirus pandemic triggered ad hoc impairment testing of assets, which identified a reduction in the
business outlook for IT operations. The result was the recognition of a non-cash impairment loss of EUR 0.5 billion on non-
current assets of the Systems Solutions cash-generating unit. EUR 426 million of the impairment loss related to the Systems
Solutions operating segment. Another EUR 44 million related to software recognized in the Group Headquarters & Group
Services segment which is subject to use by the Systems Solutions operating segment and is allocated to the Systems Solutions
cash-generating unit for the purposes of impairment testing.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 56

An ad hoc impairment test was also conducted in the Europe operating segment on account of the agreed sale of the Romanian
fixed-network business. In this context, the associated loss of the existing MVNO agreements results in the recognition of an
impairment loss totaling EUR 160 million on non-current assets of the Romanian mobile business, which will remain within the
Group. In the Romanian fixed-network business, the planned sale resulted in a reversal of impairment losses recognized in the
past on property, plant and equipment of EUR 50 million.

Right-of-use assets with regard to leases increased by EUR 12.3 billion compared with December 31, 2019 to EUR 30.3 billion.
In connection with the business combination with Sprint, right-of-use assets of EUR 6.3 billion were recognized. Another
EUR 9.4 billion came from the agreement concerning the lease and use of cell sites concluded between T‑Mobile US and
American Tower in September 2020. This was a modification to existing leases with American Tower. The agreement gives
T‑Mobile US greater flexibility in the course of merging the mobile networks of T‑Mobile US and Sprint and of the 5G network
build-out. By contrast, depreciation of EUR 5.1 billion, negative exchange rate effects of EUR 2.1 billion, disposals of
EUR 0.4 billion, and reclassifications to assets and disposal groups held for sale of EUR 0.1 billion decreased the carrying
amount.

Current and non-current financial assets increased by EUR 2.4 billion to EUR 9.6 billion. The acquisition of Sprint resulted in
an increase of EUR 0.4 billion. Derivatives without a hedging relationship increased by EUR 1.1 billion, mainly in connection
with the subsequent measurement of the stock options to buy shares in T‑Mobile US received from SoftBank in June 2020
and with new additions of embedded derivatives and embedded derivatives assumed in connection with the acquisition of
Sprint at T‑Mobile US, including their subsequent measurement. Measurement effects from the derecognition of a derivative in
connection with the repayment of a term loan raised during the course of the year had an offsetting effect. Derivatives with a
hedging relationship increased by EUR 0.6 billion, primarily due to the increase in positive fair values from interest rate swaps
in fair value hedges. In addition, other financial assets increased by EUR 0.3 billion in connection with grants receivable from
funding projects for the broadband build-out in Germany.

The increase in non-current assets and disposal groups held for sale by EUR 1.0 billion to EUR 1.1 billion was mainly the result
of the reclassified assets of T‑Mobile Infra, which is allocated to the Group Development operating segment, and Telekom
Romania Communications, which operates the Romanian fixed-network business in the Europe operating segment. Both these
companies were classified as held for sale as of December 31, 2020 on account of the intention to sell them.

The increase of EUR 1.8 billion in other assets to EUR 10.4 billion was also mainly due to the inclusion of Sprint.

On the liabilities and shareholders’ equity side, current and non-current financial liabilities increased by EUR 40.8 billion
compared with the end of 2019 to a total of EUR 107.1 billion. EUR 39.1 billion of this resulted from the transfer of liabilities
from Sprint. Immediately after the transaction, liabilities of the former Sprint totaling USD 9.8 billion (EUR 8.9 billion) were
repaid. Since then, a number of refinancing measures have been implemented in connection with the business combination,
some of which have already been reversed. On April 1, 2020, for example, T‑Mobile US raised a new term loan of USD 4 billion
(EUR 3.7 billion), which was redeemed prematurely on October 9, 2020. Senior secured notes, issued on April 9, 2020 for a
total of USD 19 billion (EUR 17.3 billion) were used to repay a briefly utilized bridge loan facility. In addition, T‑Mobile US
issued senior secured notes with a volume of USD 4.0 billion (EUR 3.6 billion) on June 24, 2020, USD 4 billion (EUR 3.4 billion)
on October 6, 2020, and USD 4.75 billion (EUR 4.0 billion) on October 28, 2020. In the course of the third quarter of 2020,
T‑Mobile US repaid a number of bonds with a total value of EUR 3.6 billion, some of them prematurely. Furthermore, bonds
with a total volume of EUR 1.8 billion when translated into euros were issued in the Group in various currencies in the course
of the year. Euro and U.S. Dollar bonds with a total volume of EUR 6.3 billion when translated into euros were repaid. A
Deutsche Bundespost treasury note (zero-coupon bond) issued in the past with a carrying amount of EUR 1.4 billion fell due
on December 31, 2019 and was repaid on that date by a bank using its own funds. The payment by Deutsche Telekom AG
to this bank was made on the following bank working day of January 2, 2020. Derivative financial liabilities decreased by
EUR 0.8 billion in total, mainly due to the decline of EUR 1.0 billion from the premature termination of forward-payer swaps
by T‑Mobile US at the start of April 2020. The secured term loan was originated on April 1, 2020. Exchange rate effects, in
particular from the translation of U.S. dollars into euros, lowered the financial liabilities by EUR 6.9 billion.

For further information on the development of financial liabilities, please refer to Note 13 “Financial liabilities and lease liabilities” in the notes to the
consolidated financial statements.

Current and non-current lease liabilities increased by EUR 12.9 billion to EUR 32.7 billion compared with December 31, 2019.
EUR 6.8 billion of this increase was attributable to the inclusion of Sprint. In connection with the modification of existing leases
that T‑Mobile US agreed with American Tower, lease liabilities increased by EUR 9.4 billion. Exchange rate effects, in particular
from the translation of U.S. dollars into euros, lowered the carrying amount by EUR 2.3 billion.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 57

Trade and other payables increased by EUR 0.3 billion to EUR 9.8 billion. The inclusion of Sprint increased the carrying amount
by EUR 2.9 billion. This was offset in particular by lower liabilities to terminal equipment vendors and declines in liabilities
in connection with the acquisition of assets in the United States operating segment. Liabilities also decreased in the other
operating segments. Exchange rate effects, especially from the translation from U.S. dollars into euros, also decreased the
carrying amount.

Provisions for pensions and other employee benefits increased by EUR 1.9 billion compared with December 31, 2019 to
EUR 7.7 billion, mainly due to a decline in the prices of plan assets, interest rate adjustments, and the change in the composition
of the Group in connection with the acquisition of Sprint.

Current and non-current other provisions increased by EUR 2.4 billion compared with December 31, 2019 to EUR 9.0 billion.
EUR 1.9 billion of this related to the business combination of T‑Mobile US and Sprint. Furthermore, the provisions recognized
for the Civil Service Health Insurance Fund (Postbeamtenkrankenkasse – PBeaKK) increased by EUR 0.5 billion, which is
attributable to the subsequent measurement of the present value determined using actuarial principles (interest effect) and
other additions.

The increase in liabilities directly associated with non-current assets and disposal groups held for sale by EUR 0.4 billion
to EUR 0.4 billion mainly related to the aforementioned reclassified liabilities of T‑Mobile Infra and Telekom Romania
Communications. Both these companies were classified as held for sale as of December 31, 2020 on account of the intention
to sell them.

Other liabilities increased by EUR 1.0 billion compared with December 31, 2019 to EUR 8.4 billion, due in particular to higher
current and non-current other liabilities. The inclusion of Sprint increased other liabilities by EUR 0.7 billion. In addition, other
liabilities increased by EUR 0.2 billion due to existing build-out obligations in connection with grants receivable from funding
projects for the broadband build-out in the Germany operating segment. The carrying amounts of contract liabilities increased
in particular as a result of the inclusion of Sprint.

Shareholders’ equity increased from EUR 46.2 billion as of December 31, 2019 to EUR 72.6 billion. The business combination of
T‑Mobile US and Sprint consummated on April 1, 2020 resulted in an increase in shareholders’ equity of EUR 30.6 billion as of
the date of first-time consolidation. Profit of EUR 6.7 billion and capital increases from share-based payments of EUR 0.5 billion
also increased the carrying amount. Shareholders’ equity was reduced in connection with dividend payments for the 2019
financial year to Deutsche Telekom AG shareholders in the amount of EUR 2.8 billion and to other shareholders of subsidiaries
in the amount of EUR 0.2 billion. Other comprehensive income also reduced shareholders’ equity by EUR 8.5 billion. The
main factors in this negative other comprehensive income were the currency translation effects recognized directly in equity
(EUR 6.6 billion), the remeasurement of defined benefit plans (EUR 1.4 billion), and losses from hedging instruments, mainly
from forward-payer swaps concluded for borrowings at T‑Mobile US, which were terminated prematurely in April 2020 and
for which the cumulative changes in value must be reversed over the terms of the loans (EUR 1.0 billion). By contrast, income
taxes relating to components of other comprehensive income of EUR 0.4 billion had a positive impact on other comprehensive
income.

For further information, please refer to Note 19 “Shareholders’ equity” in the notes to the consolidated financial statements.

For further information on the business combination of T‑Mobile US and Sprint and the acquisition of Simpel, please refer to the section “Summary of
accounting policies – Changes in the composition of the Group and other transactions” in the notes to the consolidated financial statements.

Financial position of the Group and profitability

Finance management
Our finance management ensures our Group’s ongoing solvency and hence its financial equilibrium. The fundamentals of
Deutsche Telekom’s finance policy are established each year by the Board of Management and overseen by the Supervisory
Board. Group Treasury is responsible for implementing the finance policy and for ongoing risk management. In order to ensure
we have scope for financing, we continuously monitor the development of net debt, Deutsche Telekom AG’s rating, financial
flexibility, and free cash flow AL.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 58

Calculation of net debt

millions of €
Change
Dec. 31, 2020 Dec. 31, 2019 Change %
Bonds and other securitized liabilities 87,702 51,644 36,058 69.8
Liabilities to banks 5,257 6,516 (1,259) (19.3)
Other financial liabilities 14,149 8,189 5,960 72.8
Lease liabilities 32,715 19,835 12,880 64.9
Financial liabilities and lease liabilities 139,823 86,184 53,639 62.2
Accrued interest (1,035) (748) (287) (38.4)
Other (703) (739) 36 4.9
Gross debt 138,085 84,697 53,388 63.0
Cash and cash equivalents 12,939 5,393 7,546 n.a.
Derivative financial assets 4,038 2,333 1,705 73.1
Other financial assets 881 940 (59) (6.3)
Net debt 120,227 76,031 44,196 58.1

Changes in net debt

millions of €

1,714 1,071 259

14,278 366 120,227
43,453
3,067 (8,035)

(10,756) (1,221)

76,031

Net debt First-time Free cash Sale of Dividend Additions Spectrum Forward- Acquisition Exchange Other Net debt
as of consolidation flow (before Sprint’s payments of lease acquisition payer of rate effects effects as of
Dec. 31, 2019 of Sprint dividend prepaid (incl. to liabilities swaps at Simpel Dec. 31, 2020
payments and business non-controlling T-Mobile US
spectrum to DISH interests)
investment)

Other effects of EUR 0.4 billion include, among other factors, recognition of liabilities for the acquisition of media broadcasting
rights, financing options under which the payments for trade payables become due at a later point in time by involving banks in
the process, and offsetting effects from the measurement of embedded derivatives at T‑Mobile US.

Other financing options

Off-balance-sheet financial instruments mainly relate to the sale of receivables by means of factoring. Total receivables sold
as of December 31, 2020 amounted to EUR 3.1 billion (December 31, 2019: EUR 4.2 billion). This mainly relates to factoring
agreements in the United States and Germany operating segments. The year-on-year decline was mainly attributable to the
contractual termination of a revolving factoring agreement in the Germany operating segment. The agreements are used in
particular for active receivables management.

Furthermore, in the reporting year, we chose financing options totaling EUR 0.2 billion (2019: EUR 0.7 billion) which extended
the period of payment for trade payables from operating and investing activities by involving banks in the process and which
upon payment are shown under cash flows used in/from financing activities. As a result, we show these payables under financial
liabilities in the statement of financial position.

The rating of Deutsche Telekom AG

Standard & Poor’s Moody’s Fitch

Long-term rating / outlook
Dec. 31, 2016 BBB+ / stable Baa1 / stable BBB+ / stable
Dec. 31, 2017 BBB+ / stable Baa1 / stable BBB+ / stable
Dec. 31, 2018 BBB+ / CreditWatch negative Baa1 / negative BBB+ / stable
Dec. 31, 2019 BBB+ / CreditWatch negative Baa1 / negative BBB+ / stable
Dec. 31, 2020 BBB / stable Baa1 / negative BBB+ / stable
Short-term rating A-2 P-2 F2

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 59

As announced in 2018, rating agency Standard & Poor’s downgraded Deutsche Telekom AG’s rating from BBB+ to BBB with a
stable outlook on completion of the business combination of T‑Mobile US and Sprint. We are therefore still a solid investment-
grade company with access to the international capital markets.

Financial flexibility

2020 2019 2018 2017 2016

Relative debta
Net debt 2.78x 2.65x 2.4x 2.3x 2.3x

EBITDA (adjusted for special factors)

Equity ratio % 27.4 27.1 29.9 30.0 26.2

a Relative debt is calculated on a quarterly basis and the calculation of the figure for 2020 includes as an input for the first quarter of 2020 historic pro forma
figures for Sprint, which was included in the United States operating segment.

To ensure financial flexibility, we primarily use the KPI “relative debt.” This is a core component of our finance strategy and an
important performance indicator for investors, analysts, and rating agencies.

Calculation of free cash flow AL

millions of €
2020 2019 2018
Net cash from operating activities 23,743 23,074 17,948
Interest payments for zero-coupon bonds 1,600 0 0
Termination of forward-payer swaps at T‑Mobile US 2,158 0 0
Net cash from operating activitiesa 27,501 23,074 17,948
Cash capex (18,694) (14,357) (12,492)
Spectrum investment 1,714 1,239 269
Cash capex (before spectrum investment) (16,980) (13,118) (12,223)
Proceeds from the disposal of intangible assets (excluding goodwill) and property,
plant and equipment 236 176 525
Free cash flow (before dividend payments and spectrum investment)a 10,756 10,133 6,250
Principal portion of repayment of lease liabilitiesb (4,468) (3,120) (199)
Free cash flow AL (before dividend payments and spectrum investment)a, c 6,288 7,013 6,051

a Before interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.
b Excluding finance leases at T‑Mobile US.
c Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.

Free cash flow AL (before dividend payments and spectrum investment) decreased by EUR 0.7 billion year-on-year to
EUR 6.3 billion. The following effects impacted on this development:

Excluding interest payments for zero-coupon bonds and the premature termination of forward-payer swaps concluded for
borrowings at T‑Mobile US, net cash from operating activities increased by EUR 4.4 billion. The sustained strong performance
of the operating segments, especially the United States, including Sprint, had an increasing effect on net cash from operating
activities. Higher (net) interest payments, which were up by EUR 2.1 billion in total, mainly as a result of the financial liabilities
recognized and the restructuring begun in connection with the acquisition of Sprint, and the related increase in financing,
including the handling charges incurred for a briefly utilized bridge loan facility, had a negative effect. Income tax payments
decreased by EUR 0.1 billion compared with the prior year. Factoring agreements of EUR 0.8 billion had a negative impact
on net cash from operating activities in the reporting year, mainly as a result of the contractual termination of a revolving
factoring agreement in the Germany operating segment. In the prior year, factoring agreements had had negative effects of
EUR 0.3 billion.

Cash capex (before spectrum investment) increased by EUR 3.9 billion to EUR 17.0 billion, largely on account of the inclusion of
Sprint and the ongoing 5G network build-out in the United States. Cash capex in the Germany operating segment decreased
slightly. Capital expenditure in the Germany operating segment totaled around EUR 4.2 billion in 2020, in particular for the
build-out of the 5G and fiber-optic networks. In the Europe operating segment, cash capex stood at EUR 1.8 billion, which was
slightly up on the prior year. Here, we also continue to invest in the provision of broadband and fiber-optic technology and in
5G as part of our integrated network strategy.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 60

The increase in repayments of lease liabilities was due in particular to payments for leases in the United States operating
segment, partly as a result of the inclusion of Sprint, and partly as a result of payments for new leases concluded in 2020 for
network technology and cell sites in connection with the 5G network build-out.

For further information on the statement of cash flows, please refer to Note 35 “Notes to the consolidated statement of cash flows” in the notes to the
consolidated financial statements.

Profitability

millions of €
2020 2019 2018
ROCE % 4.6 5.1 4.7
Profit (loss) from operations (EBIT) 12,804 9,457 8,001
Share of profit (loss) of associates and joint ventures accounted for using the
equity method (12) 87 (529)
Interest component of unrecognized rental and lease obligationsa n.a. n.a. 630
Other NOP adjustments n.a. n.a. 1
Net operating profit (NOP) 12,792 9,544 8,103
Tax (imputed tax rate 2020: 27.8 %; 2019: 27.8 %; 2018: 27.8 %) (3,556) (2,653) (2,253)
Net operating profit after taxes (NOPAT) 9,236 6,891 5,850
Cash and cash equivalents 12,939 5,393 3,679
Operating working capital 6,458 2,983 (511)
Intangible assets 118,066 68,202 64,950
Property, plant and equipment 60,975 49,548 50,631
Right-of-use assetsa 30,302 17,998 n.a.
Non-current assets and disposal groups held for sale and liabilitiesb 664 68 145
Investments accounted for using the equity method 543 489 576
Other assets n.a. n.a. 331
Present value of unrecognized rental and lease obligations n.a. n.a. 15,760
Other provisions (9,033) (6,663) (6,435)
Other NOA adjustments n.a. n.a. 0
Net operating assets (NOA) 220,914 138,018 129,126
Average net operating assets (Ø NOA) 201,545 135,618 124,024

a The calculation method used to determine this financial performance indicator was adjusted in 2019 as a result of the new IFRS 16 accounting standard.
b Excluding the carrying amounts of companies accounted for using the equity method.

ROCE decreased by 0.5 percentage points in the reporting period to 4.6 %. This was due to stronger percentage growth in
average operating assets (NOA) than in net operating profit after taxes (NOPAT). Both NOPAT and average NOA were affected
by the business combination of T‑Mobile US and Sprint. Thus, the positive development of NOPAT in 2020 was driven primarily
by a substantial increase in EBIT at T‑Mobile US. Overall, NOPAT amounted to EUR 9.2 billion in 2020, up from EUR 6.9 billion
in 2019. At the same time, average NOA increased, due in particular to the spectrum licenses; property, plant and equipment;
and right-of-use assets acquired as part of the Sprint transaction and the modification of the agreement concerning the lease
and use of cell sites between T‑Mobile US and American Tower. The average amount of net operating assets (NOA) increased to
EUR 201.5 billion in 2020 from EUR 135.6 billion in the prior year. In addition to the inclusion of Sprint, the development of NOA
also reflects our consistently high investment volume.

For further information on the definition of ROCE and the methods used to calculate this key performance indicator, please refer to the section
“Management of the Group.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 61

Reconciliation for the change in disclosure of key figures for the prior years in the 2020 financial year
millions of €
Profit EBITDA AL
(loss) from (adjusted Depreciation
Total operations for special and Impairment Segment Segment
revenue (EBIT) factors) amortization losses assetsa liabilitiesa
FY 2019/December 31, 2019
Presentation as of December 31, 2019 –
as reported
Germany 21,886 4,063 8,720 (4,251) (4) 41,253 30,968
United States 40,420 5,488 11,134 (7,777) 0 84,413 54,087
Europe 12,168 1,182 4,005 (2,790) (341) 27,699 10,843
Systems Solutions 6,805 (218) 519 (503) (29) 6,615 4,800
Group Development 2,797 615 1,033 (812) 0 8,395 10,571
Group Headquarters & Group Services 2,620 (1,648) (651) (1,158) (2) 54,162 65,066
Total 86,696 9,482 24,760 (17,291) (376) 222,537 176,335
Reconciliation (6,166) (25) (29) 25 (21) (51,865) (51,894)
Group 80,531 9,457 24,731 (17,266) (397) 170,672 124,441
FY 2019/December 31, 2019
+/- Realignment of the B2B
telecommunications business
as of July 1, 2020
Germany 1,844 265 362 (85) 0 3,021 1,254
United States 0 0 0 0 0 0 0
Europe (581) (74) (94) 17 0 (821) (316)
Systems Solutions (2,381) (207) (269) 53 0 (2,099) (833)
Group Development 0 0 0 0 0 0 0
Group Headquarters & Group Services 8 17 0 16 0 177 178
Total (1,111) 1 0 1 0 279 283
Reconciliation 1,111 (1) 0 (1) 0 (279) (283)
Group 0 0 0 0 0 0 0
FY 2019/December 31, 2019
= Presentation as of December 31, 2020
Germany 23,730 4,327 9,083 (4,337) (4) 44,274 32,222
United States 40,420 5,488 11,134 (7,777) 0 84,413 54,087
Europe 11,587 1,109 3,910 (2,773) (341) 26,878 10,527
Systems Solutions 4,424 (425) 250 (450) (29) 4,517 3,967
Group Development 2,797 615 1,033 (812) 0 8,395 10,571
Group Headquarters & Group Services 2,627 (1,631) (650) (1,141) (2) 54,339 65,244
Total 85,585 9,483 24,760 (17,290) (376) 222,816 176,618
Reconciliation (5,055) (26) (29) 24 (21) (52,144) (52,177)
Group 80,531 9,457 24,731 (17,266) (397) 170,672 124,441

a Figures relate to the reporting date December 31, 2019.

Development of business in the operating segments

For further information, please refer to the IR back-up at: www.telekom.com/en/investor-relations.

Our B2B telecommunications business was realigned with effect from July 1, 2020. A new B2B unit was created in the Germany
operating segment, and the assets and liabilities previously assigned to the Systems Solutions, Europe, and Group
Headquarters & Group Services segments have been transferred to the new unit. Prior-year comparatives in these segments
(development of operations, customer development, headcount development, and order entry) were adjusted retrospectively.

For further information on the realignment of the B2B telecommunications business and on the different consummation dates required under company law,
please refer to the section “Group organization.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 62

Germany
Customer development

thousands
Change
Dec. 31, 2020 Dec. 31, 2019 Change % Dec. 31, 2018
Mobile customers 48,526 46,189 2,337 5.1 44,202
Contract customers 26,037 25,291 746 2.9 25,435
Prepaid customers 22,490 20,898 1,592 7.6 18,767
Fixed-network lines 17,590 17,824 (234) (1.3) 18,625
Retail broadband lines 14,118 13,730 388 2.8 13,561
Of which: optical fiber 9,515 8,529 986 11.6 7,236
Television (IPTV, satellite) 3,864 3,618 246 6.8 3,353
Unbundled local loop lines (ULLs) 4,101 4,638 (537) (11.6) 5,236
Wholesale broadband lines 7,733 7,372 361 4.9 6,722
Of which: optical fiber 6,433 5,863 570 9.7 4,970

Total
In Germany we continue to be market leader both in terms of fixed-network and mobile revenues. This success is attributable
to our high-performance networks. We offer best customer experience with award-winning network quality – in the fixed
network as in mobile communications – and with a broad product portfolio and excellent service. We want to offer our
customers a seamless and technology-neutral telecommunications experience. To this end we market not only fixed-network
and mobile products, but also convergence products such as our brand-new MagentaEINS Plus rate plan, introduced in
September 2020. This new offering bundles our connectivity services for home and on the move in a single contract. Our
MagentaEINS convergence product remains very popular among customers, with some 5.1 million customers having opted for
MagentaEINS by the end of 2020. That corresponds to an increase of 7.5 % against year-end 2019.

We continued to see strong demand for our fiber-optic-based lines. As of the end of December 2020, the total number of
lines had increased to over 15.9 million. In other words, we connected a further 1.6 million lines to our fiber-optic network in
Germany in 2020. With the progress made in fiber-optic rollout and vectoring technology, we also successfully drove forward
the marketing of higher bandwidths.

Mobile communications
We won a total of 2.3 million mobile customers in 2020. Of these, 649 thousand were high-value contract customers under our
Telekom and congstar brands. Sustained high demand for mobile rate plans with included data volumes alongside our multiple
award-winning network quality continues to drive this trend. The number of mobile contract customers with resellers (service
providers) increased, primarily due to the volatile developments at some of our service providers. We have added 1.6 million
prepaid customers since the start of the year, largely on the back of our automotive offerings targeted specifically at business
customers.

For further information on our awarding-winning network quality, please refer to the section “Highlights in the 2020 financial year.”

The StreamOn option, with which customers can stream certain music, gaming, or video services without reducing their
included data allowance, remains very popular. At the end of 2020, almost 4 million customers were using this option, up by
around 30 % year-on-year.

Fixed network
Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of
competitors, we are pursuing new paths in marketing. Our focus is on convergence offerings and further development of such
products: We offer MagentaTV with exclusive access to a wide range of additional content in the Megathek library and via
popular streaming services, and with TV lines and fiber-optic-based lines and, since September 2020, our MagentaEINS Plus
rate plan. Our brand-new convergence product offers customers Germany-wide unlimited data plus added benefits for the
community and no minimum contract term.

The number of broadband lines increased by 388 thousand to over 14.1 million in 2020. After completing the IP migration,
broadband customer additions were up significantly compared with 170 thousand additions in 2019. We added 246 thousand
TV customers in 2020, increasing the customer base by 6.8 % compared with the end of the prior year. In traditional fixed-
network business, the number of lines declined by 234 thousand. This marked a considerable reduction in line losses compared
with the prior-year period, which had been affected in particular by the migration of consumers to IP. As expected, the number
of fixed-network lines therefore declined slightly to around 17.6 million lines.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 63

Wholesale
As of December 31, 2020, fiber-optic-based lines accounted for 54.4 % of all lines – 5.5 percentage points higher than at the
end of 2019. This growth was driven largely by high demand for our contingent model. The number of unbundled local loop
lines decreased by 537 thousand compared with the end of the prior year, partly as a result of the shift to higher-value fiber-
optic-based lines and partly from consumers switching to cable providers. In addition, our wholesale customers are migrating
their retail customers to their own fiber-optic-based lines. The total number of wholesale lines at the end of 2020 was around
11.8 million.

Development of operations

millions of €
Change
2020 2019 Change % 2018
Total revenue 23,779 23,730 49 0.2 23,662
Consumers 11,723 11,602 121 1.0 11,523
Business Customers 8,861 8,954 (93) (1.0) 9,032
Wholesale 2,983 2,944 39 1.3 2,874
Other 212 230 (18) (7.8) 233
Profit (loss) from operations (EBIT) 4,085 4,327 (242) (5.6) 4,181
EBIT margin % 17.2 18.2 17.7
Depreciation, amortization and impairment losses (4,440) (4,341) (99) (2.3) (4,116)
EBITDA 8,525 8,668 (143) (1.6) 8,296
Special factors affecting EBITDA (751) (453) (298) (65.8) (628)
EBITDA (adjusted for special factors) 9,276 9,121 155 1.7 8,924
EBITDA ALa 8,480 8,630 (150) (1.7) 8,202
Special factors affecting EBITDA ALa (751) (453) (298) (65.8) (628)
EBITDA AL (adjusted for special factors)a 9,231 9,083 148 1.6 8,829
EBITDA AL margin (adjusted for special factors)a % 38.8 38.3 37.3
Cash capexb (4,172) (4,414) 242 5.5 n.a.

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.
b Retrospective changes in connection with realignment of the B2B telecommunications business have not been applied to cash capex for the 2018 financial
year.

Total revenue
In 2020 we generated total revenue of EUR 23.8 billion, which was up slightly by 0.2 % year-on-year. Growth in fixed-network
business, driven largely by broadband revenue growth of 5.7 % and a 2.3 % rise in revenue from variable call charges, offset
declining revenues in mobile communications business. Overall, revenue was affected by the effects of the coronavirus
pandemic, such as temporary travel restrictions, lockdowns, and the deteriorated economic situation. This had a negative
impact on roaming, visitor, and terminal equipment revenues, and resulted in delays or postponements to current orders in B2B
telecommunications business.

Revenue from Consumers grew by 1.0 % year-on-year. Volume-driven declines in revenue from voice components continue
to strongly impact on traditional fixed-network business. By contrast, revenue from broadband business grew by 4.8 % while
revenue from fixed-network terminal equipment increased by 5.6 % on the back of strong terminal equipment leasing business.
Mobile business declined by 1.1 % primarily due to lower revenues from mobile terminal equipment business. In addition,
negative trends in roaming and visitor revenues in consequence of the coronavirus pandemic had an impact.

Revenue from Business Customers declined by 1.0 %. IT revenues increased by 3.4 % and mobile revenues declined by 0.9 %
compared with the prior-year period. Business customer operations were also affected by the aforementioned negative impact
of the coronavirus crisis, particularly in mobile business. The B2B telecommunications business, which was integrated into the
Germany operating segment effective July 1, 2020, reported a decline in revenue at the end of 2020 of 3.2 % year-on-year.
This is attributable to the deteriorated economic situation in consequence of the coronavirus pandemic and to market-related
factors such as price erosion and competitive pressure in solutions business.

For further information on the realignment of the B2B telecommunications business, please refer to the section “Group organization.”

Wholesale revenue was up at the end of 2020 by 1.3 % year-on-year. The positive trend in the number of fiber-optic-based
lines, driven mainly by the contingency model, continued in 2020 with an increase of 9.7 % compared with the end of 2019 and
partially offset the decrease in revenues from declining volumes of unbundled local loop lines. The coronavirus pandemic had
positive effects on voice revenues in the second and fourth quarter of 2020.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 64

Adjusted EBITDA AL, EBITDA AL

EBITDA AL adjusted for special factors increased by EUR 148 million or 1.6 % year-on-year to EUR 9.2 billion. Our
adjusted EBITDA AL margin increased to 38.8 %, up from 38.3 % in the prior year. The main reasons for this increase are a
sound operational development, driven by high-value revenue growth and enhanced cost efficiency. Lower personnel costs
resulting, among other factors, from the smaller headcount and the ongoing implementation of efficiency enhancement and
digitalization measures reduced costs. Higher expenses recognized as special factors for socially responsible instruments in
connection with the staff restructuring, in particular the dedicated retirement program, had an offsetting effect. EBITDA AL
decreased in 2020 by 1.7 % year-on-year to EUR 8.5 billion.

EBIT
Profit from operations was down 5.6 % year-on-year to around EUR 4.1 billion, partly as a result of the slightly lower EBITDA level
together with higher depreciation, amortization and impairment losses year-on-year, mainly on account of higher depreciation
of property, plant and equipment.

Cash capex
Cash capex decreased by EUR 242 million or 5.5 % compared with the prior-year period. This is mainly due to the fact that
cash outflows in connection with the acquisition of 5G mobile spectrum licenses in the 2019 financial year were shown in
cash capex and, since 2020, have been presented in net cash from/used in financing activities on account of the payment
plan agreed with the Federal Republic of Germany. Cash capex also declined as a result of the changed accounting treatment
of grants receivable from funding projects for the broadband build-out as of the start of the third quarter of 2019. Capital
expenditure totaled around EUR 4.2 billion in 2020, with much of this figure going towards the build-out of our 5G and fiber-
optic networks. The number of households connected by pure fiber-optic lines increased to over 2 million at the end of 2020.
In mobile communications, our customers benefit from greater LTE network coverage. As of December 31, 2020, we supplied
98.7 % of households in Germany with LTE. More than two thirds of the German population can already use 5G.

United States
Customer development

thousands
Change
Dec. 31, 2020 Dec. 31, 2019 Change % Dec. 31, 2018
Branded customersa, b 102,064 67,895 34,169 50.3 63,656
Postpaid customersc 81,350 47,034 34,316 73.0 42,519
Postpaid phone customers 66,618 40,346 26,272 65.1 37,224
Other postpaid customers 14,732 6,689 8,043 n.a. 5,295
Prepaid customersb, c, d 20,714 20,860 (146) (0.7) 21,137

Adjustments of the customer base

thousands
Adjustment of
customer Adjustment of
Total definition for customer
adjustments of Sprint’s prepaid definition at
customer base in business as of Sprint as of Sprint additions
2020 July 1, 2020d Apr. 1, 2020c April 1, 2020
Branded customersa 28,354 (9,393) (4,853) 42,600
Postpaid customersc 28,830 0 (5,514) 34,344
Postpaid phone customers 24,055 0 (1,861) 25,916
Other postpaid customers 4,775 0 (3,653) 8,428
Prepaid customersc, d (476) (9,393) 661 8,256

a Starting in the first quarter of 2020, T‑Mobile US discontinued reporting of wholesale customers due to the expansion of machine-to-machine (M2M) and
Internet of Things (IoT) products and instead will continue to focus on postpaid and prepaid customer reporting.
b On July 18, 2019, we entered into an agreement whereby certain T‑Mobile US prepaid products will now be offered and distributed by a current MVNO
partner. As a result, we included a base adjustment to reduce prepaid customers by 616 thousand in the third quarter of 2019.
c Includes customers acquired in connection with the Sprint Merger and certain customer base adjustments.
d In connection with obtaining regulatory approval for the Sprint Merger, on July 1, 2020, substantially all prepaid customers acquired were subsequently
acquired by DISH. Upon closing of the transaction with DISH, we entered into a Mobile Virtual Network Operator (MVNO) agreement to provide network
services to customers of their prepaid business for a period of up to seven years. As a result, we included a base adjustment to reduce prepaid customers
by 9.4 million in the third quarter of 2020. The prepaid customers included in our total customers as of June 30, 2020 include the customers subsequently
acquired by DISH and are expected to be different than the customers included under the MVNO agreement, and classified as wholesale customers, due to
differences in customer reporting policies.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 65

Branded customers
At December 31, 2020, the United States operating segment (T‑Mobile US) had 102.1 million customers, compared to
67.9 million customers at December 31, 2019. Net customer additions were 5.8 million in 2020, compared to 4.9 million net
customer additions in 2019, due to the factors described below.

Postpaid net customer additions were 5.5 million in 2020 – the most in company history – compared to 4.5 million postpaid
net customer additions in 2019. The increase resulted from higher postpaid other net customer additions primarily due to higher
gross additions from connected devices primarily due to educational institution additions and lower churn, partially offset
by lower switching activity in the industry from reduced store traffic due to retail store closures arising from the coronavirus
pandemic. This increase was partially offset by lower postpaid phone net customer additions primarily due to higher churn from
customers acquired in the Sprint Merger and lower switching activity in the industry from reduced store traffic due to retail
store closures arising from the coronavirus pandemic.

Prepaid net customer additions were 331 thousand in 2020, compared to 339 thousand prepaid net customer additions in
2019. The decrease was primarily due to lower prepaid gross customer additions, partially offset by lower churn due to lower
switching activity in the industry from reduced store traffic due to retail store closures arising from the coronavirus pandemic.

Development of operations

millions of €
Change
2020 2019 Change % 2018
Total revenue 61,208 40,420 20,788 51.4 36,522
Profit (loss) from operations (EBIT) 9,187 5,488 3,699 67.4 4,634
EBIT margin % 15.0 13.6 12.7
Depreciation, amortization and impairment losses (15,665) (7,777) (7,888) n.a. (5,294)
EBITDA 24,852 13,265 11,587 87.4 9,928
Special factors affecting EBITDA (270) (544) 274 50.4 (160)
EBITDA (adjusted for special factors) 25,122 13,809 11,313 81.9 10,088
EBITDA ALa 20,628 10,590 10,038 94.8 9,924
Special factors affecting EBITDA ALa (370) (544) 174 32.0 (160)
EBITDA AL (adjusted for special factors)a 20,997 11,134 9,863 88.6 10,084
EBITDA AL margin (adjusted for special factors)a % 34.3 27.5 27.6
Cash capex (10,394) (6,369) (4,025) (63.2) (4,661)

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.

Total revenue
Total revenue for the United States operating segment of EUR 61.2 billion in 2020, increased by 51.4 %, compared to
EUR 40.4 billion in 2019. In U.S. dollars, T‑Mobile US’ total revenues increased by 55.0 % year-over year primarily due to
increased service revenues as well as increased equipment revenues. The components of these changes are described below.

Service revenues primarily due to higher average postpaid customers driven by customers acquired in the Sprint Merger, the
success of new customer segments and rate plans as well as continued growth in existing and new markets, growth in other
connected devices (tablets and wearable products), and growth in educational institution customers. The increase in service
revenues was also driven by higher postpaid phone ARPU as a result of customers acquired in the Merger and higher roaming
and other service revenues primarily from the inclusion of wireline operations acquired in the Sprint Merger.

Equipment revenues increased in 2020 primarily due to an increase in device sales revenue, excluding purchased leased
devices. In addition, equipment revenues increased due to the Sprint Merger including increases in lease revenues due to a
higher number of customer devices under lease, an increase in revenues primarily related to the liquidation of returned devices,
and an increase in sales of leased devices, primarily due to an increase in purchased leased devices.

Other revenues were essentially flat in 2020.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 66

Adjusted EBITDA AL, EBITDA AL

In euros, adjusted EBITDA AL increased by 88.6 % to EUR 21.0 billion in 2020, compared to EUR 11.1 billion in 2019. The
adjusted EBITDA AL margin increased to 34.3 % in 2020, compared to 27.5 % in 2019. In U.S. dollars, adjusted EBITDA AL
increased by 92.8 % during the same period. Adjusted EBITDA AL increased primarily due to higher service revenues and
equipment revenues as discussed above. These increases were partially offset by increases in expenses primarily due to the
Sprint Merger including those associated with backhaul agreements, other tower expenses, employee-related and benefit-
related costs primarily due to increased headcount, external labor and professional services, lease costs, and advertising.
Additional increases in expenses primarily due to the Sprint Merger include those associated with leased device cost of
equipment sales, primarily due to an increase in purchased leased devices, costs related to the liquidation of returned devices,
repair and maintenance costs, regulatory and roaming costs, and legal related expenses for risk provisioning and commitments.
In addition to these costs primarily due to the Sprint Merger, were increases in expenses primarily due to the continued build-
out of our nationwide 5G network, costs associated with our restructuring activities, device cost of equipment sales, excluding
purchased leased devices, bad debt primarily due to the estimated macro-economic impacts of the coronavirus pandemic,
commission expense primarily due to higher gross customer additions, and inventory repair expense as a result of an increase in
the high-end device mix to fulfill insurance claims. The impact from commission costs capitalization and amortization, including
a net benefit from costs capitalized as result of the Sprint Merger, reduced adjusted EBITDA AL by USD 45 million in 2020
compared to 2019.

EBITDA AL in 2020, included special factors of EUR -0.4 billion compared to special factors of EUR -0.5 billion in 2019. The
change in special factors was primarily due to an increase of EUR 1.2 billion in Merger-related costs including transaction
costs, including legal and professional services related to the completion of the Merger; EUR 1.0 billion of restructuring costs,
including severance, store rationalization and network decommissioning; and integration costs to achieve synergies in network,
retail, IT, and back office operations. Also, EUR 0.4 billion in third-party commissions and cleaning-related expenses associated
with the coronavirus pandemic and EUR 0.2 billion postpaid billing system disposal. These increases in special factor expenses
were offset by the EUR 1.6 billion spectrum impairment reversal and the EUR 0.3 billion transaction fee received from SoftBank.
Overall, EBITDA AL increased by 94.8 % to EUR 20.6 billion in 2020, compared to EUR 10.6 billion in 2019, due to the factors
described above, including special factors.

EBIT
EBIT increased by 67.4 % to EUR 9.2 billion in 2020, compared to EUR 5.5 billion in 2019. In U.S. dollars, EBIT increased by 72.6 %
during the same period primarily due to higher EBITDA AL. In U.S. dollars, depreciation and amortization increased by 106.5 %
primarily due to higher depreciation expense from assets acquired in the Sprint Merger, excluding leased devices, and network
expansion from the continued build-out of our nationwide 5G network. In addition depreciation and amortization increased
due to higher depreciation expense on leased devices resulting from a higher total number of customer devices under lease,
primarily from customers acquired in the Sprint Merger, and higher amortization from intangible assets acquired in the Sprint
Merger.

Cash capex
Cash capex increased by 63.2 % to EUR 10.4 billion in 2020, compared to EUR 6.4 billion in 2019. In U.S. dollars, cash capex
increased by 67.3 % primarily driven by network integration related to the Sprint Merger, the continued build-out of our
nationwide 5G network and an increase in spectrum purchases.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 67

Europe
Customer development

thousands
Change
Dec. 31, 2020 Dec. 31, 2019 Change % Dec. 31, 2018
Europe, total Mobile customers 45,619 46,165 (546) (1.2) 50,542
Contract customersa 26,918 26,245 673 2.6 26,665
Prepaid customersa 18,701 19,920 (1,219) (6.1) 23,877
Fixed-network linesb 9,084 9,105 (21) (0.2) 9,039
Of which: IP-basedb 8,439 8,311 128 1.5 7,391
Broadband customers 6,953 6,672 281 4.2 6,405
Television (IPTV, satellite, cable) 5,057 4,945 112 2.3 4,835
Unbundled local loop lines (ULLs)/
wholesale PSTN 2,246 2,294 (48) (2.1) 2,275
Wholesale broadband linesc 684 533 151 28.3 411
Greece Mobile customers 6,914 7,365 (451) (6.1) 7,893
Fixed-network lines 2,589 2,638 (49) (1.9) 2,566
Broadband customers 2,185 2,033 152 7.5 1,893
Romania Mobile customers 4,683 4,916 (233) (4.7) 5,360
Fixed-network lines 1,444 1,560 (116) (7.4) 1,741
Broadband customers 912 1,014 (102) (10.1) 1,101
Hungary Mobile customers 5,427 5,369 58 1.1 5,330
Fixed-network lines 1,759 1,703 56 3.3 1,663
Broadband customers 1,323 1,231 92 7.5 1,148
Poland Mobile customers 11,198 10,954 244 2.2 10,787
Fixed-network lines 31 18 13 72.2 18
Broadband customers 39 18 21 n.a. 18
Czech Republic Mobile customers 6,178 6,265 (87) (1.4) 6,188
Fixed-network linesb 606 533 73 13.7 394
Broadband customers 368 320 48 15.0 251
Croatia Mobile customers 2,253 2,274 (21) (0.9) 2,273
Fixed-network lines 885 908 (23) (2.5) 931
Broadband customers 625 621 4 0.6 618
Slovakia Mobile customers 2,441 2,428 13 0.5 2,369
Fixed-network lines 865 860 5 0.6 853
Broadband customers 607 576 31 5.4 543
Austria Mobile customers 5,074 5,019 55 1.1 7,194
Fixed-network lines 569 549 20 3.6 538
Broadband customers 635 612 23 3.8 594
Otherd Mobile customers 1,451 1,576 (125) (7.9) 3,149
Fixed-network lines 335 335 0 0.0 333
Broadband customers 259 249 10 4.0 238

a M2M cards (machine-to-machine) were reclassified Group-wide as of January 1, 2020 and assigned exclusively to the prepaid customer segment. The
portion of M2M cards which had previously been recognized in the contract customer segment was reclassified accordingly. The comparatives for 2019
have been adjusted retrospectively.
b The prior-year comparatives for IP-based fixed-network lines in the Czech Republic were adjusted as part of the standardization of the underlying customer
definition.
c The prior-year comparatives for wholesale broadband lines in Croatia and Greece were adjusted as part of the standardization of the underlying customer
definition.
d “Other”: national companies of North Macedonia, Montenegro, and the lines of the GTS Central Europe group in Romania. We sold the national company in
Albania as of May 7, 2019.

Total
After customer development was hampered by the corona-induced shop closures during the first lockdown, our crisis
management paid off over the remainder of the year. The focus on expanding digital sales channels, such as our service app
and service center services, almost brought customer development back to normal. It did not slump again, not even when
lockdown measures were reimposed at the end of 2020 during the second coronavirus wave. Our MagentaOne convergent
product portfolio, in particular, generated double-digit growth of 19.5 % in FMC customers thanks to ongoing demand. We are
continuously building out our fixed-network infrastructure with state-of-the-art fiber-optic-based lines (FTTH, FTTB, and FTTC),
with Greece, Hungary, and Slovakia in particular seeing the greatest rollout progress in the reporting year. Since the start of the
year, the number of broadband customers has increased by 4.2 %.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 68

In mobile business, we recorded growth in high-value contract customers, which only partially offset the decline in the prepaid
customer base. In 5G, we reached the first milestone a year ago with the market launch in Austria. Following Hungary and
Poland, our national companies in the Czech Republic, Slovakia, Croatia, and Greece also launched 5G commercially in the
fourth quarter of 2020.

Mobile communications
In the Europe operating segment, we had 45.6 million mobile customers as of December 31, 2020, a slight decline of 1.2 %
compared with the end of 2019. The number of high-value contract customers increased by 2.6 %. The contract customer bases
grew or remained stable in almost all of our national companies, with particularly strong growth recorded in Romania, Austria,
Poland, and Hungary. Overall, contract customers account for 59 % of the total customer base. Our innovative services and
rate plans are now joined in all countries by a new product portfolio, which we revamped in line with the “more for more”
principle. Customers in these countries can now select high-value add-on services – e.g., more data – for a small additional
monthly fee. The new portfolio also satisfies the growing demand for data volume driven by video streaming and gaming
services. In addition, thanks to our integrated network strategy our customers benefited from greater coverage with fast mobile
broadband. As of December 31, 2020, we covered 97.6 % of the population in the countries of our operating segment with LTE,
reaching around 108 million people in total.

By contrast, the prepaid customer base declined slightly, in line with expectations, in particular in Romania and Greece. This
was due in part to the negative impact of the coronavirus pandemic. But also, our market approach is focused on contract
rate plans and we offer our prepaid customers attractive high-value contract rate plans. Already, more than one third of new
contract customer adds are former prepaid customers who have taken advantage of these offerings. Furthermore, inactive SIM
cards are deactivated from the customer base at regular intervals.

Fixed network
Broadband business continued to grow despite the coronavirus pandemic, with the customer base increasing by 4.2 %
compared with the end of the prior year to a total of 7.0 million. The customer bases of almost all of our national companies,
especially in Greece, Hungary, the Czech Republic, and Slovakia saw substantial growth. Romania was the exception. By
continuing to invest in innovative fiber-optic-based technologies, we are systematically building out our fixed-network
infrastructure. Thus, we increased household coverage with optical fiber at our four largest national companies to 4.1 million
households as of December 31, 2020. The number of IP-based lines increased to account for 92.5 % of all fixed-network lines
by the end of December 2020. The total number of fixed-network lines in our Europe operating segment was on a par with the
prior-year level at 9.1 million.

The TV and entertainment business had a total of 5.1 million customers as of December 31, 2020, up 2.3 % compared with the
prior year. With both telecommunications providers and OTT players offering TV services, the TV market is already saturated in
many countries of our segment.

FMC – fixed-mobile convergence

Our portfolio of convergent products, MagentaOne, was highly popular with consumers across all of our national companies.
At the end of 2020, we had 5.7 million FMC customers; this corresponds to growth of 19.5 % compared with the prior year. Our
national companies in Greece, Hungary, and Austria in particular contributed to this double-digit growth. We have also seen
substantially accelerated growth in the marketing of our MagentaOne Business product to business customers.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 69

Development of operations

millions of €
Change
2020 2019 Change % 2018
Total revenue 11,335 11,587 (252) (2.2) 11,312
Greece 2,940 2,943 (3) (0.1) 2,888
Romania 951 980 (29) (3.0) 933
Hungary 1,734 1,872 (138) (7.4) 1,889
Poland 1,453 1,486 (33) (2.2) 1,526
Czech Republic 1,072 1,088 (16) (1.5) 1,047
Croatia 917 960 (43) (4.5) 966
Slovakia 773 785 (12) (1.5) 761
Austria 1,302 1,276 26 2.0 1,055
Othera 283 298 (15) (5.0) 343
Profit (loss) from operations (EBIT) 1,278 1,109 169 15.2 650
EBIT margin % 11.3 9.6 5.7
Depreciation, amortization and impairment losses (2,875) (3,114) 239 7.7 (2,998)
EBITDA 4,153 4,223 (70) (1.7) 3,648
Special factors affecting EBITDA (188) (141) (47) (33.3) (122)
EBITDA (adjusted for special factors) 4,341 4,364 (23) (0.5) 3,771
EBITDA ALb 3,722 3,769 (47) (1.2) 3,581
Special factors affecting EBITDA ALb (188) (141) (47) (33.3) (122)
EBITDA AL (adjusted for special factors)b 3,910 3,910 0 0.0 3,703
Greece 1,199 1,212 (13) (1.1) 1,173
Romania 153 141 12 8.5 135
Hungary 520 551 (31) (5.6) 540
Poland 378 383 (5) (1.3) 382
Czech Republic 430 448 (18) (4.0) 432
Croatia 337 360 (23) (6.4) 374
Slovakia 335 327 8 2.4 320
Austria 496 467 29 6.2 336
Othera 63 20 43 n.a. 11
EBITDA AL margin (adjusted for special factors)b % 34.5 33.7 32.7
Cash capexc (2,216) (1,816) (400) (22.0) n.a.

The contributions of the national companies correspond to their respective unconsolidated financial statements and do not take consolidation effects at
operating segment level into account.
a “Other”: national companies of North Macedonia, Montenegro, and the GTS Central Europe group in Romania, as well as the Europe Headquarters. We sold
the national company in Albania as of May 7, 2019.
b Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined in 2019 following the introduction of the IFRS 16
accounting standard.
c Retrospective changes arising in connection with the realignment of the B2B telecommunications business have not been applied to cash capex for the
2018 financial year.

Total revenue
Our Europe operating segment generated total revenue of EUR 11.3 billion as of December 31, 2020, a year-on-year decrease of
2.2 %. In organic terms, i.e., assuming constant exchange rates and adjusted for the sale of Telekom Albania, revenue remained
on a par with the prior-year level, despite the deterioration in economic conditions due to the coronavirus pandemic. Overall we
therefore fell slightly short of our expectations on account of the coronavirus pandemic.

Fixed-network business proved to be solid over the year as a whole. We thus recorded an increase in revenue from broadband
business in organic terms, in part as a result of the ongoing build-out of our networks. In many places, we have been rated the
telecommunications company with the best network (e.g., Connect readers’ choice 2020, Ookla tests in Greece and Croatia),
which is paying off, especially in these times of lockdowns, with the associated demand for broadband connections. Thanks to
the wide range of services we offer, the TV business also recorded slight growth rates. The systems solutions business grew
year-on-year, especially in Greece and Poland; the wholesale business also recorded positive growth rates, driven in part by
higher revenue in Romania. We recorded a slight organic decline in mobile revenues compared with the prior year, primarily
driven by declines in roaming and visitor revenues as a result of travel restrictions, some of which are still in place or have
been reimposed, and by a conscious reduction in low-margin terminal equipment business. These negative effects have been
partially offset by increases in higher-margin service revenues (excluding roaming and visitor revenues).

For more information on our award-winning network quality, please refer to the section “Highlights in the 2020 financial year.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 70

Looking at the development by country, our national companies in Austria, Poland, and the Czech Republic recorded the best
organic development of revenue in the 2020 financial year. This offset the decline in revenue in Romania, Croatia, and Slovakia
in particular. In Romania, the downward trend was mainly due to declining revenues from mobile communications and systems
solutions business, which were partially offset by higher wholesale revenues.

Revenue from Consumers declined by 1.5 % compared with the prior-year period. Lower revenue from mobile terminal
equipment business and from roaming was only partially offset by gains in higher-margin service revenues (excluding roaming).
In the fixed network, revenue from broadband/TV business increased thanks to our innovative TV and entertainment offerings
as well as the continuous rollout of fiber-optic technology. This offset the decline in revenue from voice telephony. In addition,
the higher number of FMC customers had a positive impact on revenue.

The coronavirus pandemic posed huge challenges for the European companies in 2020. This is clearly reflected in our Business
Customers operations. Revenue decreased 2.6 % year-on-year, with declines in mobile communications, fixed-network, and
ICT business. As a result of coronavirus-related travel restrictions, our European subsidiaries were unable to realize the majority
of the planned roaming revenues (especially in tourism countries such as Croatia). As of the end of 2020, these losses were not
offset by revenue from the Europe-wide increase in demand for mobile data and broadband lines. In the first and third quarters
of 2020, our ICT business recorded above-average new business with our cloud solutions (e.g., in Greece). However, by the
end of 2020, the second lockdown had caused further postponements of customer orders from our corporate customers and
from the public sector, which resulted in a slight decline in revenues from ICT business (in particular in our most important ICT
market, Hungary).

Adjusted EBITDA AL, EBITDA AL

Our Europe operating segment generated adjusted EBITDA AL of EUR 3.9 billion in the 2020 financial year, which was on a par
with the prior-year level, despite the impact of the coronavirus pandemic. In organic terms, i.e., assuming constant exchange
rates and adjusted for the sale of Telekom Albania, adjusted EBITDA AL increased by 2.1 %, thus continuing to make a positive
contribution to earnings. Savings in indirect costs (primarily due to lower personnel, marketing, and travel costs) were the main
factor contributing to this development.

Looking at the development by country, the increase in adjusted organic EBITDA AL was largely attributable to the positive
trends at our national companies in Austria, Romania, Hungary, Slovakia, and Poland. Contrasting developments were reported
primarily at the national company in Croatia, where decreases in mobile revenues, especially from roaming and visitors,
terminal equipment business, as well as decreases in voice telephony in fixed-network business, were only partially offset by
positive revenue effects from systems solutions as well as broadband and TV business.

EBITDA AL decreased by 1.8 % year-on-year to EUR 3.7 billion. Expenses arising from special factors were up EUR 47 million
year-on-year, mainly on account of the higher expenses for staff restructuring measures. The agreed sale of the Romanian fixed-
network business prompted a reversal of impairment losses in the course of the year that had been recognized on property,
plant and equipment in the past. This had a positive effect on EBITDA AL in the amount of EUR 50 million. In organic terms,
EBITDA AL recorded modest growth of 0.7 %.

Development of operations in selected countries

Greece. In Greece, revenue remained on a par with the prior-year level at EUR 2.9 billion. The fixed-network business recorded a
further increase: the broadband business posted particularly strong growth as a result of the intensive rollout of fiber-optic lines
and vectoring. The systems solutions business also recorded significant growth, firmly driven by higher contract volumes in the
public sector. The wholesale business recorded modest growth. In addition to good operational development, mobile business
was heavily impacted by the coronavirus-related decline in roaming and visitor revenues as a result of reduced travel activities.
These declines were only partially offset by the increase in the number of mobile devices sold. Business with the convergent
product portfolio enjoyed a positive trend, generating revenue growth, thanks in particular to higher customer numbers.

In the 2020 financial year, adjusted EBITDA AL in Greece stood at EUR 1.2 billion, which was a slight decrease against the prior
year of 1.1 %: the slightly lower net margin, driven largely by higher direct costs, was only partially offset by savings in indirect
costs, in particular personnel costs.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 71

Hungary. Revenue in Hungary totaled EUR 1.7 billion in the 2020 financial year, a decrease of 7.4 % against the prior year. This
decline was due to negative exchange rate effects. In organic terms, revenue was on a par with the prior year. Mobile business
grew, driven by higher service revenues (excluding from roaming and visitors), due in part to much higher data usage. This
offset the decrease in roaming and visitor revenues resulting from the negative impact of the coronavirus pandemic. Higher
revenues from the sale of mobile devices also contributed to this increase. In fixed-network business, systems solutions saw a
decline due to a lower order volume in the public sector. By contrast, both broadband and TV revenues increased substantially,
driven in particular by a larger customer base. Our MagentaOne convergence products also continued to perform well, with
substantial customer additions and a corresponding increase in revenue.

Adjusted EBITDA AL stood at EUR 520 million, down 5.6 % year-on-year. In organic terms, adjusted EBITDA AL increased by
2.0 % compared with the prior year. This growth is attributable in particular to savings in indirect costs, including lower
personnel costs and marketing expenses. Lower direct costs also had a positive impact on organic adjusted EBITDA AL.

Poland. Our revenue in Poland decreased by 2.2 % in the 2020 financial year to EUR 1.5 billion. This decline was due to negative
exchange rate effects. In organic terms, revenue increased by 1.1 %. This growth is based on higher fixed-network revenue,
especially in systems solutions business. The fixed-network core business also generated substantial revenue growth thanks to
a larger customer base. Overall, this growth offset the negative effects from the decline in wholesale business. Higher service
revenues in the mobile business (excluding roaming and visitors) were almost sufficient to offset the declines, particularly in
terminal equipment sales and roaming and visitor revenues. The increase in high-value service revenues was attributable to
both volume-driven increases in revenues from voice telephony and a higher-value customer base.

Adjusted EBITDA AL stood at EUR 378 million, down 1.3 % year-on-year. In organic terms, adjusted EBITDA AL increased by
2.0 %, mainly on the back of a higher net margin.

Czech Republic. In the 2020 financial year, revenue in the Czech Republic stood at EUR 1.1 billion, down 1.5 % on the prior-year
level. This decline was due to negative exchange rate effects. In organic terms, revenue increased by 1.6 %. The fixed-network
business was a strong driver of growth, recording substantial year-on-year increases in broadband and TV business in particular.
The continuous investments in new fiber-optic networks paid off with a higher number of customers. Mobile revenues were
down slightly on the prior-year level. In operational terms, service revenues (excluding roaming and visitors) increased year-on-
year. The customer response to our “more for more” offers and the associated increase in revenue per customer contributed
to this positive trend. However, the negative effects of the coronavirus pandemic on roaming and visitor revenues neutralized
these gains.

Adjusted EBITDA AL decreased by 4.0 % year-on-year to EUR 430 million. In organic terms, earnings declined slightly by 1.2 %
against the previous year: the positive organic revenue trend was offset by overall increases in direct and indirect costs.

Austria. Revenue in Austria totaled EUR 1.3 billion in the reporting year. This increase of 2.0 % was mainly attributable to
higher mobile terminal equipment sales. Business with higher-margin service revenues also contributed positively to revenue.
These two effects more than offset the declines in roaming and visitor revenues resulting from the coronavirus pandemic. The
Magenta product portfolio has been very well received by our customers. This can be seen in particular in the development of
the fixed-network business: broadband in particular generated positive growth rates, as a result of a larger customer base and
other factors.

Adjusted EBITDA AL increased substantially by 6.2 % year-on-year to EUR 496 million. In addition to the positive revenue
effects, stability in the development of costs also contributed to this growth.

EBIT
Our Europe operating segment recorded an increase in EBIT of EUR 169 million in the reporting year. In connection with the
agreed sale of the Romanian fixed-network business, an ad hoc impairment loss of EUR 160 million was recognized in 2020
on non-current assets of the Romanian mobile business, which is to remain in the Group. This impairment was the result of
the discontinuance of the previously existing MVNO agreements. Impairment losses totaling EUR 0.3 billion were recognized in
Romania in the prior year. Depreciation and amortization were down slightly on the prior year.

Cash capex
In the reporting year, the Europe operating segment reported cash capex of EUR 2.2 billion, up 22.0 % year-on-year. This
increase is largely due to a rise in cash outflows for the acquisition of spectrum licenses, primarily in Hungary and Greece.
Even adjusted for spectrum acquisitions, our level of investment was up year-on-year. We continue to invest in the provision of
broadband and fiber-optic technology and in 5G as part of our integrated network strategy.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 72

Systems Solutions
Order entry

millions of €
Change
2020 2019 Change % 2018a
Order entry 4,588 4,740 (152) (3.2) n.a.

a Retrospective changes arising in connection with the realignment of the B2B telecommunications business have not been applied to order entry for the
2018 financial year.

Development of business
The 2020 financial year was dominated by the ongoing strategic development of our systems solutions business with a focus
on growth and future viability, as well as our extensive transformation program, and the effects of the coronavirus pandemic.

Under the transformation program we realigned our organization and workflows, adjusted capacities, and developed a new
strategy for our portfolio. Stand-alone portfolio units assume responsibility not only for our growth areas but also for our
traditional IT business. Consistent with our efforts to implement the Group’s strategy pillar “Lead in business productivity,” on
July 1, 2020, we combined our B2B telecommunications operations in our Germany operating segment.

Furthermore, the effects of the coronavirus pandemic on the global economy continue to impact on the financial position
of our business customers. This led to delays in current projects and the postponement of deal closures, especially with our
automotive customers in the digital solutions area. The resulting mid-year lull in order entry was almost completely offset by
the year-end with a number of major deals signed in other areas. As a result, order entry in our Systems Solutions operating
segment decreased year-on-year by 3.2 % in 2020, which was in line with our expectations.

Development of operations

millions of €
Change
2020 2019 Change % 2018
Total revenue 4,178 4,424 (246) (5.6) 4,474
Of which: external revenue 3,242 3,423 (181) (5.3) 3,435
Profit (loss) from operations (EBIT) (650) (425) (225) (52.9) (453)
Special factors affecting EBIT (636) (338) (298) (88.2) (296)
EBIT (adjusted for special factors) (14) (87) 73 83.9 (157)
EBIT margin (adjusted for special factors) % (0.3) (2.0) (3.5)
Depreciation, amortization and impairment losses (790) (479) (311) (64.9) (409)
EBITDA 140 54 86 n.a. (44)
Special factors affecting EBITDA (210) (310) 100 32.3 (240)
EBITDA (adjusted for special factors) 350 364 (14) (3.8) 196
EBITDA ALa 25 (60) 85 n.a. (31)
Special factors affecting EBITDA ALa (210) (310) 100 32.3 (240)
EBITDA AL (adjusted for special factors)a 235 250 (15) (6.0) 209
EBITDA AL margin (adjusted for special factors)a % 5.6 5.7 4.7
Cash capexb (255) (356) 101 28.4 n.a.

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.
b Retrospective changes in connection with realignment of the B2B telecommunications business have not been applied to cash capex for the 2018 financial
year.

Total revenue
Total revenue in our Systems Solutions operating segment in the 2020 financial year decreased by 5.6 % year-on-year to
EUR 4.2 billion, reflecting the coronavirus-induced decline of the IT market in Western Europe. The upward revenue trend in
our growth areas public cloud and security was not sufficient to fully offset the declines in traditional IT and project business.
The development of the digital solutions business was particularly affected by the impact of the coronavirus pandemic on the
automotive industry.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 73

Adjusted EBITDA AL, EBITDA AL

In the 2020 financial year, adjusted EBITDA AL at our Systems Solutions operating segment decreased by 6.0 % year-on-year
to EUR 235 million. The decrease in earnings in traditional IT business and in project business, partly due to the effects of the
coronavirus pandemic, were largely offset by efficiency enhancement effects from our transformation program and strong
growth in our growth areas (especially public cloud and security). EBITDA AL increased by EUR 85 million compared with
the prior year to EUR 25 million, thanks to the streamlining of the portfolio in 2019. As a result, special factors were down
EUR 100 million on the prior year, at EUR -200 million.

Adjusted EBIT, EBIT

Adjusted EBIT in our Systems Solutions operating segment in the 2020 financial year improved by EUR 73 million year-on-
year, coming in at EUR -14 million, mainly as a result of declines in depreciation and amortization. The realignment of the
B2B telecommunications business in combination with the effects of the coronavirus pandemic triggered ad hoc impairment
testing, which identified a reduction in the business outlook for IT operations. This resulted in the recognition of a non-cash
impairment loss of around EUR 0.4 billion on non-current assets in the systems solutions business, which reduced EBIT to
EUR -0.7 billion.

Cash capex
Cash capex in the Systems Solutions operating segment stood at EUR 255 million in 2020, compared with EUR 356 million in
the prior year. This was due to a reduced need for investments in traditional IT business and in the area of digital solutions,
which was impacted by the effects of the coronavirus pandemic on the automotive industry. Going forwards, we will continue
to focus our investments on developing our growth business.

Group Development
Customer development

thousands
Change
Dec. 31, 2020 Dec. 31, 2019 Change % Dec. 31, 2018
T‑Mobile Netherlands Mobile customers 6,803 5,610 1,193 21.3 4,021
Fixed-network lines 682 619 63 10.2 241
Broadband customers 668 605 63 10.4 241

The number of mobile customers and fixed-network lines in the Netherlands continued to increase steadily on the back
of the positive development of operational business. The acquisition of the Dutch MVNO and SIM provider Simpel as of
December 1, 2020 increased the mobile customer base by around 1.0 million. In mobile communications, our portfolio of rate
plans with large data volumes through to unlimited data continued to win us new customers despite the deteriorated economic
situation in consequence of the coronavirus pandemic, as well as intense competition. The number of customers in the fixed-
network consumer portfolio also continued to grow.

Development of operations

millions of €
Change
2020 2019 Change % 2018
Total revenue 2,883 2,797 86 3.1 2,185
Of which: T‑Mobile Netherlands 1,946 1,910 36 1.9 1,322
Of which: GD Towers 989 945 44 4.7 862
Profit (loss) from operations (EBIT) 562 615 (53) (8.6) 560
Depreciation, amortization and impairment losses (780) (812) 32 3.9 (334)
EBITDA 1,343 1,427 (84) (5.9) 893
Special factors affecting EBITDA (43) 97 (140) n.a. (27)
EBITDA (adjusted for special factors) 1,386 1,330 56 4.2 921
Of which: T‑Mobile Netherlands 639 591 48 8.1 425
Of which: GD Towers 786 771 15 1.9 529
EBITDA ALa 1,058 1,130 (72) (6.4) 865
Special factors affecting EBITDA ALa (43) 97 (140) n.a. (27)
EBITDA AL (adjusted for special factors)a 1,101 1,033 68 6.6 892
Of which: T‑Mobile Netherlands 554 502 52 10.4 413
Of which: GD Towers 587 563 24 4.3 509
EBITDA AL margin (adjusted for special factors)a % 38.2 36.9 40.8
Cash capex (699) (452) (247) (54.6) (271)

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 74

Total revenue
Total revenue in our Group Development operating segment increased in 2020 by 3.1 % year-on-year to EUR 2.9 billion, thanks
to the operational growth of our two subsidiaries, T‑Mobile Netherlands and DFMG. In the Netherlands, customer growth in the
mobile and fixed-network business, higher terminal equipment sales, and the acquisition of Simpel effective December 1, 2020
contributed to the revenue growth. The GD Towers unit also recorded a year-on-year increase in revenue, driven by volume-
based growth at DFMG.

Adjusted EBITDA AL, EBITDA AL

Adjusted EBITDA AL increased year-on-year from EUR 1.0 billion to EUR 1.1 billion. This growth was attributable to the
aforementioned positive revenue trend at T‑Mobile Netherlands, synergies from the takeover of Tele2 Netherlands, and
efficient cost management in the company. The GD Towers business continued to post consistent growth on the back of
rising volumes. By contrast, EBITDA decreased by 6.4 % to EUR 1.1 billion. This was primarily due to negative special factors of
EUR 43 million arising in part from consulting services in connection with the business combination of T‑Mobile US and Sprint
and the integration of Tele2 Netherlands at T‑Mobile Netherlands. The prior-year figure included positive net special factors of
EUR 97 million, mainly resulting from the allocation of our share of 11 % in Ströer SE & Co. KGaA to Deutsche Telekom Trust e.V.

EBIT
EBIT decreased by 8.6 % year-on-year to EUR 562 million, mainly as a result of the special factors described under
adjusted EBITDA AL. Depreciation, amortization and impairment losses were down on the prior-year period.

Cash capex
Cash capex increased by EUR 247 million year-on-year to EUR 699 million, mainly due to the acquisition of mobile licenses by
T‑Mobile Netherlands. It also grew as a result of additional investments for the 5G build-out and those required to integrate
Tele2 Netherlands and higher capital expenditure at DFMG in connection with building out mobile infrastructure in Germany.

Group Headquarters & Group Services

Development of operations

millions of €
Change
2020 2019 Change % 2018
Total revenue 2,556 2,627 (71) (2.7) 2,735
Profit (loss) from operations (EBIT) (1,655) (1,631) (24) (1.5) (1,646)
Depreciation, amortization and impairment losses (1,304) (1,143) (161) (14.1) (812)
EBITDA (350) (488) 138 28.3 (833)
Special factors affecting EBITDA (277) (237) (40) (16.9) (318)
EBITDA (adjusted for special factors) (73) (251) 178 70.9 (515)
EBITDA ALa (707) (887) 180 20.3 (917)
Special factors affecting EBITDA ALa (277) (237) (40) (16.9) (318)
EBITDA AL (adjusted for special factors)a (429) (650) 221 34.0 (599)
Cash capexb (990) (1,010) 20 2.0 n.a.

a Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction
of the IFRS 16 accounting standard.
b Retrospective changes in connection with realignment of the B2B telecommunications business have not been applied to cash capex for the 2018 financial
year.

Total revenue
Total revenue in our Group Headquarters & Group Services segment decreased in 2020 by 2.7 % year-on-year as a result
of lower revenue from land and buildings, largely due to the ongoing optimization of space. Lower intragroup revenues at
Deutsche Telekom IT on account of a reduced revenue-relevant cost basis also had an effect.

Adjusted EBITDA AL, EBITDA AL

Adjusted EBITDA AL at Group Headquarters & Group Services increased by EUR 221 million year-on-year to EUR -429 million.
This increase was mainly due to lower operating expenses at our Group Services, higher income from real estate sales, and
the reduced headcount at Vivento as a result of the continued staff restructuring. Furthermore, lower IT-related costs at
Deutsche Telekom IT had a positive impact. By contrast, lower revenue from land and buildings had a negative impact on
adjusted EBITDA AL.

Overall, EBITDA AL was negatively impacted in the reporting year by special factors amounting to EUR 277 million, especially
for staff-related measures. This contrasts with special factors of EUR 237 million in the prior-year period, also in particular for
staff-related measures.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 75

EBIT
The moderate year-on-year decline in EBIT of EUR 24 million to EUR -1.7 billion was largely a result of two contrasting effects:
the increase in depreciation, amortization and impairment losses on the one hand, and the positive development of EBITDA AL
on the other. The increase in depreciation, amortization and impairment losses is mainly attributable to the increased volume
of output in connection with the introduction of agile processes and shorter project runtimes at Deutsche Telekom IT.
Depreciation and amortization also rose following the decision to capitalize newly commissioned domestic intragroup
development services at Deutsche Telekom IT since January 2016 instead of charging them internally. An impairment loss
was also recognized in the amount of EUR 44 million on software used by the Systems Solutions operating segment. This
was a consequence of the ad hoc impairment testing carried out in the Systems Solutions cash-generating unit. By contrast,
depreciation, amortization and impairment losses from land and buildings decreased as a result of our continued optimization
of the real estate portfolio.

Cash capex
Cash capex decreased by EUR 20 million year-on-year, primarily owing to decreased investment in real estate-related
construction and project services and lower cash capex for vehicles.

Development of business at Deutsche Telekom AG

Deutsche Telekom AG prepares its annual financial statements in accordance with the principles of German GAAP, as specified
in the German Commercial Code (Handelsgesetzbuch – HGB) and the German Stock Corporation Act (Aktiengesetz – AktG).

As the Headquarters of the Deutsche Telekom Group, we perform strategic and cross-segment management functions and
provide services for other Group companies. The profits and losses of our subsidiaries and Group financing measures have
a material effect on our financial position and results of operations. Total revenue in the United States operating segment
increased by 51.4 %. This increase was mainly attributable to higher service and terminal equipment revenues, due in particular
to postpaid customer additions in connection with the business combination with Sprint, growing success of new customer
segments as well as continued growth in existing and new markets. Total revenue in our Germany operating segment was
almost flat on the prior-year level with an increase of 0.2 %. Higher revenue in the fixed-network business compensated for
revenue declines in the mobile communications business. The coronavirus pandemic had a negative impact on roaming, visitor,
and terminal equipment revenues. It also resulted in delays or postponements to current orders in B2B telecommunications
business. Revenue in our Europe operating segment decreased by 2.2 %. In organic terms, revenue remained stable at the
prior-year level, despite the deterioration in economic conditions due to the coronavirus pandemic. The fixed-network business
showed a very solid performance. Revenue from our mobile communications business recorded a slight decline, in particular
in roaming, visitor, and terminal equipment revenues. These negative effects were partially offset by higher service revenues
(excluding roaming). Total revenue in our Systems Solutions operating segment decreased by 5.6 %, reflecting the coronavirus-
induced decline of the IT market in Western Europe. The upward revenue trend in our growth areas public cloud and security
was not sufficient to fully offset the declines in traditional IT and project business. Total revenue in our Group Development
operating segment increased by 3.1 % year-on-year, thanks to operational growth at T‑Mobile Netherlands B.V., The Hague, and
at DFMG Deutsche Funkturm GmbH, Münster.

Deutsche Telekom AG reported income after taxes for the 2020 financial year of EUR 2.5 billion. Alongside the operating
business, the development of business in the reporting year was affected by a large number of other factors, including
capital repayments based on fair values, write-downs resulting from the impairment of the indirectly held investments in
BT Group plc, London, and the write-ups on Hellenic Telecommunications Organization S.A., Athens. The latter were required
under German GAAP due to improved earnings prospects. Furthermore, in connection with the realignment of the B2B
telecommunications business, the Deutsche Telekom Global Carrier (DTGC) business area was transferred to
Telekom Deutschland GmbH, Bonn, with retroactive economic effect as of January 1, 2020, as part of a spin-off with realization
of hidden reserves.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 76

Results of operations of Deutsche Telekom AG

Statement of income of Deutsche Telekom AG under German GAAP (total cost method)
millions of €
Change
2020 2019 Change % 2018
Net revenue 2,740 3,423 (683) (20.0) 3,546
Other own capitalized costs 9 7 2 28.6 7
Total operating performance 2,749 3,430 (681) (19.9) 3,553
Other operating income 4,725 2,387 2,338 97.9 2,672
Goods and services purchased (471) (1,037) 566 54.6 (1,024)
Personnel costs (2,291) (2,326) 35 1.5 (2,537)
Depreciation, amortization and write-downs (211) (254) 43 16.9 (289)
Other operating expenses (2,834) (3,081) 247 8.0 (4,521)
Operating results 1,667 (881) 2,548 n.a. (2,146)
Net financial income (expense) 1,245 3,131 (1,886) (60.2) 6,488
Income taxes (380) (484) 104 21.5 (143)
Income after income taxes 2,532 1,766 766 43.4 4,199
Other taxes (17) (17) 0 0.0 (13)
Income after taxes 2,515 1,749 766 43.8 4,186

The positive operating results improved by approximately EUR 2.5 billion year-on-year. This increase was mainly due to an
increase in other operating income of EUR 2.3 billion, a decline in goods and services purchased of EUR 0.6 billion, and a
decrease in other operating expenses of EUR 0.2 billion compared with the prior year. A decrease of EUR 0.7 billion in revenue
had an offsetting effect.

The year-on-year decrease in revenue of EUR 0.7 billion is largely attributable to the spin-off of the DTGC business area and
mainly relates to fixed-network revenue.

The increase of EUR 2.3 billion in other operating income was mainly attributable to income of EUR 1.5 billion from a capital
repayment based on fair values by T‑Mobile Global Zwischenholding GmbH, Bonn, income of EUR 0.8 billion from the
realization of hidden reserves in connection with the spin-off of the DTGC business area, and an increase of EUR 0.3 billion in
income from derivatives primarily in connection with U.S. dollar contracts. A decrease of EUR 0.1 billion in income from cost
transfers and reimbursements as well as a decline of EUR 0.1 billion in foreign currency translation gains, in particular, had a
negative effect in the reporting year.

The write-ups on Hellenic Telecommunications Organization S.A. (OTE), Athens, in the amount of EUR 0.9 billion and on
Deutsche Telekom Asset Management GmbH & Co. KG, Monheim, in the amount of EUR 0.1 billion, which were required under
German GAAP due to improved earnings prospects, also had a positive effect in the reporting year. In the prior year, other
operating income had included write-ups on Hellenic Telecommunications Organization S.A. (OTE), Athens, in the amount of
EUR 0.9 billion, and on Ströer SE & Co. KGaA, Cologne, in the amount of EUR 0.1 billion.

The year-on-year decrease of EUR 0.6 billion in goods and services purchased is due primarily to the transfer of International
Carrier Services in connection with the spin-off of the DTGC business area and relates to network access charges.

The decrease of EUR 0.2 billion in other operating expenses compared with the previous year was mainly attributable to a
decrease of EUR 0.2 billion in expenses from derivatives in connection with U.S. dollar contracts.

Net financial income decreased by EUR 1.9 billion to EUR 1.2 billion. This was primarily due to a write-down in the amount
of EUR 1.4 billion on CTA Holding GmbH, Bonn, as a result of the impairment of this company’s indirectly held investment
in the British BT Group plc, London, United Kingdom. Furthermore, net financial income was impacted by an increase of
EUR 0.3 billion in net interest expense and a decline of EUR 0.2 billion in income related to subsidiaries, associated, and related
companies.

Income related to subsidiaries, associated, and related companies, which declined by EUR 0.2 billion compared with the
prior year, was positively affected in the reporting year in particular by profits transferred by Telekom Deutschland GmbH,
Bonn, of EUR 3.6 billion (2019: EUR 3.7 billion), T‑Mobile Global Zwischenholding GmbH, Bonn, of EUR 0.6 billion (2019: transfer
of losses of EUR 17 thousand), DFMG Holding GmbH, Bonn, of EUR 0.2 billion (2019: EUR 0.3 billion), and
GMG Generalmietgesellschaft mbH, Cologne, of EUR 0.2 billion (2019: EUR 0.2 billion). The transfer of the losses from
Deutsche Telekom IT GmbH, Bonn, of EUR 0.8 billion (2019: EUR 0.7 billion), and from T‑Systems International GmbH,
Frankfurt/Main, of EUR 0.7 billion (2019: EUR 0.2 billion), had an offsetting effect.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 77

Income related to subsidiaries, associated and related companies was impacted in particular by the operating business of the
consolidated subsidiaries. The figure for the reporting year also included effects from a capital repayment based on fair values
by T‑Mobile Global Holding GmbH, Bonn, to T‑Mobile Global Zwischenholding GmbH, Bonn, as well as from the write-downs by
Telekom Deutschland GmbH, Bonn, and T‑Systems International GmbH, Frankfurt/Main, on their shares in CTA Holding GmbH,
Bonn.

The increase in the net interest expense of EUR 0.3 billion compared with the prior year was primarily the result of lower income
from plan assets for pension obligations in the amount of EUR 0.2 billion and lower income from long-term loans to Group
companies in the amount of EUR 0.1 billion.

Income after income taxes was particularly impacted by the aforementioned effects and increased by EUR 0.8 billion year-on-
year in 2020.

Other tax expense of EUR 17 million combined with the aforementioned factors resulted in income after taxes of
EUR 2,515 million in the 2020 financial year. Taking into account EUR 2,614 million in unappropriated net income carried
forward, unappropriated net income totaled EUR 5,129 million.

Financial position of Deutsche Telekom AG

Balance sheet of Deutsche Telekom AG under German GAAP

millions of €
Dec. 31, 2020
Dec. 31, 2020 % Dec. 31, 2019 Change Dec. 31, 2018
Assets
Intangible assets 216 0.2 217 (1) 186
Property, plant and equipment 2,388 2.0 2,313 75 2,376
Financial assets 101,411 86.8 111,020 (9,609) 94,431
Noncurrent assets 104,015 89.0 113,550 (9,535) 96,993
Inventories 0 0.0 0 0 1
Receivables 8,180 7.0 6,695 1,485 22,325
Other assets 964 0.8 1,313 (349) 1,630
Cash and cash equivalents 3,201 2.7 2,076 1,125 680
Current assets 12,345 10.6 10,084 2,261 24,636
Prepaid expenses and deferred charges 437 0.4 463 (26) 522
Difference between plan assets and corresponding liabilities 9 0.0 13 (4) 7
Total assets 116,806 100.0 124,110 (7,304) 122,158
Shareholders’ equity and liabilities
Capital stock and reserves 53,028 45.4 53,021 7 53,015
Unappropriated net income 5,129 4.4 5,460 (331) 7,031
Shareholders’ equity 58,157 49.8 58,481 (324) 60,046
Accruals for pensions and similar obligations 3,960 3.4 3,780 180 3,747
Tax accruals 412 0.4 411 1 238
Other accruals 2,591 2.2 2,602 (11) 2,377
Accruals 6,963 6.0 6,793 170 6,362
Debt 10,952 9.4 10,928 24 6,705
Remaining liabilities 40,594 34.8 47,776 (7,182) 48,904
Liabilities 51,546 44.1 58,704 (7,158) 55,609
Deferred income 140 0.1 132 8 141
Total shareholders’ equity and liabilities 116,806 100.0 124,110 (7,304) 122,158

In addition to shareholders’ equity, our financial position is mainly determined by financial assets as well as by receivables
from and payables to Group companies. Loans recognized under financial assets as well as receivables from and payables to
affiliated companies primarily resulted from financing relationships between Deutsche Telekom AG and its subsidiaries.

The balance sheet total decreased by EUR 7.3 billion year-on-year to EUR 116.8 billion.

The development of total assets was attributable in particular to the decrease of EUR 9.6 billion in financial assets and the
decrease of EUR 0.3 billion in other assets. By contrast, receivables increased by EUR 1.5 billion and cash and cash equivalents
by EUR 1.1 billion.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 78

The decline in financial assets of EUR 9.6 billion year-on-year resulted in particular from repayments of loans to affiliated
companies, mainly by T‑Mobile USA, Inc., Bellevue, in the amount of EUR 8.5 billion, T‑Mobile Polska S.A., Warsaw, in the
amount of EUR 0.7 billion, and Telekom Deutschland GmbH, Bonn, in the amount of EUR 0.4 billion. Shares in affiliated
companies, which rose by a total of EUR 0.2 billion, had an offsetting effect. This was due in particular to the increase in
the carrying amount of the investment in Telekom Deutschland GmbH, Bonn, in connection with the spin-off of the DTGC
business area at the fair value of the new shareholding of EUR 1.1 billion. In addition, write-ups led to an increase in the shares in
Hellenic Telecommunications Organization S.A. (OTE), Athens, in the amount of EUR 0.9 billion and in Deutsche Telekom Asset
Management GmbH & Co. KG, Monheim, in the amount of EUR 0.1 billion. The shares in affiliated companies were reduced by
the write-down of EUR 1.4 billion on CTA Holding GmbH, Bonn, and the capital repayment of EUR 0.6 billion by T‑Mobile Global
Zwischenholding GmbH, Bonn.

The year-on-year increase in receivables of EUR 1.5 billion resulted in particular from a EUR 1.0 billion increase in financial
receivables from affiliated companies, mainly from loans granted to Deutsche Telekom Europe B.V., Maastricht, in the amount
of EUR 1.0 billion, and a EUR 0.7 billion increase in receivables from cash management.

The decrease in other assets of EUR 0.3 billion is attributable in particular to a EUR 0.2 billion decline in income tax receivables
and a EUR 0.1 billion decline in receivables from cost reimbursements.

The development of total shareholders’ equity and liabilities was mainly influenced by the decrease of EUR 7.2 billion in
remaining liabilities and of EUR 0.3 billion in shareholders’ equity. By contrast, accruals increased by EUR 0.2 billion.

The EUR 0.3 billion decline in shareholders’ equity was primarily attributable to the dividend payment of EUR 2.8 billion for the
previous year. Income after taxes for the 2020 financial year of EUR 2.5 billion had an offsetting effect on shareholders’ equity.

The increase in accruals is largely attributable to a EUR 0.2 billion increase in pension obligations, in particular in connection
with changes in discount rates.

Debt remained unchanged year-on-year at EUR 11.0 billion. In the reporting year, new bonds were issued in the amount of
EUR 1.6 billion and repayments of treasury bills were made in the amount of EUR 0.4 billion. Liabilities to banks decreased
by EUR 1.2 billion, mainly due to repayments of principal in the amount of EUR 1.6 billion. These were offset by loans of
EUR 0.4 billion.

Remaining liabilities decreased by a total of EUR 7.2 billion year-on-year, due mainly to the decrease in financial liabilities
to affiliated companies, particularly as a result of loan repayments of EUR 5.4 billion to Deutsche Telekom International
Finance B.V., Maastricht. The borrowing of EUR 1.2 billion from T‑Mobile Austria Holding GmbH, Vienna, had an offsetting
effect. In addition, liabilities from cash management decreased due in particular to the capital repayment by T‑Mobile Global
Zwischenholding GmbH, Bonn, in the amount of EUR 2.1 billion, as well as to other liabilities by a total of EUR 0.7 billion.

Statement of cash flows of Deutsche Telekom AG under German GAAP

millions of €
2020 2019 Change 2018
Income after taxes 2,515 1,749 766 4,186
Net cash (used for) provided by operating activities (1,808) 17,760 (19,568) 4,409
Net cash provided by (used for) investing activities 11,587 (14,536) 26,123 1,940
Net cash (used for) provided by financing activities (8,654) (1,828) (6,826) (5,826)
Net change in cash and cash equivalents 1,125 1,396 (271) 523
Cash and cash equivalents, at the beginning of the year 2,076 680 1,396 157
Cash and cash equivalents, at the end of the year 3,201 2,076 1,125 680

Net cash used for/provided by operating activities changed year-on-year by EUR 19.6 billion, resulting in net cash used for
operating activities of EUR 1.8 billion. The change resulted mainly from the intragroup restructuring of receivables from cash
management to noncurrent loans, which had led to a high level of net cash provided by operating activities in the previous year.
In the reporting year, the decrease in liabilities from cash management, which was due in particular to a capital repayment by
T‑Mobile Global Zwischenholding GmbH, Bonn, had a negative effect on net cash used for/provided by operating activities.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 79

Net cash provided by investing activities in the reporting year was primarily attributable to repayments of medium- and long-
term investments by subsidiaries of EUR 9.6 billion, mainly by T‑Mobile USA, Inc., Bellevue, as well as a capital repayment by
T‑Mobile Global Zwischenholding GmbH, Bonn, in the amount of EUR 2.1 billion. Cash outflows for short-term loans amounting
to EUR 1.0 billion and cash outflows to acquire properties in the amount of EUR 0.3 billion had an offsetting effect. Net cash
provided by investing activities also included interest received of EUR 1.2 billion. In the previous year, net cash used for
investing activities had been mainly impacted by cash outflows of EUR 17.9 billion to subsidiaries for medium- and long-term
investments. In particular, repayments of medium- and long-term investments by subsidiaries in the amount of EUR 1.8 billion
and interest received in the amount of EUR 1.5 billion had an offsetting effect.

Net cash used for financing activities changed by EUR 6.8 billion year-on-year to EUR 8.7 billion. Net cash used for financing
activities in the reporting year resulted primarily from net repayments of current financial liabilities of EUR 2.9 billion, especially
to Deutsche Telekom International Finance B.V., Maastricht, the payment of the dividend for the 2019 financial year of
EUR 2.8 billion, and interest paid of EUR 3.0 billion. The year-on-year change mainly related to EUR 5.8 billion lower net
borrowings of noncurrent financial liabilities and bullet payments of interest of EUR 1.6 billion in connection with the
redemption of long-term zero-coupon bonds in the reporting year.

In all, this resulted in an increase in cash and cash equivalents of EUR 1.1 billion in the reporting year.

Risk management in hedge accounting

We use derivatives to hedge interest rate and currency exposures; i.e., exclusively for hedging purposes, not for speculative
gains. In the process, we monitor the effectiveness of the hedges on a regular basis.

Corporate responsibility and non-financial statement

The outbreak of the coronavirus pandemic in 2020 clearly underscored the huge opportunities that digitalization offers in
tackling societal challenges. Online shopping and contactless payments reduce the risk of infection, doctors offer consultations
online, contact tracing apps help contain the pandemic – and, the world over, people are chatting with each other via live
video. What is more, during the first lockdown people began working from home. Even in times of crisis, we remain committed
to keeping everyone connected. SDG 10 STRUCTURE Our multi-billion investments in the network infrastructure have paid
off throughout the pandemic: our networks were running stably even under substantially higher loads. SDG 9 STRUCTURE

We fulfilled our responsibility as an employer by introducing comprehensive rules and supportive measures to help employees
work from home SDG 8 EMPLOYEES , while safeguarding service for our customers in parallel. Our home office configurator

helps small and medium-sized businesses, for example, to develop customized solutions for staff working from home. Likewise,
our Digital Schutzpaket Business (digital business protection package) keeps sensitive customer data safe. We are also
furthering the digitalization trend in schools: not only with fiber-optic connections, but also by providing support to schools in
lodging applications for funding. SDG 4 RELATIONSHIPS In 2020, T‑Mobile US helped set up homeschooling infrastructure for

more than 500,000 students in the United States. In its home country, T‑Mobile Austria provided 10,000 students with free
data packages for online study. We also helped ease the impact of coronavirus on society with a range of further activities.
The measures in question include providing additional data volume free of charge, gifting smartphones to retirement and
care homes SDG 10 RELATIONSHIPS , and establishing a hotline to support Nebenan.de, a neighborhood help portal. During the

crisis, we have proved we are a reliable partner. That is why F.A.Z.-Institut, a company specializing in management, media, and
marketing information, honored us with a “heroes of the crisis” award in 2020.

But digitalization can help us tackle other challenges, such as protecting our climate. A key prerequisite for this is that
increasing use of the internet does not lead to higher CO2 emissions. In the reporting year, we reached a milestone on the
path toward achieving our ambitious climate goals: since the start of 2020, our customers in Germany have been surfing
on Deutsche Telekom’s green network, which is powered solely by electricity from renewable sources. We also continued to
pursue our other sustainability goals. As part of our “We care for our Planet” program, we initiated various measures to reduce
CO2 emissions and conserve resources. SDG 15 ENVIRONMENT On top of that, we positioned ourselves with a broad-based

campaign against online hate speech and for more digital civil courage.

Creating transparency
We have been transparently reporting on our corporate responsibility (CR) activities for more than 20 years: on our website, in
the “We Care” magazine, in our CR report, and in our Annual Report. Since the 2016 financial year, we have also explained how
our core business contributes to achieving the UN Sustainable Development Goals (SDGs), which have been set as part of the
2030 Agenda.

For further information, please refer to the section “Sustainable Development Goals.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 80

Since the 2017 reporting year, we have published this non-financial statement (NFS) as part of the management report in
accordance with the CSR Directive Implementation Act. In selecting the content for the NFS 2020, we took both the statutory
requirements and the results of our materiality analysis into account. SDG 17 RELATIONSHIPS The concepts in this NFS are

described on the basis of our long-standing CR reporting and in line with the GRI standards. We will publish our 2020 CR report
at the end of March 2021. This will also satisfy the additional transparency expectations of our stakeholders.

The Supervisory Board of Deutsche Telekom AG is responsible for the review of the content of the NFS. In the reporting year,
it did this with the support of PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (independent auditor) in the
form of a limited assurance engagement. This audit was based on the International Standard on Assurance Engagements
ISAE 3000 (revised). Unless otherwise stated, all disclosures in this NFS apply in equal measure to the Group and the parent
company. To avoid repetition within the management report, we refer to further information provided in other sections
wherever relevant. References to disclosures not contained in the combined management report are provided as background
information; these disclosures are not part of the NFS and thus are not covered by the review.

The independent judging panel for the Building Public Trust Awards 2020, comprising experts from academia, industry,
and rating agencies, selected us to receive the award for best climate impact reporting among DAX 30-listed companies.
PricewaterhouseCoopers has been awarding the Building Public Trust Award since 2016.

Explanation of the business model

We are one of the leading telecommunications companies worldwide. We offer our consumers fixed-network/broadband,
mobile, internet, and internet-based TV products and services, as well as ICT solutions for our business and corporate
customers.

For further information on our business model, please refer to the sections “Group organization” and “Group strategy.”

Strategic and organizational approach to sustainability

We see ourselves as a responsible company and have made that a core element of our Group strategy. We are committed to
implementing sustainability along our entire value chain – and to playing an important role in meeting today’s environmental,
economic, and social challenges. We are expressly committed to the principles of the United Nations Global Compact, the
German Sustainability Code, and the Code of Responsible Conduct for Business. Furthermore, we support the SDGs of the
United Nations (UN), in particular contributing to the following goals: 3 Good health and well-being, 4 Quality education,
5 Gender equality, 8 Decent work and economic growth, 9 Industry, innovation and infrastructure, 11 Sustainable cities and
communities, 12 Responsible consumption and production, and 13 Climate action.

Our CR strategy includes three fields of action: “Connected life and work – enabling a sustainable lifestyle in the digital
world,” “Connecting the unconnected,” and “Low-carbon society.” In addition, the following topics are of particular importance
within our sustainability management system: data security and data privacy, digitalization, sustainable supply chains, circular
economy and resource decoupling, as well as being a responsible employer.

Our Board of Management bears overall responsibility for our CR goals, discussing and making decisions on key CR-related
issues. The Group Corporate Responsibility (GCR) unit develops Group-wide policies and guidelines. Its aim is to further develop
our corporate culture, particularly in terms of sustainable innovation and social responsibility. The CR managers from the
different business units and national companies are responsible for implementing our CR strategy and work together in the
international CR Manager Network. GCR is also advised by the CR Board, which is composed of the heads of the Group’s key
areas. Our values and basic principles are anchored in our Guiding Principles, the Code of Conduct, the Code of Human Rights &
Social Principles, and other subject-specific policies. The cornerstones of our sustainability management activities are formally
set out in our CR Policy, which is binding for all Group units. As part of our CR controlling activities, we record environmental,
social, and governance (ESG) data and performance indicators. We use this data primarily to calculate our Group-wide ESG KPIs
(key performance indicators), which we use to measure and control our CR performance. In some cases, the KPIs and other
metrics can also be linked to the SDGs to show the progress we are making in the SDG focus areas.

The Socially Responsible Investment ESG KPI indicates the percentage of Deutsche Telekom AG shares held by investors who
show a predominant or at least partial concern for environmental, social, and governance criteria in their investment strategy.
And our commitment to greater sustainability is paying off: As of September 30, 2020, around 13 % of all T-Shares were held by
investors who show at least a partial concern for environmental, social, and governance criteria, and 9 % were held by investors
who manage their funds primarily in accordance with aspects of socially responsible investment (SRI). In the reporting year, our
share was added to a further sustainability index: the Euronext Vigeo World 120 from Vigeo Eiris. SDG 8 FINANCE

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 81

Listing of the T-Share in sustainability indexes/ratings

Rating agency Indexes/ratings/ranking 2020 2019 2018 2017 2016

S&P SAM DJSI World ✔ ✔ ✔ ✔ ✔
DJSI Europe ✔ ✔ ✔ ✔ ✔
S&P Global 1200 ESG ✔ ✔ ─ ─ ─
S&P Europe 350 ESG ✔ ✔ ─ ─ ─
S&P Europe Developed LargeMidCap ESG ✔ ✔ ─ ─ ─
CDP STOXX Global Climate Change Leaders ✔ ✔ ✔ ✔ ✔
Supplier Engagement A-List ✔ ✔ ✔ ✖ ✔
MSCI ESG Universal Indexes ✔ ✔ ✔ ✔ ─
ISS-oekom “Prime” (Sector Leader) ✔ ✔ ✔ ✔ ✔
Bloomberg Gender Equality Index ✔ ✔ ✔ ✖ ✖
Sustainalytics STOXX Global ESG Leaders ✔ ✔ ✔ ✔ ✔
EURO STOXX 50 ESG ✔ ✔ ─ ─ ─
iSTOXX 50 SD KPI ✔ ✔ ✔ ✔ ✔
UN Global Compact 100 ✔ ✔ ✔ ✔ ✔
FTSE Financial Times Stock
Exchange FTSE4Good ✔ ✔ ✔ ✔ ✔
Vigeo Eiris Euronext Vigeo World 120 ✔ ✖ ✖ ✖ ✖
Euronext Vigeo Europe 120 ✔ ✔ ✖ ✖ ✖
Euronext Vigeo Eurozone 120 ✔ ✔ ✖ ✖ ✖

✔ Listed successfully ✖ Not listed ─ Index did not exist in the relevant year

We are making our contributions towards solving social challenges measurable. To this end, we have developed a process and
methodology to evaluate the external impact of selected products, solutions, and measures. This helps us to keep our key
sustainability activities results-oriented and to make our contribution to achieving the SDGs visible. SDG 8 FINANCE

Detailed information will be published in our 2020 CR report.

Process for determining significant topics

We use a comprehensive materiality process to determine the topics that are relevant both for the direction of our sustainability
strategy and for our reporting. For instance, we perform a document analysis in order to analyze aspects such as existing
legislation and the expectations of our stakeholders, e.g., the capital markets. In the reporting year, we validated the results
of this analysis by conducting interviews with independent experts on topics such as the future of work, sustainable business
models, and values and responsible corporate governance. The results of the materiality analysis from the previous year were
confirmed. Consequently, there is no need to include further matters in the NFS for 2020.

Detailed information on our approach will be published in our 2020 CR report.

As part of our comprehensive risk and opportunity management system, we determine existing and potential risks and
opportunities arising from environmental, economic, or social aspects, and from how our Company is managed. Topics such
as climate protection, suppliers, data privacy and data security, health, and the environment involve potential risks, which we
have outlined in the section “Risk and opportunity management.” We maintain this practice to provide the transparency our
stakeholders expect, even if the risk assessment has found that these topics have a “low” risk significance and therefore do not
need to be rated as “very likely severe” in the meaning of the CSR Directive Implementation Act. The present NFS focuses on
these risks and opportunities in relation to the relevant aspects.

For further information, please refer to the section “Risk and opportunity management.”

Aspect 1: Environmental concerns

One field of action in our CR strategy is “Low-carbon society.” It not only expresses our commitment to minimize the impact
our business activities may exert on the climate, but also to tap into the opportunities for sustainable development offered by
digitalization. When used properly, it can also make a valuable contribution to saving energy and thus slowing down climate
change.

For further information, please refer to the section “Deployment of ICT products to the benefit of society.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 82

In order to handle the rising tide of regulatory requirements, especially from the EU, we established an internal, cross-divisional
green deal task force in 2020. The purpose of the task force is to ensure that necessary measures and processes can be
implemented without delay and to create the necessary transparency.

Our holistic environmental management system is based on the international ISO 14001 standard. A Group-wide environmental
guideline brings together the main voluntary commitments to which the Group as a whole is subject. You can access this policy
on our Group website.

Climate protection and resource conservation SDG 13 ENVIRONMENT

Our investments in the network build-out make us one of the biggest investors in the industry. Rising demand for faster data
services with full-coverage availability must not lead to an increase in CO2 emissions and thus accelerate global warming. That
is why, by increasing energy efficiency – for instance at our data centers for network operations – we ensure that our energy
consumption grows to a much lesser extent than the volumes of data we transmit. We also use renewable energy sources to
decouple energy consumption from CO2 emissions.

For about the last two decades, climate protection has been steadily increasing in importance at Deutsche Telekom. Our Group-
wide climate protection strategy covers the following aspects: “Emissions from the value chain,” “Renewable energy sources,”
“Energy efficiency,” and “Enablement: positive climate-protection effects on our customers.” In 2019, the Group Board of
Management adopted new, ambitious climate goals:

a. By the end of 2021, we intend to source 100 % of the electricity used by the Group from renewables (Scope 2).
b. By 2030, we plan to reduce our CO2 emissions (Scope 1 and 2) by 90 % (compared to 2017). We want to achieve this not
only by switching to renewably sourced electricity, but especially by implementing energy efficiency measures.
c. Over 80 % of our CO2 footprint arises from the production and use of our products. We plan to achieve a 25 % reduction
per customer in these emissions by 2030 (versus 2017) (Scope 3, categories: purchased goods and services, capital goods,
use of sold and leased assets). We maintain a close dialog with the suppliers in order to reduce the emissions generated
during production and to ensure the products manufactured consume less energy during the utilization phase.
Since 2019, we have been a member of the international industry initiative GSMA. Within this initiative, we undertook to reduce
our CO2 emissions (Scope 1, 2) to “net zero” by 2050 at the latest and thus make our business operations completely climate
neutral. This undertaking within the framework of the GSMA industry initiative has since been expanded to include Scope 3
emissions, the goal being to eliminate the industry’s direct and indirect emissions altogether by 2050 at the latest. But in our
view this target is not ambitious enough. That is why we intend to assess in 2021 whether we can reach climate neutrality faster.

We developed our new climate goals in line with the current scientific and political conditions. The Science Based Targets
initiative (SBTi) has confirmed to us that our climate protection targets contribute to compliance with the Paris Climate
Agreement. The SBTi also gave a positive assessment of the targets of our subsidiaries in the United States and Hungary. In
order to achieve these targets, T‑Mobile US has concluded long-term agreements with wind and solar park operators, which
will give the park operators the necessary investment certainty. Consequently, there are now five wind parks and three solar
parks in the United States that are either already connected to the network or are set to be connected in the course of 2021.
In Germany, too, a wind park is set to be added to the network in 2021 as part of a long-term power purchase agreement.
SDG 7 ENVIRONMENT

We have reached our climate goal, adopted in 2013, to reduce the Group’s CO2 emissions by 20 % (compared to 2008,
excluding T‑Mobile US). To differing extents, 40 business units in 29 countries contributed toward achieving this goal. The
measures taken were varied, e.g., direct procurement of green electricity, enhancing energy efficiency, and acquiring
guarantees of origin.

We calculate our CO2 emissions across the Group in line with the market-based method of the Greenhouse Gas (GHG) protocol.
The standard distinguishes between three CO2 emissions categories (Scope 1, 2, and 3). We report on these each year as part of
the CDP and in our CR and Annual Reports. The successful business combination of T‑Mobile US and Sprint to form the larger
T‑Mobile US in 2020 also had a clear impact on our environmental data, with absolute energy consumption rising together with
the resulting emissions.

Detailed information on year-on-year data trends will be published in our 2020 CR report.

The following graphic visualizes the emissions of the different scopes resulting from our business activities, shown as
CO2-equivalents emissions (CO2e emissions).

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 83

CO2e emissions (Scope 1-3)

Deutsche Telekom Group in 2020 in % and kilotons (kt) of CO2e

50 % (8,221 kt) 1 % (235 kt) 14 % (2,277 kt) 35 % (5,660 kt)

Scope 3 emissions from upstream activities:

Transport services, products and services purchased, capital goods, production waste, energy and fuel upstream chains, business travel,
and journey to work

Scope 1 emissions from Deutsche Telekom’s own activities:

Operation of Deutsche Telekom’s systems, buildings, and vehicles

Scope 2 emissions from energy procured:

Generation of electricity and district heating procured by Deutsche Telekom

Scope 3 emissions from downstream activities:

Transport of products sold to the customer, use of products sold or leased, and disposal and recycling of products sold

The PUE (power usage effectiveness) metric serves as one indicator for enhancing the energy efficiency in our data centers. We
determine this metric using the method recommended by The Green Grid Association, which takes the total energy consumed
by data centers into account, not only that used to operate the servers. In 2020, the global PUE metric for our T‑Systems data
centers was 1.61. Our high-availability, state-of-the-art data centers operated by T‑Systems in Germany are designed with even
greater efficiency in mind, and as such are capable of achieving a PUE of 1.3. From 2008 to 2020, we reduced the average PUE
metric for data centers in Germany from 1.85 to 1.50.

We determine the effectiveness of our climate protection measures using key performance indicators (KPIs). The KPIs Energy
Intensity and Carbon Intensity for Deutsche Telekom (fixed-network and mobile entities) are shown in the following graphics.
Both KPIs reflect our energy consumption and our CO2 emissions in relation to the volume of data transmitted, thus
demonstrating how our network’s energy and emissions efficiency has developed in practice. The result for the Energy Intensity
KPI is 119 and 23 for the Carbon Intensity KPI. For the Group as a whole in Germany, the Energy Intensity KPI stands at 60 and
the Carbon Intensity KPI at 3.

Energy Intensity ESG KPI Carbon Intensity ESG KPI

Deutsche Telekom Group in 2020 Deutsche Telekom Group in 2020

Energy consumption Emissions

in millions of kWh in millions of kg of CO 2e
12,643 119 2,466 23
ENERGY CARBON
INTENSITY INTENSITY
106 kWh/terabyte 106 kgCO2e/terabyte
IP data volume IP data volume
in millions of terabytes in millions of terabytes

Other metrics of importance to us are the Renewable Energy KPI and the Enablement Factor ESG KPI. The Renewable Energy
KPI shows how much of our Company’s overall electricity consumption is obtained from renewable sources. In 2020, this
amounted to 58 % Group-wide and 100 % in Germany. When calculating this KPI, we look at direct purchases, guarantees of
origin, renewable energy certificates, the renewable energy we produce ourselves, and the proportion of renewable energy
used across the countries. We use the Enablement Factor ESG KPI to calculate the positive CO2 effects facilitated for our
customers through using selected products.

For further information, please refer to the section “Deployment of ICT products to the benefit of society.”

In order to effectively curb climate change, many relevant players must work together, which is why we participate in national
and international associations and organizations, such as the Global e-Sustainability Initiative. We are also working
systematically on improving climate protection throughout our supply chain. Since 2016, the CDP supplier engagement rating
has assessed how well companies have integrated the topic of climate protection into their supply chains. In 2020, we were
awarded an A rating by CDP and included on its Supplier Engagement Leader Board. Almost 70 % of our procurement volume
is covered by the participation of our suppliers in CDP’s 2020 supply chain program. SDG 17 ENVIRONMENT

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 84

Last but not least, handling valuable resources efficiently also plays a vital role in a holistic approach to ecological responsibility.
In 2020, our existing “Stop wasting – start caring!” initiative was integrated into “We care for our Planet,” an end-to-end
environmental program approved by the Board of Management in 2019. Whether in our Telekom shops, with our products
and networks, or in terms of mobility – we have adopted an array of measures to conserve resources. SDG 15 ENVIRONMENT

For instance, energy-saving initiatives and improvements to our buildings helped us to cut our power consumption by around
137 GWh in 2020 – enough to satisfy the annual electricity needs of over 34,000 private households. What is more, all
of Deutsche Telekom’s own products have had sustainable packaging since the end of 2020. We developed corresponding
sustainability criteria precisely for this purpose. In addition, over 25 % of the packaging of new products we source from
our suppliers already meets these criteria. SDG 12 ENVIRONMENT We were also able to save 263 metric tons of CO through
2
our subsidiary Comfortcharge’s operation of rapid-charging stations for electric vehicles. That is the equivalent of the CO2
emissions produced by a passenger car on a journey of 815,000 kilometers. One of the Group’s goals is to increase the
proportion of electric vehicles in its fleet. Currently, around 10 % of the new vehicles ordered are electric. Various measures
have been agreed to significantly increase that share in the coming years. Above and beyond that, the focus in 2020 was on
expanding our “We care for our Planet” program and providing it with an international network. KPIs were developed for each
component of the initiative, which will feed into our ESG KPIs. These KPIs help us measure our progress and also enhance public
transparency of what we do.

For further information on the progress of our environmental program and on our KPIs, please refer to the 2020 CR report.

Conserving resources is also a goal of the Green Pioneers initiative launched by our employees. Thus far, 250 employees
from around 45 locations in Germany have joined the initiative. Our Green Pioneers play a proactive role within the workforce,
promoting awareness of resource efficiency at the workplace and providing impetus for our core business – and they do
so voluntarily, on top of their professional duties. In 2020, some Green Pioneers held courses on environmental issues for
their colleagues, with more than 700 employees in total taking part. Other Green Pioneers organized activities on sustainable
mobility in the reporting year, such as “Cycling to work” and “Cycling at lunchtime.” These two cycling campaigns alone helped
save more than 50,000 kg of CO2 by the end of September 2020. Similar grassroots initiatives by our employees have been
launched at our national companies, like T‑Mobile Polska in Poland and OTE/Cosmote in Greece. Projects to conserve resources,
e.g., campaigns to collect and recycle mobile phones and to avoid plastic waste, have also been implemented at our national
companies. SDG 15 EMPLOYEES

Aspect 2: Employee concerns

With their commitment, expertise, and high performance, our almost 230,000 employees ensure that – even during the
ongoing coronavirus pandemic – we are always there for our customers, our network remains stable, and the Company can
grow and pave the way for the digital society. They are crucial to our business success. Six Guiding Principles, representing our
values, form the cornerstones for collaboration within our Company. We have defined our strategic HR priorities in line with
the motto: “Supporting people. Driving performance.” We attach great importance to employee involvement and fair behavior
toward colleagues, promote diversity, and engage in systematic health management. SDG 8 EMPLOYEES

For our Guiding Principles and further information about our HR work, please refer to the section “Employees.”

Collaboration with employees’ representatives and trade unions SDG 17 EMPLOYEES

Digitalization is fundamentally changing the way we work together. Employees are expected to demonstrate greater flexibility,
social skills, and autonomy, to continue learning throughout their lives, and to work with greater independence. We have made
it our goal to support our employees in this transformation – and to help them not only manage change, but also take an active
role in shaping it.

Codetermination rights play a key role in the digital transformation. Together with employees’ representatives and trade unions,
we want to create the working world of the future – with an eye to the needs of our workforce and the success of our Company.
86 collective agreements were concluded with the trade union in the course of 2020. In the midst of the coronavirus pandemic,
we negotiated a new collective agreement in record time at the end of March 2020. Among other things, the agreement
extended protection against dismissal and contained provisions on short-time work. In the case of employees affected by short-
time work, such as those working in the Telekom shops, we increased the short-time work allowance to 85 % of the gross salary.
The Germany-wide agreement covers 60,000 employees, trainees, and students on dual study programs.

Our dealings with the employee representatives and trade unions also concentrated on harmonizing remuneration systems
across Germany. To this end, grading policies and processes were standardized. As the underlying laws and contracts vary from
country to country, codetermination matters are managed locally with trade unions and employees’ representatives. Group
management is generally involved in issues of particular importance.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 85

The works councils, central works councils, and Group Works Council represent the interests of Group employees in Germany.
Our partner representing the employees’ interests on a European level is the European Works Council (EWC). We also have
executive staff representation committees and representatives of disabled employees at unit, company, and Group level. The
EWC has been one of our established key dialog partners for many years, representing the interests of Group employees
in countries within the European Union and the European Economic Area. The EWC has 32 seats, 31 of which are currently
occupied (as of December 31, 2020). Collective bargaining plays an important role and has a long tradition at our Company,
a fact made clear by the percentage of employees covered by collective agreements. As of December 31, 2020, 72 % of
employees in Germany were covered by collective agreements. We record the Group-wide coverage rate every two years. As
of December 31, 2020, it stood at just under 46 %.

We carefully monitored trade union matters in the United States over the course of 2020. The responsibility for national human
resources management matters in the United States lies with T‑Mobile US’ management. This responsibility is assumed with
a great deal of commitment and accompanied by excellent customer satisfaction results. Across the globe, Deutsche Telekom
respects the rights to freedom of association and collective bargaining in accordance with national law. This naturally also
applies to the United States, with each employee at T‑Mobile US entitled to form or join a trade union. At the same time,
employees are also free to choose not to do so. T‑Mobile US will not exert any influence in this respect, neither favoring nor
discriminating against employees because of a decision they have made.

Collaboration with employees’ representatives is founded on our commitment to trusting cooperation – anchored in our Group-
wide Employee Relations Policy, which sets out twelve core elements describing what we stand for as an employer around the
world. The policy also describes our aspiration with regard to the following HR topics: virtual working, employee development,
responsible handling of changes, health and sustainability, fair pay, work-life balance, leadership, diversity, the prohibition of
discrimination, and how we communicate and work together with employees’ representatives. Our Code of Human Rights &
Social Principles policy statement also includes a voluntary commitment to safeguarding the freedom of association and the
right to collective bargaining (in compliance with national law in each case).

Our employee survey, carried out every two years, is a key indicator of the relationship between our Company and its workforce.
We supplement it with pulse surveys, which give us a snapshot of the mood across the Group twice a year.

For further information, please refer to the section “Employees.”

Diversity and equal opportunity SDG 10 EMPLOYEES

People from some 150 countries work successfully together at Deutsche Telekom. They all bring their diverse skills and cultural
characteristics to the workplace. Respecting the individuality of our employees and harnessing their diversity for our joint
success is just as important for our Group as developing a shared corporate culture. That is why the Human Resources and Legal
Affairs Board of Management department includes a Diversity team. Our Group-wide Diversity Policy, six Guiding Principles,
the Employee Relations Policy, and the Code of Human Rights & Social Principles policy statement form the foundation of our
commitment to diversity. We are also a founding member of the Diversity Charter corporate initiative. Developments in the
proportion of women in leadership positions and serving on the supervisory boards are reported to and discussed by the Board
of Management on an annual basis.

We offer our employees a wide variety of options to grow professionally and achieve their potential – regardless of their gender,
age, sexual orientation, state of health, ethnic background, religion, or culture. These include mentoring programs, flexible
working models, childcare services, advice for those caring for loved ones, and an action plan for inclusion. In various training
courses, we shine a light on unconscious bias in order to raise employees’ awareness of hidden prejudices. Last but not least, we
support the many employee networks at Deutsche Telekom, e.g., in Germany Magenta Pride, Women@telekom, the Fathers’
Network, or the Network for International Employees.

In Germany, for example, our collective agreements on remuneration and other matters reached with the trade unions ensure
transparent, gender-neutral compensation. We meet the requirements set out in the Act to Promote Transparency of Pay
Structures by publishing a remuneration report every five years – most recently in the 2017 financial year.

For further information, please refer to the section “Employees.”

Occupational health and safety SDG 3 EMPLOYEES

The coronavirus pandemic left its mark on 2020. We implemented comprehensive hygiene plans and initiated many other
measures to protect our employees’ health.

For further information, please refer to the section “Employees.”

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 86

Measures that promote health within the Company not only help individual employees and ensure long-term business success,
but also have positive effects beyond that on society as a whole. We use holistic health management to take on social
responsibility and promote a proactive culture of health. We support our employees in maintaining their health and
occupational safety with a host of target audience-specific measures and extensive prevention programs. We consider the
statutory requirements to be only the minimum standard we must achieve. Our corporate occupational health and safety
measures are effectively incorporated into our structures via certified management systems and appropriate policies and
guidelines. We support the Group-wide approach with a uniform international health, safety, and environmental management
system based on the international DIN ISO 45001, DIN EN ISO 14001, and DIN EN ISO 9001 standards for occupational safety
and health, environmental protection, and quality.

The Board of Management bears overarching responsibility for safeguarding health, occupational safety, and the environment.
We pool together and manage our programs at Group level, with on-site health and safety managers responsible for putting
them into practice. We systematically evaluate the programs to ensure they are effective. The health rate, for instance, is
reported to the Board of Management once a year. In addition, we review the results of our employee survey, evaluating stress
prevention measures under collective agreements, health insurance reports, and competitor benchmarks. We analyze this
data each year to derive measures that exceed the statutory requirements. Raising awareness, prevention, and encouraging
individual responsibility are high priorities at our Company.

Group-wide initiatives serve to promote health awareness and health literacy among our employees. On completion of the
employee survey, for example, all teams across 29 countries are issued recommendations, along with measures to be
implemented on the basis of their particular health index rating. In Germany, a range of services are available to employees to
promote health in the workplace, including comprehensive check-ups, colon cancer screenings, and flu shots. The program also
includes courses on nutrition, exercise, and relaxation (stress prevention, mindfulness, etc.). Due to the coronavirus pandemic,
many courses were held online in 2020. In addition, with our Germany-wide employee and executive advisory service, we offer
a portfolio of support services in the area of psychosocial health, but also crisis prevention and expert advice in the event
of psychosocial crises and extreme incidents. Throughout 2020, occupational medicine specialists were available to answer
employees’ medical questions with regard to coronavirus.

Standards in Germany serve to improve occupational safety by regulating aspects such as safe, ergonomic environments in
buildings and vehicles. In addition to services available to all employees, there are also target group-specific measures, e.g.,
driver safety training for certain areas of work. Our aim is to promote employees’ health, boost their motivation, improve the
health rate, and continue to reduce the accident rate.

A variety of key figures demonstrate the effectiveness of our corporate health management services. The health rate, including
long-term illnesses at Deutsche Telekom in Germany was 95.0 % in 2020 (prior year: 94.0 %). Excluding long-term illnesses,
the health rate in 2020 stood at 96.5 % (prior year: 95.5 %). The health rate is reported to the Board of Management at the end
of each quarter. Our aim for 2020 was to bring the Group-wide health rate up to 95.9 % (excluding long-term illnesses). The
total number of work-related accidents continued to decline in the reporting year in comparison with the previous year. With
3.8 accidents (resulting in over three days of absence) per thousand employees, the accident rate in Germany was well below
the industry average. The Group-wide health index – calculated in 29 countries as part of the last employee survey in 2019 –
remained constant at 3.6 (on a scale from 1.0 to 5.0). The next survey is scheduled for 2021.

Aspect 3: Social concerns

Access to state-of-the-art information technology is key to participating in the information and knowledge society. Our promise
with the #TAKEPART brand campaign is to enable as many people as possible to participate – also and especially in times of
crisis. We are delivering on that promise with an array of different activities. In this context, the security of our customers’ data
is of prime importance. But the internet is also supposed to be a space in which everyone can feel safe and where we interact
on the basis of democratic principles. That is why we are actively pushing for a positive culture of online debate, promoting the
competent use of ICT, and making a stand against hate speech and for digital civil courage.

For further information on our corporate identity and our Guiding Principles, please refer to the sections “Group organization” and “Employees.”

Deployment of ICT products to the benefit of society SDG 12 FINANCE

During the coronavirus pandemic, the internet has enabled us to physically distance yet still stay close to others. In 2020, we
provided practical assistance with various solutions and campaigns. In Germany, for instance, we gave our customers free data
volumes under their plans. What is more, together with SAP we developed a coronavirus tracing app (Corona-Warn-App) on
behalf of Germany’s Federal Government. As of December 2020, the app had been downloaded over 23 million times. Many
of our national companies, too, were able to provide rapid solutions. T‑Systems Iberia, our national company in Spain, for
example, cooperated with Mercabarna, a Spanish food wholesaler, to develop an app that links up supermarkets, social welfare
organizations, and logistics companies in a digital marketplace. The idea behind the app was to get donations of food quickly
to where they are urgently needed in Spain during the pandemic.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 87

We can use our products, services, and activities to contribute to tackling many environmental and social challenges, as
was made clear in a comparison with the 17 sustainability goals (SDGs) adopted by the United Nations. For instance, ICT
solutions can help reduce resource consumption in agriculture and increase harvests, shape cities up for the future in terms of
sustainability, make mobility more sustainable, stabilize power supply grids, or improve access to education and medical care
– areas of application that offer market opportunities for our Company. In order to evaluate the concepts described in this NFS,
it is important to also look to the opportunities digitalization opens up for sustainable development. For this reason, we are
addressing the topic here, even though it is not required under the CSR Directive Implementation Act.

For further information on our sustainability risks, please refer to the section “Risk and opportunity management – Risks and opportunities.”

Using the Sustainable Revenue Share ESG KPI, we determine how much revenue (excluding T‑Mobile US) we generate from
products that make a contribution to sustainability. In 2020, this share amounted to just over 44 %. For the Enablement Factor
ESG KPI, we also calculate the positive CO2 effects facilitated for our customers through using selected products. We combine
this figure with our own CO2 emissions to determine the enablement factor, which we use to measure our overall performance
in relation to climate protection. According to this figure, the positive CO2 effects facilitated for our customers in Germany were
610 % higher in 2020 than our own CO2 emissions (enablement factor of 7.1 to 1). The substantial increase against the prior year
(enablement factor of 2.4 to 1) is another consequence of the coronavirus pandemic; it results largely from the increased use of
our web- and video-conferencing tools due to the growing number of people working from home and home schooling.

Enablement Factor ESG KPI

Deutsche Telekom Group in Germany in 2020

x 7.1
35.8

5.1

CO2 emissions Positive CO2 effects facilitated for our

(Scope 1–3 in millions of tons of CO 2e) customers (millions of tons of CO 2e)

Sustainable products are another key competition factor at our Company. In order to highlight these sustainability benefits to
our customers, we have suitable products certified by recognized environmental labels. The majority of Telekom Deutschland’s
fixed-network devices and media receivers, for example, carry the Blue Angel seal of approval, which was also awarded to the
joint system of Telekom Deutschland and Teqcycle for taking back cell phones.

We also use our “we care” label to identify products, services, measures, and initiatives that offer ecological or social
sustainability added value, e.g., in the Environment category, our green network in Germany and our reusable carry bags.
Further information on the second category of the “we care” label – Digital participation – can be found in the next two
sections. SDG 12 ENVIRONMENT

Detailed information on this will be published in our 2020 CR report.

Network access and digital responsibility

All around the world, having access to state-of-the-art information technologies is a precondition for economic performance
and participation in a knowledge and information society. That is why we continue to rapidly expand our infrastructure and
improve transmission speeds with new, secure technology. SDG 8 FINANCE

Demand for faster data services with full-coverage availability is growing continuously. We invested around EUR 17 billion (not
including spectrum investment) primarily in building and operating networks in Europe and the United States, with around
EUR 5.5 billion of this figure earmarked for Germany alone. Hence, the majority of the Group’s investment volume in Germany
is for the build-out of broadband networks. These investments have already paid off – during the coronavirus pandemic, for
example, our network was running stably despite increased data traffic. This build-out is based on the goals of our Europe-
wide integrated network strategy, which we use to help achieve the EU Commission’s network build-out targets and the Federal
Government’s Digital Agenda and broadband strategy. Founded on two pillars – building out mobile networks and rolling out
optical fiber – our strategy sets out, among other elements, to upgrade our mobile networks with 4G/LTE technology so as to
offer greater network coverage with fast mobile broadband. In the reporting year, preparations were made to decommission
the existing 3G network on June 30, 2021. By the end of 2020, we already covered more than 98.7 % of German households
with LTE. We also pushed ahead with the 5G build-out in Germany in 2020: by the end of the year, two thirds of the population
had been granted access to the new technology. In 26 cities across Germany, the 5G network is operating in the 36 GHz band,
at top speeds of up to 1 Gbit/s (as of the end of 2020). At the end of the reporting year, our fixed network provided around
36 million households with fiber-optic-based technology. In addition to FTTH build-out and vectoring technology, we are using

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 88

other innovative products, such as our hybrid router, which combines the transmission bandwidths of fixed-network and mobile
communications, thus attaining higher transmission speeds – particularly in rural areas. We also moved forward with the build-
out of fiber right to the home (FTTH) in the reporting year, connecting a further 600,000 households to the fiber-optic network
in 2020 using this network technology. Thus a total of more than two million households in Germany now have the option of a
direct connection to Deutsche Telekom’s fiber-optic network. SDG 9 STRUCTURE

For further information about our build-out targets, please refer to the section “Group strategy.”

In general, we want to make our network infrastructure and our products as efficient, environmentally friendly, and harmless to
health as possible. That is why we are committed to addressing the topic of mobile communications and health responsibly. In
the context of the award of the 5G licenses, there is public debate around the potential effects of 5G on health. We have been
providing information on the scientific evidence regarding mobile communications and health for more than 20 years now.
Together with Telefónica Deutschland, Vodafone, and 1&1, we also support the information platform www.informationszentrum-
mobilfunk.de. This platform provides expert, evidence-based information on mobile communications topics subject to
controversial public debate, such as health, research, technology, benefits, and applications. In 2020, the information platform
collaborated with the German Association of Towns and Municipalities to publish a series of information brochures on network
build-out for municipalities. We adopted our Group-wide EMF Policy (EMF being short for “electro-magnetic fields”) back
in 2004. It defines standard requirements – which considerably exceed the applicable national legal requirements – for
addressing mobile communications and health-related matters. SDG 3 ENVIRONMENT

For further information, please refer to the section “Risk and opportunity management.”

Responsibility for shaping the digital transformation has to be assumed by society as a whole. Our Board of Management plays
an active role in this discussion, which entails looking at matters such as how we can use artificial intelligence (AI) responsibly.
AI is a well-hidden feature in an ever-growing number of ICT products and services. It opens up opportunities, but also presents
challenges. Back in 2018, under the auspices of Group Compliance Management, we were one of the first companies worldwide
to adopt AI guidelines on digital ethics. These guidelines provide a framework for a responsible approach to AI. In 2020, we
incorporated the requirements formulated in our AI guidelines into our Privacy and Security Assessment, a procedure we use
to assess whether new or updated IT systems comply with our security and data privacy requirements. In the reporting year,
we also developed internal testing procedures like the robust AI assessment and continued to apply the internal test seal
developed in 2019 for Deutsche Telekom AI projects. In order to firmly entrench the AI guidelines in the Company, we continue
to provide our employees with further training on how to deal with the requirements. SDG 8 RELATIONSHIPS

Connect the unconnected

But access to technology alone is not enough to ensure everyone can participate in the knowledge and information society
– people also need to know how to use digital media safely, competently, responsibly, and for the benefit of everyone.
Increasingly, this issue has not only a private dimension – the protection of personal data – but also a socio-political one. Hardly
any area of life is untouched by digitalization. That is why we are working to build media literacy and democracy skills in the
population. In doing so, we are guided by the aspiration embodied in our #TAKEPART campaign to keep everyone connected,
namely that digital participation also includes participation in society. SDG 10 RELATIONSHIPS

As one of Germany’s major corporate foundations, the Deutsche Telekom Foundation is dedicated to improving education in
STEM subjects in the digital world. Since 2018, it has been supporting the initiative “The Future of STEM learning” and, together
with five universities, developing concepts for good STEM teaching. In total, the Deutsche Telekom Foundation has invested
EUR 1.6 million in this project. SDG 4 RELATIONSHIPS

The individual national companies are responsible for implementing projects on media literacy. Examples include the youth
promotion programs in Slovakia and the United States. Slovak Telekom’s national education program ENTER encourages
digital education, while T‑Mobile US’ Changemaker Challenge is a contest in which young people contribute ideas for better
coexistence – in the categories technology, environment, and education. Three winners were chosen from among
428 applicants.

All of our initiatives for greater media literacy in Germany can be found on the website “Media, sure! But secure.”
(www.medienabersicher.de/en/), where we provide informational material for all target groups. Deutsche Telekom’s
#TAKEPART stories – tales from the digital world for teenagers and young adults – are a practical take on digitalization issues
of social relevance and translate them into a range of offers for multipliers. The aim is to raise awareness, highlight alternatives,
try out new behaviors, and make the dialog on social media more constructive. All modules of the #TAKEPART stories are
also available in simplified German. Our multi-award-winning Teachtoday initiative (www.teachtoday.de/en/) helps children
and young people learn how to navigate the internet safely and skillfully. Since 2020, a new toolbox has been available for
multipliers and teachers. It comprises more than 100 formats that deal with media literacy and democracy skills. They can be
used without any specialist knowledge and have been designed for two key age groups: 9 to 12 and 13 to 16. The initiative also
publishes the children’s magazine Scroller.

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= p q Combined management report 89

In 2020, our media literacy initiatives focused on “digital civil courage” and dealt with the question of how we want, and
are able, to interact with each other on the internet and social media. The downsides of this interaction include hate speech
and fake news, which are socially divisive. Together with Deutsche Telekom’s brand management, we launched the campaign
“#TAKEPART – No Hate Speech.” Working closely with 44 partners – such as Gesicht zeigen! (Show your face) and #ichbinhier
(I’m here) – we are setting an example for more digital civil courage and against turning words into weapons. The corresponding
campaign spot was shown on television and other media. Podcasts enabled us to reach out to many thousands of people
– including new target groups like teenagers and young adults. Digital civil courage was also a topic of discussion at an
international meeting of Deutsche Telekom managers and at the Magenta Moon event. Overall, we reached some 15 million
people through the campaign and accompanying events (not including the campaign on TV/radio and in movie theaters).
The campaign and the underlying commitment to civil courage online bear the “we care” label in the “Digital participation”
category. In this category, the label highlights positive contributions toward solving social challenges in the digital world.
SDG 4 RELATIONSHIPS

“Act responsibly” has been specifically named in our strategy since 2020 and social responsibility aspects likewise form part
of Deutsche Telekom’s brand profile. The topic also features regularly in sales support contexts and on MagentaTV. In 2020, we
broadcast four programs on Scroller-TV. Scroller-TV and the children’s magazine Scroller earned us two Comenius Awards in
2020, Europe’s most prestigious honor for digital education media.

Data privacy is another focal point of our efforts. Our advisory service www.digitallysecure.en and our app-based “We Care”
magazine offer practical advice on how to use digital media safely and securely.

We measure the impact of our Group’s social commitment with a set of three ESG KPIs. The Community Investment ESG KPI
maps our social commitment in terms of financial, human, and material resources. In 2020, this amounted to EUR 149 million.
This strong year-on-year increase was attributable in particular to donations of handsets and services of T‑Mobile US rendered
as part of its “Digital participation” campaign. The Beneficiaries ESG KPI shows how many people have benefited from our
community activities: 16.4 million in 2020. The Media Literacy ESG KPI calculates which proportion of the target group has
benefited from media literacy programs as part of our social commitment efforts. In 2020, this KPI was 45 %, up from 41 %
in the prior year and precisely at this year’s target figure of 45 %. The rising popularity of our offerings stems largely from
a burgeoning interest among the public at large in acquiring media literacy and democracy skills. In times of coronavirus,
social and digital media are being not only used, but also abused, more than ever – fueling growing concerns and ultimately
helping to boost interest in our offerings. The 2020 ESG KPIs for the Deutsche Telekom Group in Germany were EUR 34 million
(Community Investment), over 12 million (Beneficiaries), and 39 % (Media Literacy).

Community Investment ESG KPI

1%
Time spent
4%
Overhead costs

69 %
Non-cash donations
26 %
Cash contributions € 149 million

Data privacy and data security SDG 16 STRUCTURE

People will only use ICT solutions if they trust in the security of their personal data – and only then can these solutions develop
their true potential for more sustainable development. As a result, we attach particularly great importance to protecting and
securing data.

For further information, please refer to the section “Risk and opportunity management.”

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= p q Combined management report 90

Our active data protection and compliance culture, which has been built up over ten years, sets national and international
standards. The data privacy-related compliance management system outlines the measures, processes, and audits we use to
ensure compliance with laws, regulations, and voluntary commitments to uphold data privacy in the Group.

Since 2009, the Group Board of Management has been advised by an independent Data Privacy Advisory Board comprising
reputable experts from politics, science, business, and independent organizations. At the beginning of 2020, the role of the
Advisory Board was strengthened through the addition of new members and permanent guests from the ranks of the Board of
Management and the Supervisory Board of Deutsche Telekom AG.

Data privacy and data security are governed by the corresponding Group policies: Binding Corporate Rules Privacy (BCRP)
regulates how the Group treats personal data, while the Group Security Policy contains significant security-related principles
valid within the Group, which are based on the international ISO 27001 standard. These policies allow us to guarantee an
adequately high and consistent level of data privacy and security throughout our entire Group.

We issue an annual transparency report – since 2014 in Germany, and since 2016 in our national companies – in which
we set out the nature and scope of our disclosures to security authorities. We are thus fulfilling our statutory duty as a
telecommunications company.

In order to ensure even better data privacy and data security within our Group, our corporate units are audited and certified
several times a year by internal and external experts. This includes the annual (re-)certification of the Telekom Security
management in accordance with ISO 27001, regular Group-wide internal security checks, and the annual review of the
individual Group units in connection with security maturity reporting. These audits help us assess the status quo of security in
our Group.

Every two years, we perform a sample survey of data privacy and data security awareness across the Company. In the course
of the Group Data Privacy Audit (GDPA), we survey 25,000 Deutsche Telekom employees on topics related to data privacy and
data security. The focus of our Online Awareness Survey (OAS) is on security awareness at the Company. The results are used
to calculate the Data Protection Award indicator – which quantifies the level of data protection in the units on a scale from 0 to
100 %. It is based on what the employees said they thought, did, and knew about data protection. The Data Protection Award
indicator was calculated in 2020 at 86 % (2018: 76 %, excluding T‑Mobile US). The OAS surveys around 42,000 employees
Group-wide (excluding T‑Mobile US) across all levels of the hierarchy and provides data on security awareness. With academic
support, we use the results from this survey to determine the Security Awareness Index (SAI). In the last survey in 2018, the
index was 80.3 of a maximum of 100 points (higher than in any other benchmark company). We also have our processes and
management systems as well as products and services certified by external, independent organizations such as TÜV, DQS,
DEKRA, and auditing firms. The IT systems at Telekom Deutschland were most recently certified as secure in 2020 by the
testing institute TÜV Informationstechnik (TÜViT) of the TÜV Nord Group.

Telecommunications companies are required to train their employees on issues related to data protection law when they
begin their employment. Deutsche Telekom goes above and beyond these legal requirements: Every two years, we train all
of our employees in Germany and place them under an obligation to uphold data privacy and telecommunications secrecy.
Corresponding requirements apply to our national companies. Where there is a greater risk of data such as customer or
employee information being misused, we also provide additional online training designed for self-study, give data privacy
presentations, and host classroom training courses on specialized topics such as protection of customer data.

Since July 1, 2020, the Group’s cybersecurity expertise has been pooled at Deutsche Telekom Security, a Deutsche Telekom
subsidiary that leads the market for IT security solutions in Germany. Deutsche Telekom Security is responsible for everything
related to internal security and its goal is to protect all Group units. It offers consumers and business customers solutions to
make information technology more secure, from smartphones through to corporate infrastructure. In the Cyber Defense and
Security Operation Center, more than 240 security experts around the world monitor our systems and those of our customers
around the clock.

We react to new emerging threats and continuously develop innovative processes for defending against attacks. And for good
reason: cyberattacks on companies are becoming more aggressive and sophisticated across all industries. In the reporting
period alone, we registered on average almost 45 million attacks per day on our honeypot systems. Of course, not all of
the attacks picked up by our sensors are high-level threats. Most are automatic scanning tools seeking to exploit potential
vulnerabilities. While these do not necessarily count as fully fledged attacks, they are still to be seen as relevant early-stage
activities. In a shielded environment, Deutsche Telekom Security even develops its own malware and uses it to test whether new
systems can reliably detect and mitigate attack vectors. In this way we ensure our own critical IT infrastructure is protected.
We also offer other operators critical infrastructure advisory services, for example to energy providers.

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Our security experts use their experience to help develop security solutions for our customers. In 2020, Deutsche Telekom
Security brought a wide range of new solutions to market maturity. Among other things, our key security and defense offerings
were combined in the Magenta Security Shield package, so as to offer our customers even better protection. Data privacy and
security play a fundamental role in the development of our products and services. We review the security of our systems at
every step of development using the Privacy and Security Assessment process both for new systems and for existing systems
when the technology or method of data processing is modified. We use a standardized procedure to also document the data
privacy and data security status of our products throughout their entire life cycle. Our security management systems are
certified externally. At the same time, we ensure that our services also comply with specific regulatory requirements from other
industries, such as TISAX in the automotive industry.

Youth protection aspects are also taken into consideration in our product and service design. When we develop services
that could be relevant in terms of youth protection in Germany, we consult our Youth Protection Officer for suggestions of
restrictions or changes. In 2014, we appointed a Child Safety Officer (CSO) in each of our national companies in Europe. The
CSO acts as a central contact for the relevant stakeholders of the community, and plays a key internal role in coordinating
issues relevant to youth protection. Since protecting minors when they interact with media is a challenge across many different
industries, we cooperate with different youth protection organizations and participate in alliances such as the “Alliance to
better protect minors online,” which aims to make the internet a safer place for children and young people.
SDG 3 RELATIONSHIPS

We work with research institutes, industry partners, initiatives, standardization bodies, public institutions, and other internet
service providers worldwide with a view to fighting cybercrime and enhancing internet security together. For instance, we
collaborate with the German Federal Office for Information Security throughout Germany and with the European Union
Agency for Network and Information Security at a European level. The Cyber Security Cluster Bonn is an association of
authorities and companies in Bonn that are dedicated to consulting, education, and research in the field of cybersecurity.
As an expert committee, the Cyber Security Cluster Bonn offers direct advice to German and European government bodies.
SDG 17 RELATIONSHIPS

Aspect 4: Respecting human rights

We place high priority on respecting human rights. This applies not only to our Company, but also to our business partners and
our approximately 20,000 suppliers in more than 80 countries – whom we explicitly place under the same obligations.

Labor standards in the supply chain and in the Group SDG 10 EMPLOYEES

There are still places in the world where human rights are not a given. As part of our global procurement activities, we can be
exposed to country- and supplier-specific risks. These include, for example, inadequate local working and safety conditions.
Violations cause severe damage to those affected and can result in reputational damage and negative financial consequences
for companies.

For further information, please refer to the section “Risk and opportunity management.”

As a responsible company, we have made an express commitment to upholding the UN Guiding Principles on Business and
Human Rights adopted by the United Nations Human Rights Council in 2011 (Ruggie Principles). The obligation to respect
human rights is anchored in our core regulations – i.e., our Guiding Principles and our Code of Human Rights & Social Principles
policy statement. The latter underscores our commitment to protecting human rights and to the goals of the German National
Action Plan on Business and Human Rights adopted by the Federal Government in 2016. At the same time, the code embodies
our commitment to complying with the principles laid down by the International Labour Organization (ILO), the Organisation
for Economic Co-operation and Development (OECD), the Universal Declaration of Human Rights, and the UN Global Compact.
We also require our suppliers to comply with all our guidelines related to human rights. Within the Group, the main focus of our
attention is on preserving the right to collective agreements, and on ensuring diversity and equal opportunity.

For further information, please refer to the passages entitled "Collaboration with employees’ representatives/trade unions" and "Diversity and equal
opportunity.”

In order to meet the requirements of the UN Guiding Principles, we have developed an extensive program to implement these
Principles throughout our Group and introduced an ongoing process comprising several interconnected measures and tools.
The program includes the policy statement, promoting awareness, a mechanism for lodging complaints, a risk and impact
analysis, and reporting.

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We use two main instruments to review our Code of Human Rights & Social Principles in the Group: Firstly, we compile a
central Human Rights & Social Performance Report each year. For 2020, all 121 of the companies surveyed declared in this
report that they comply with the rules and principles of the Code of Human Rights & Social Principles. We also included
our five joint ventures in the survey for 2020. The report indicated no violations for 2020. Secondly, we have established a
central point of contact for human rights issues, which can be reached via the email address “[email protected].”
Further contact options and an anonymous whistleblower system can be found on Tell me!, our Group-wide whistleblower
portal. We look into all tip-offs received and introduce countermeasures, provided the information is identified as plausible.
In 2020, nine tip-offs relating to human rights were received via the point of contact and the whistleblower portal. Not all
of these tip-offs were deemed plausible. Whenever necessary, we carry out review processes at our national companies to
assess employer-employee relationships. To do so, we compile five human rights-related key performance indicators, such as
employee satisfaction, then assess these using a traffic light system. SDG 16 RELATIONSHIPS

For further information about employee satisfaction, please refer to the section “Employees.”

In addition, we conduct an annual formal review of compliance with our Employee Relations Policy. In February 2020, an
employee relations policy review was conducted at Crnogorski Telekom in Montenegro. After a review like this, the results are
discussed with the regional managers in our national companies. If necessary, we agree measures such as a Human Rights
Impact Assessment and Engagement – a process for estimating the actual and potential effects of business activities on human
rights, as well as the ability of the organization to prevent, mitigate, or eliminate negative effects. In view of the coronavirus
pandemic, we were unable to perform any further assessments abroad in 2020. The pandemic also prevented us from holding
on-site training courses to raise awareness among managers and employees for human rights issues. Instead, we organized
a Human Rights Risk Assessment at Group Headquarters, in the course of which we identified further Group-wide challenges
as regards human rights; among other things, these will make it necessary to adjust individual policies and communications
measures. We will take corresponding action before the end of 2021.

Our perception of ourselves as a company that acts in a socially and ecologically sustainable way includes assuming
responsibility along our entire value chain. We have been working to improve sustainability throughout our supply chain for
many years. Our strategy for sustainable procurement practices is embedded Group-wide in our procurement processes. The
heads of the CR and Procurement units are jointly responsible for its implementation. They report to the Board of Management
members for HR and Legal Affairs as well as Finance. An escalation process calls for decisions to be made at Board of
Management level in severe cases. The Sustainable Procurement working group supports our international procurement
units in meeting sustainability requirements. Our sustainability principles for Procurement are set out in the Group’s Global
Procurement Policy. The supplementary Procurement Practices provide specific guidelines for procurement in Germany and
serve as recommendations for our national companies. The section of the Procurement Practices covering sustainability gives
purchasing officers an overview of the CR criteria that are to be taken into account in each stage of the procurement process.
An e-learning tool is available to our employees throughout the Group for training purposes. SDG 8 RELATIONSHIPS

We cannot guarantee that all our suppliers conform to the principles of our Supplier Code of Conduct. We review their
compliance regularly to minimize risks and support suppliers in further developing their sustainability performance, working
closely with them on these issues. Leading up to the supplier evaluation, we classify our categories as critical or non-critical
based on risk and opportunity. We have defined 14 Corporate Social Responsibility (CSR) risk criteria and four CSR opportunity
criteria on the basis of expert interviews.

For the supplier evaluation itself, we use a multi-stage approach: The Supplier Code of Conduct, for instance, is an integral part
of all supplier agreements and binding for all of our suppliers. Ethical, social, and ecological principles as well as fundamental
human rights are codified in this document. When selecting a supplier after issuing an invitation to tender, sustainability factors
are given a weighting of 10 %. In addition, new suppliers are subjected to a sustainability risk assessment by an external audit
firm. In this way, we discover if there is any increased risk in terms of specific sustainability criteria at any of our suppliers.

Sustainability assessments and reviews are conducted for selected suppliers of critical categories. Depending on their
individual sustainability performance and risk classification, we use a range of instruments, for instance, the information
system EcoVadis, mobile surveys, or on-site supplier audits (social audits). Our focus here is not only on our direct suppliers
but also, wherever possible, on downstream suppliers. We also boost the effectiveness of our audits by collaborating with
15 other telecommunications companies in the Joint Audit Cooperation (JAC). In 2020, we completed a total of 89 social audits
(76 audits and 13 mobile surveys) – 29 at our direct and 60 at our indirect suppliers. Since 2010, we have carried out 728 audits
within the framework of the JAC. The coronavirus pandemic had little impact on the planned JAC audits: where in-person audits
were not possible, they were conducted by video conference, for example. SDG 10 RELATIONSHIPS

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= p q Combined management report 93

We work in close cooperation with our strategically important suppliers on improving their sustainability performance, for
example, in terms of environmental protection, working hours regulations, and occupational health and safety. This is done
primarily as part of the development program we initiated for suppliers. Since 2018, we have been implementing this program
on the basis of a voluntary industry-wide approach known as the Sustainable Development Program (SDP). In addition to
Deutsche Telekom, telecommunications companies Telefónica and Swisscom have thus far joined the SDP as well and more
are to follow. In the reporting period, six further suppliers (two of Deutsche Telekom, three of Swisscom, one of Telefónica)
were included in the SDP. Since the launch of the program in 2014, a total of 29 suppliers have completed the SDP, achieving
measurable ecological, social, and economic progress. Suppliers made further progress in 2020, too. For instance, one of
them succeeded in raising its employee satisfaction level by 11.5 %. Another installed its own photovoltaic system, cutting by
3,700 MWh/year the amount of energy needed to heat and cool its buildings and saving 3,034 metric tons of CO2e emissions.
SDG 17 RELATIONSHIPS

As announced in the 2019 CR Report, we changed our sustainability performance metric for procurement in 2020 in order to
meet the increasing requirements of our stakeholders. To this end, one of the steps we took was to define two new ESG KPIs:
The Procurement Volume Without CR Risk ESG KPI – for which the target is 95 % by 2025 – measures the procurement volume
from direct business partners on whom an established external service provider carried out checks in the reporting period
for negative reports in the media and found no irregularities. It also includes suppliers for whom irregularities were identified,
but where corresponding corrective action was taken. The share of this procurement volume subjected to a risk assessment
amounted to 99.6 % in 2020. On the other hand, the Order Volume Verified as Non-Critical ESG KPI – target for 2025: 60 %
– measures the share accounted for by suppliers checked for social and ecological criteria by means of dedicated reviews –
e.g., via EcoVadis, the Carbon Disclosure Project (CDP), social audits, supplier visits, or our Supplier Development Program.
In 2020, the share of these CR-qualified suppliers was 62 %. Both ESG KPIs are calculated in respect of the audited Group-
wide procurement volume already largely mapped in a standardized procurement reporting system (excluding the “Network
Capacity” category and T‑Mobile US). The new KPIs replace the previous indicators “Sustainable procurement” and “Top 200
CR-qualified suppliers.”

We are constantly working to enhance the social and ecological sustainability of our value chain. In the reporting year, we
developed specific sustainability criteria for IT and network products and tested them in a pilot project. As of 2021, these
criteria will be applied in all tenders for hardware products and have a weighting of 10 % when selecting suppliers.

Detailed information on our supplier management system will be published in our 2020 CR report.

Aspect 5: Fighting corruption

Corruption and unfair business practices violate national and international law. We reject every form of corruption, which is why
corruption avoidance measures constitute a focus of our compliance activities.

Ethical business practices and compliance SDG 16 EMPLOYEES

We feel it is highly important that all staff and executive bodies in our Group act with integrity and comply with our values,
rules of conduct, and applicable laws and statutory requirements at all times. The goal of our compliance activities is to prevent
violations and improper business behavior and to integrate compliance into our business processes early on and enduringly.
Our customers need to be able to trust that our actions meet the highest standards for compliance and integrity around the
world. This is essential if we are to be seen as a reliable partner.

We have expressed our commitment to complying with ethical principles and both legal and statutory requirements. We have
anchored this pledge in our Guiding Principles and our Code of Conduct. The Code of Conduct is valid throughout the Group
and has been introduced in all of our national companies.

Group Compliance Management, our central compliance organization, also plays a key role in establishing corporate
governance structures and a corporate culture that focus on integrity. It promotes a compliance culture and establishes a set
of values centering around the issue of compliance at our Group, and encourages managers and employees to internalize these
values. Our understanding of compliance therefore far exceeds simply conducting business legally, i.e., in line with laws and
internal regulations, and aims to ensure everyone in our Group behaves with integrity.

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We have introduced a comprehensive compliance management system to establish integrity and compliance with the law
as pillars of conduct across the entire Group. The compliance management system serves to mitigate exposure to legal and
financial risks, minimize the risk of reputational damage being sustained by the Company, its employees or executive bodies,
prevent violations of applicable law and internal policies and regulations, and deter conduct not in compliance with our
values. All our activities comply both with legal and statutory requirements and with our own internal policies and regulations.
Responsibility for the compliance management system lies with the Board of Management department for Human Resources
and Legal Affairs. In addition, one person at management or board of management level in each Group company is in charge of
compliance. Our Chief Compliance Officer is responsible for the Group-wide design, advancement, and implementation of the
compliance management system. Compliance officers implement the compliance management system and our compliance
goals locally at the level of our operating segments and national companies.

We take many different actions and measures to prevent and fight corruption. Our compliance management system is based
on the Compliance Risk Assessments (CRAs), which we use to identify and assess compliance risks and introduce suitable
preventative measures. To this end, we have introduced a Group-wide process to be carried out annually. The companies that
will take part in the CRAs are selected according to the level of maturity of their compliance management system (maturity-
based model). In the reporting year, the CRAs included 69 companies and covered almost 94 % of the workforce (according to
the headcount figures for the fully consolidated companies). The individual Group companies are responsible for conducting
the CRA, with support and advice given from the central compliance organization. We have our compliance management
system regularly reviewed, with particular attention paid to anti-corruption measures. In the two-year period 2020/21, a total
of 23 German and international companies will be externally audited.

We regularly provide risk-oriented and target group-specific compliance and anti-corruption training. We have set up the Ask
me! advice portal to address all kinds of issues relating to compliance. The portal contains reliable information for employees
on laws, internal policies, and rules of conduct relevant to their daily activities.

Despite all precautions, we are not always able to prevent breaches of law or violations of regulations at the Company. The
Tell me! whistleblower portal is available to employees and external parties for reporting breaches or suspected breaches of
the law or of internal policies and regulations. In 2020, 113 compliance-related tip-offs were submitted via the Tell me! portal
(prior year: 122 tip-offs). Over the course of the year, 46 of these were confirmed to be cases of misconduct and dealt with
accordingly. Within the scope of the legal framework available to us, we systematically pursue all tip-offs, including those that
reach us via other channels, and implement commensurate sanctions in compliance with the relevant statutory provisions. We
have introduced a Group-wide reporting process to control and monitor these activities.

With our Supplier Code of Conduct as an integral component of our General Terms and Conditions for Purchasing, we obligate
our suppliers to, among other elements, refrain from any kind of corruption or conduct that could be interpreted as such. We
select our business partners based on compliance criteria and conduct risk-oriented compliance business assessments. We
have been offering regular e-learning training courses on compliance to our suppliers since 2014. SDG 17 RELATIONSHIPS

Innovation and product development

VTI strategy: we enable today’s business and shape the future
At Deutsche Telekom, innovation means creating the best (digital) customer experience on the basis of the best network
– now and in the future. To this end, we neither manufacture smartphones, nor do we create our own film content, or the
automation technology and sensors for industrial campus networks. Our core competency consists in integrating the individual
components so that, in conjunction with our network and IT infrastructure, we can guarantee the best customer experience at a
reasonable price with resilient and future-proof technology. This is precisely the task of our Technology and Innovation Board of
Management department (VTI), which works in close cooperation with our operating segments. VTI is where we combine and
integrate our Technology, Innovation, IT, and Security functions. This structure will allow us to meet the demands of the future
network generation and the associated requirements not only of our customers, but also of society as a whole – also in terms
of network security and sustainability. Our Group strategy includes the claim to “lead in technology.” That applies not only
to high-speed broadband access, but also to responsible network production. That is an economic and ecological necessity,
especially given growing cloudification, increasing data traffic, and the rising number of active components in our network.
SDG 9 ENVIRONMENT

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Gaming exemplifies the comprehensive nature of the role we play. We do not program games, but offer creators of games
and gamers themselves a cloud gaming platform that uses the latest NVIDIA RTX servers with powerful graphics cards. Our
networks enable a seamless end-to-end experience that also includes access to stable bandwidth. It is a service we can already
offer our fixed-network broadband customers, and our LTE/4G and 5G mobile customers. On top of that, we are building
infrastructure to integrate distributed cloud capacity (edge clouds) into our networks. That is getting the cloud closer to the
gamers. We define and configure our networks in such a way as to provide stable, low-latency gaming traffic, making for a user
experience without interruptions and delays. At the same time, we help a large number of people #TAKEPART by facilitating
access to our platform.

The crisis triggered by coronavirus has underscored the importance of investing in resilient, future-proof technology: our
networks and IT were, are, and will remain secure and stable. That would not have been possible without the IP migration in
Europe and the IT turnaround in Germany.

We are thus in a position both to enable Deutsche Telekom’s current business and to simultaneously shape the future. We
are convinced that, in line with the priorities of our segments, we can reliably deliver results, constantly develop product,
industry, and technological innovations, and simultaneously hone and refine our ways of working – all in the best interests of
Deutsche Telekom.

Delivery Innovation: VTI is a supplier for the Group. As such, it is particularly important that we consistently meet our
obligations. That means conscientiously delivering our services, leveraging the synergies offered by centralized production,
and working cost-efficiently. At the same time, we can also shape the future, e.g., by promoting agile working methods to
make our production future-proof.
Experience Innovation: We are Deutsche Telekom’s central innovation team. Constantly pursuing innovations that benefit
both our customers and the Group is our task and our obligation – but we also consider it an expression of the freedom we
enjoy. Our technological innovations form the underpinnings for this. We work in close cooperation with the segments in
order to meet all customer requirements, and create useful and meaningful innovations.
Capability Innovation: Continuing to turn Deutsche Telekom into a software-based company entails transforming our
capabilities. We want to recognize future changes in our Company and be able to handle them as they arise. Changes
become entrenched especially when accompanied by cultural innovation in the shape of skills transformation and the
systematic retraining and further training of our employees as software engineers, AI experts, and network architects. By
the end of 2020, we had given 1,000 of our employees intensive training in topics relevant for the future, such as software
development, artificial intelligence, and cloud computing in 15 Skill Academies. SDG 4 EMPLOYEES

Innovation priorities
Where does innovation come from? Everywhere. That is why it is important to ensure we pursue our innovation activities at an
intragroup level and that they are aligned with our strategy. Our interconnected innovation areas provide a holistic, Group-wide
framework for this. In the reporting year, we continued to hone our innovation priorities in close coordination with the operating
segments, building on our activities in 2019:

Connectivity: We are working to ready our router operating system for the digital future – with enhanced cloud-based
connectivity management and service quality, a superior customer experience and standardized operation via app, PC,
or TV, and value-added applications, such as child protection functions, home security, predictive maintenance, and
troubleshooting. This new router generation is based on a scalable global reference system (Reference Design Kit, RDK),
which we are constantly fine-tuning together with other leading telecommunications providers. In 2020, we launched initial
applications and prototypes in Germany, Hungary, Croatia, and Greece. We will be starting a comprehensive pilot with the
latest router generation in early 2021.
MagentaGaming: We readied our cloud-based gaming offering for the market, launching it at Gamescom in August 2020. In
an effort to become the best entertainment aggregator in our markets, we are continuously evolving the offering’s functions
and features, expanding the available content, integrating payment and customer loyalty systems, and developing mobile
gaming applications.
Smart Home: We began cloudifying our smart-home offerings in the previous year, with the aim of making the ecosystem
future-proof. We achieved a substantial increase in customer satisfaction, in part by making the activation process a lot
simpler. The 2020 financial year saw the integration of Smart Home into Telekom Deutschland’s new broadband service,
which entailed the changeover to hardware-based applications and in-app service activation via Telekom ID to increase user
numbers.
Home Orchestration: We want to improve the customer experience at home by ensuring the easy, seamless, and uniform
interaction of all Deutsche Telekom’s services and devices, and by enabling the services of selected partners. We continue
pushing forward with this integration and orchestration of the home network, TV, smart speakers, smart-home applications,
and entertainment services. Initial applications, e.g., Wi-Fi Sharing, have already gone live.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 96

Magenta Voice: In summer 2020, we launched the first mini speaker on the German market. This compact speaker version
was honored with the German Design Award. What is more, multiple individual designs make it truly customizable. With
smart voice control (also known as voicification), we want to further enhance the way our customers experience our services,
and to simplify interaction with technology and devices. In addition, we are constantly evolving the voice platform, winning
over new partners, and integrating further voice-controlled Telekom services (e.g., TV, Smart Home). Ongoing functionality
enhancements have resulted in rising customer satisfaction levels. In parallel, we are pushing forward with B2B solutions.
5G: With 5G, we are creating the basis for the digital world of tomorrow, especially when it comes to real-time
communication. This next-generation technology is the key to innovative applications for virtual reality and extended reality
(XR), connected and autonomous driving, robotics, and Industry 4.0. In 2020, we defended our position as innovation leader
for the 5G core network by launching dynamic spectrum sharing (DSS), a new antenna technology that for the first time
enables the parallel use of LTE and 5G in the same frequency band. DSS has been key to successfully expediting the 5G build-
out and thus contributed in a major way to accomplishing our current level of network coverage reaching two thirds of the
population in Germany.
Campus Networks: Campus networks for corporate customers are one of the core applications for 5G technology. Campus
networks integrate dedicated mobile connectivity with edge computing and integrated digital applications from the fields of
production, automation, and logistics, enhancing companies’ options to automate their production, and achieve stability and
flexibility. We continued expanding our campus portfolio in 2020 and, at the end of the year, successfully completed pilot
projects for a 5G campus at the University Hospital Bonn and a “private-only” campus for corporate customers with their
own spectrum. The 5G NR NSA product, Campus L, has been ready for rollout since December 2020, while the Campus M
version was launched in summer 2020.
Network Differentiation: In this innovation program, we are developing software solutions for the automated analysis and
operation of network infrastructure based on artificial intelligence (AI) and machine learning. In addition, a multi-vendor
strategy serves to strengthen autonomy and enables us to maintain our innovation leadership. This approach to network
production is based on cloud and software technologies that will significantly enhance the customer experience and improve
both flexibility and scalability. At the same time, it lowers production costs and opens up new monetization options. The
Open Test & Integration Center (OTIC) was opened in Berlin. Here, start-ups, suppliers, operators, and systems integrators
can test out how new components interact with mobile networks. The goal is to create a vendor-independent RAN that also
interacts quickly and easily with other networks. This is the vision being pursued by the network operators and suppliers that
have joined forces in the O-RAN Alliance.
AI Enterprise: By integrating artificial intelligence, we will ensure that our products and services remain competitive into the
future. The focus of our activities in 2020 was on scaling up the chatbots already based on AI in order to further personalize
customer interactions across all points of contact. German computer magazine Computer Bild named our “Frag Magenta”
chatbot the best chatbot by a German telecommunications provider (issue 24/2020). We also continued to personalize our
marketing and sales activities so as to be able to offer our customers tailored solutions that are based on our previous
interactions with them.
Big Data: This is an innovation area in which we are driving the implementation of Group-wide principles for data processing
and analytics. Our uniform data model will enhance our data analyses and enable us to easily transpose successful analyses
to new markets. As our top priority is the privacy and integrity of our customers’ data, customer and network data remain
with the relevant national companies. Applications have been implemented at five national companies and have already
resulted in significant efficiency gains.
Sustainable Telco: Our latest innovation area is devoted to making telecommunications providers more sustainable.
Currently, the main focus is on energy-optimized network production and the resource-efficient design of products and
services. The reporting year saw successful prototypes and tests for AI-based, smart energy management in the mobile
network and for decentralized renewable energy production.
Three-pronged innovation strategy
We set ourselves apart from the competition and generate growth in three ways:

1. In-house developments
2. Partnerships
3. Start-up funding
1. In-house developments
In 2020, we continued to pursue our current innovation topics and optimized our delivery process, developed new products,
and simultaneously ramped up our transformation into a more agile company.

Delivery innovation: Artificial intelligence drives internal digitalization, e.g., in campaign management or with the Magenta
chatbot, which Computer Bild, a German computer magazine, named best chatbot by a German telco in its 24/2020 issue.
Dynamic spectrum sharing helped us build on our leadership position. This new antenna technology enables the parallel use
of LTE and 5G in the same frequency band.
Experience innovation: In the consumer arena, we executed the commercial launch of the mini speaker and MagentaGaming.
Industrial campus networks also reached the market.
Capability innovation: In the wake of our transformation into an agile company, more than 70 % of our employees now work
in an agile set-up, which is also having a positive impact on IT delivery. For example, around two-thirds of our IT deployments
now take place outside of the traditional waterfall development model.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 97

Thanks to our centralized research unit, Telekom Innovation Laboratories (T-Labs), we have access to our own R&D centers.
At our T-Labs sites in Berlin, Be’er Sheva, Budapest, and Vienna, we collaborate with the world’s leading universities, research
institutes, and other companies’ innovation centers. Together with these partners, T-Labs is conducting research &
development at the interfaces between science and entrepreneurship, with a view to shaping the future in our current key
areas: Blockchain, Intelligence, and Experience. The T-Labs teams are solving specific customer problems, enhancing
Deutsche Telekom’s innovative strength, and tapping into the topics of the future for networks, computing, and processes.
SDG 9 RELATIONSHIPS

Blockchain has multiple thrusts: In the first, blockchain technologies are being assessed to see whether they can help make
Deutsche Telekom’s internal processes more efficient and transparent. A specific example is wholesale roaming, where, in
partnership with the GSM Association (GSMA) and other telecommunications companies, we have designed a solution for
creating, signing, and billing contracts. The medium-term goal is to work together with the GSMA to create an industry
standard to enable further use cases to be implemented using this solution. The second thrust focuses on using the
blockchain as infrastructure. This could be crucial, for example, to development of the M2M economy, where producers and
consumers connect in a decentralized manner and share trusted data. Another new topic of interest is the development of
decentralized identity solutions that could allow people and even machines to autonomously store and manage their own
identities. Above and beyond that, we are looking into new ways of participating in open-source projects.
Intelligence relates to all aspects of teaching cognitive abilities to machines. The resulting artificial intelligence (AI) is
defined as the imitation of human intelligence or intellectual processes by computer systems. Such processes include
learning, drawing conclusions, and automatic correction. T-Labs’ main focus is on developing innovations that are
thematically related to the requirements of a telecommunications provider and that help automate or optimize its
infrastructure, processes, or products. AI research is currently focused on the following: communication networks (so as to
optimize network planning for the rollout of new technologies such as fiber optic or 5G); cybersecurity AI (in order to protect
Deutsche Telekom’s customers and its own infrastructure, and achieve fair, verifiable results using AI); and quantum AI (to
enhance both the speed and quality of machine learning processes). In addition, we are launching sustainability AI – which
uses AI-based optimizations to make more efficient use of valuable resources. SDG 15 ENVIRONMENT

Experience developed an infrastructure for smart city solutions that is based on micro-services. Developed using open
standards, the infrastructure allowed for the integration into the existing OGC platform operated by the City of Hamburg. The
platform enables citizens to access a variety of information about their city (free parking spaces, available charging stations
for electric vehicles, etc.). The services developed reflect the quest to satisfy the future needs of society. The Experience
team collaborates with scientists, businesses, and other partners to shape both the customer journey for every product and
the value added by every service. Specific results include prototypes and tests to improve streaming quality, and to utilize
XR technology for Deutsche Telekom’s business areas.
University Partnerships is being established in cooperation with a large number of Deutsche Telekom units to function as a
Group-wide linchpin for innovation, further training, and HR marketing. Academia as a Service was launched by T-Labs as an
active research network aimed at fostering global academic partnerships, e.g., by starting pilot projects or putting Academia
partners into contact with Deutsche Telekom stakeholders. T-Labs’ active promotion of university partnership programs assists
Deutsche Telekom’s HR department in recruiting talented new employees and helps strengthen the Company’s corporate
brand.

2. Partnerships
We draw on the expertise and abilities of our partners in order to implement the digital transformation. For example, we rely
on the tremendous innovative energy coming out of Silicon Valley, Israel, Germany, and other innovation hotspots across the
globe. The following are some examples of successful partnerships:

Deutsche Telekom concluded an agreement with SK Telecom to set up a joint venture for 5G technology. The joint venture
will assist both companies in developing innovative 5G solutions. The focus is on solutions that ensure in-house 5G coverage,
initially for the European market. In-house coverage, which is accomplished using 5G repeaters, is currently an untapped
market niche, and the joint venture can play a pioneering role in this area. In the medium to long term, we are assessing
options for partnerships in the fields of augmented reality (AR) and virtual reality (VR) services, mobile edge computing
(MEC), and the app market.
Deutsche Telekom joined the Open RAN Policy Coalition, building on its groundwork in this field: promoting and accelerating
carrier-grade open-RAN solutions for an even better customer experience in our networks. As a trailblazer in this area, we
founded the global #OpenRAN movement back in 2016. Its mission is to develop specifications to open up and cloudify
the RAN, and to encourage a more lively and competitive environment for network equipment providers. Since then, Open
RAN has gained considerable momentum. The technical standards and interfaces of the O-RAN Alliance are making the RAN
open, smart, and fully interoperable.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 98

Together with U.S. navigation specialist Swift Navigation, Deutsche Telekom is launching a solution for reliable, high-
precision geopositioning in the European market. Called Precise Positioning, the system is accurate to the centimeter and
enables, for example, lane-accurate navigation for (semi-)autonomous vehicles. Conventional satellite navigations systems
like GPS are accurate only to within three to five meters. Skylark™, Swift’s cloud solution, corrects this satellite data, allowing
the location of autonomous vehicles and machines to be determined with greater accuracy. Via the mobile network, data
flows continuously between the ground-based reference stations operated by Deutsche Telekom, the cloud solution from
Swift, and the M2M SIM card in the vehicle, delivering precise correction data and enabling exact positioning in real time.
Precise Positioning opens up new cross-industry mobility options and possibilities to develop autonomous applications that
require exact, reliable positioning. The potential application areas include the automotive industry, logistics, drones, rail
traffic, agriculture, the construction industry, and even consumer solutions. In the agricultural sector, for instance, with
Precise Positioning self-driving machines can be deployed to sow crops, spread fertilizer, or plow fields with inch-perfect
precision and thus save seeds, fertilizer, and energy. SDG 13 ENVIRONMENT

Deutsche Telekom is now working together with RemoteMyApp (RMA) as its partner for modern game streaming technology
to serve the cloud gaming business area and bring its MagentaGaming service to the market. Under the partnership, the
streaming solution is provided under a limited-time exclusivity arrangement in Deutsche Telekom’s footprint markets.
Deutsche Telekom is also partnering up with Nreal, an incredibly innovative provider of mixed reality hardware and software
with multiple accolades to its name including as a winner at the CES Innovation Awards. Under the partnership with Nreal,
Deutsche Telekom has developed a variety of mixed reality solutions for gaming, entertainment, and productivity, which offer
our customers the opportunity in our shops and at other locations to experience the huge potential of our 5G networks first
hand.
TM Forum is a leading global alliance of over 700 companies working together to standardize application integration for
service providers from the information and telecommunications technology sectors. As a TM Forum member,
Deutsche Telekom is a signatory to the Open API Manifesto and its contributions include working with co-members to further
develop the standard for open APIs. Open APIs promote better interoperability with partners and help to standardize the
integration points between software applications. This is an essential piece of the puzzle both in terms of establishing cross-
industry component recycling and ensuring the integration capability of innovations.
Deutsche Telekom joined the 1000+ Solutions Challenge Alliance of the Solar Impulse Foundation in order to identify and
promote technologies to reduce carbon emissions in the ICT sector. We are working hand in hand with the Foundation to
accelerate the rollout of sustainable and profitable solutions for the ICT industry. We will also make use of these solutions to
help achieve our own climate targets.
3. Start-up funding SDG 9 RELATIONSHIPS

As Deutsche Telekom’s leading start-up program, the tech incubator hubraum puts external start-ups in touch with the relevant
business units in our Group, so that together they can offer innovative products to consumers and business customers. To
this end, hubraum provides the start-ups with seed financing from its own investment fund and targeted innovation programs
geared to our strategic growth areas and technologies.

Since founding hubraum in 2012, we have set up a strategic investment portfolio of over 30 companies and worked together
closely with around another 350 start-ups from Europe and Israel in areas such as the real-time gigabit society (e.g., 5G and
edge cloud), the smart data economy (e.g., AI and process automation), and the Internet of Things (e.g., NB-IoT and Industry
4.0). With Europe’s first 5G networks and edge cloud infrastructure, the hubraum campus in Berlin offers start-ups not only co-
working office space, but also exclusive access to our Group’s networks, product platforms, and test data to help them build
up their businesses faster. Launched in 2019, the hubraum 5G prototyping initiative was continued in 2020 with more specific
programs:

B2B – Campus Network Program. Under the Campus Network Program, five start-ups were chosen to develop future
applications for 5G campus networks in collaboration with Deutsche Telekom. The applications are to be implemented, for
instance, at the Aachen-based Center Connected Industry (CCI), of which Deutsche Telekom is a member.

B2C – Consumer Entertainment Program. Starting in July 2020, seven start-ups worked on projects as part of our 5G
Consumer Entertainment Program, the results of which were presented in early October 2020. The goal was to develop
concrete 5G applications. The following start-ups received investment funding from Deutsche Telekom:

In mid-2020, hubraum and its partners Nreal, Qualcomm, and Unity jointly hosted a mixed reality innovation program for
start-ups. Over 150 start-ups from across the globe applied to be included on the program, with 14 teams accepted as the
2020 cohort. The participating teams were each given a pair of Nreal Light mixed reality glasses and were able to begin
refining their ideas at the end of the year. They have until the Demo Day in spring 2021 to finalize their projects.
Australian start-up tagSpace is already collaborating with n-tv, a news channel. The company is testing how to integrate
conventional news content and dedicated specials – e.g., on the fall of the Berlin Wall – into an augmented reality (AR) app.
Together with Quake Capital, a U.S.-based investor specializing in seed funding for early-stage start-ups, and Mediengruppe
RTL, in 2020 seven start-ups were selected to test and evolve their ideas in Deutsche Telekom’s live network as part of the 5G
Consumer Entertainment innovation program. Their goal was to turn 5G into a first-hand experience for our customers. This
three-month program was held around Deutsche Telekom’s Headquarters in Bonn, where the start-ups were given access to
5G infrastructure for testing purposes.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 99

You can use the Dance Fight app developed by Virtual Arts to put your dance moves to the test and compete live against
other dancers. People across the globe follow these dance contests and can vote for their personal favorites. Dance Fight is
already available in the Apple and Google app stores in the United States.
MojiLaLa’s LeoAR app enables you to place 3D objects in the real world, letting virtual dinosaurs roam through Berlin, for
example. Super RTL, a television channel, already uses this app, thus benefiting from the start-up program. German soccer
team 1. FC Köln, too, is already testing integrating figures into one of the start-up’s AR apps.
Another innovation program focusing on extended reality was launched in 2020 and is set to continue in 2021.

Innovation governance
Innovation cycles are getting shorter and shorter. As a result, we must be agile and flexible in how we manage and budget
our innovation projects. We orient ourselves toward the best-practice approaches used by innovative start-ups and successful
companies, and to the latest findings from research and academia.

Portfolio and Innovation Board

The Portfolio & Innovation Board (PIB) plays a central role in managing our innovations. This Group-wide body ensures that
we set the right priorities by identifying and selecting the innovation projects for our Group and deciding on the method of
implementation. Our efforts are guided primarily by the Group strategy and we create full transparency across the Group
regarding our investments in innovation.

Corporate Innovation Fund

Our Corporate Innovation Fund (CIF) is managed centrally by the PIB. Similar to a venture capital approach, the CIF offers all
business and product ideas generated within the Group a flexible and results-oriented form of funding for a specific project
phase. The provision of an additional innovation budget allows us, for example, to fund new innovation projects at short notice
and with little red tape. Such financing is granted independently of annual planning periods, and therefore intensifies our focus
on market and customer requirements. Innovation can take place anywhere across Deutsche Telekom, as long as the proposed
business and product ideas fit within our Group’s central innovation focuses.

Investment Committee
We established the Investment Committee to speed up investment decisions on our multi-year innovation priorities. Its
objective is to act like an (internal) venture capitalist. The Investment Committee allocates funding according to success,
orienting itself to the approach used in the start-up industry and among venture capital investors, whereby raising new funding
from capital investors is dependent on the venture’s performance. This gives us the flexibility we need when developing
innovation topics and focuses efforts on success. Funding is made available for the next project phase only when specific
outcomes that are relevant to our customers are achieved.

Deutsche Telekom Capital Partners

Deutsche Telekom Capital Partners (DTCP), established in early 2015, is Deutsche Telekom’s investment management group. It
manages approximately USD 1.7 billion of assets and advises a portfolio of over 60 companies on behalf of Deutsche Telekom
and other institutional investors. DTCP pursues two investment strategies: growth equity in Europe, the United States, and
Asia, and investments in digital infrastructure in Europe. The prime motive for DTCP’s investments is financial. For example, it
acquires shares in companies still in the growth phase and aids those companies’ further growth, with a view to selling its stake
for a profit later on. DTCP also plays an active role in establishing business relations between the innovative portfolio companies
and Deutsche Telekom in order to add value for both sides.

In the growth equity field, the focus on cloud-based software-as-a-service (SaaS) solutions for companies resulted in a positive
development, not least due to the spike in the number of people working from home and to increasing digitalization. New
additions to the growth equity portfolio included Aircall (call center software), Arctic Wolf Networks (corporate network
security), Auth0 (single sign-on systems), Catenoid (online video), and Epsagon (app management). In addition, DTCP
increased its stakes in the successful portfolio companies AppsFlyer (marketing analytics) and LeanIX (IT architecture suite).
Through the entrance of a new majority shareholder in Pipedrive, a provider of CRM software, DTCP was able to divest part of
its stake in the company. The successful investment in Community Fibre, a fiber-optic provider for the London metropolitan
area, was DTCP’s first in a fiber-optic network and another milestone in the field of digital infrastructure. Cell towers, fiber-optic
networks, and data centers are set to form a focus of further DTCP investments.

The strategic investment fund Telekom Innovation Pool (TIP) is available for investments that are mainly strategically
motivated. Advised by DTCP, Deutsche Telekom makes investments in and promotes business start-ups that have a strategic
focus and clearly collaborate with the Group’s business managers. TIP actively pursues long-term innovations for the
Deutsche Telekom Group, particularly in the fields of software-defined networking (SDN) and the digitalization of business
operations. In 2020, TIP made five new corporate investments: Cynet (network security), Everphone (rented mobile devices),
RemoteMyApp (cloud-based gaming solutions), Weaveworks (Kubernetes services), and vHive (drone surveillance of business
assets).

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 100

Patent portfolio
Patents are gaining more and more significance in the telecommunications industry. Our patent strategy has to keep pace
with the constant evolution of market players and fields of activity. On the one hand, our Group’s scope for action must be
maintained. On the other, in addition to pursuing our own research and development activities, we want to pave the way to open
innovation through collaborative projects and partnerships. National and international patent rights are vital for these types of
activity. We are strongly dedicated to generating and maintaining our own patents. In the reporting year, Deutsche Telekom
held a total of around 8,800 patent rights. We are continuing our intense efforts to develop and streamline our patent portfolio.
This will secure the value of the rights we hold and ensure they are in line with our Group’s strategic objectives. We have put in
place a professional patent law management process to keep our patents safe.

Investment in research and development

Research and development (R&D) expenditure includes pre-production research and development, such as the search for
alternative products, processes, systems, and services. By contrast, we do not class as R&D expenditure the costs of developing
system and user software which is designed to improve productivity and make our business processes more effective. R&D
expenditure in the Deutsche Telekom Group amounted to EUR 33.1 million in 2020 (2019: EUR 45.4 million). In 2020, our
Group’s investments in internally generated intangible assets to be capitalized were also up year-on-year at EUR 448.4 million
compared with EUR 344.2 million for the previous year. These investments predominantly relate to internally developed
software, mainly in our Group Headquarters & Group Services segment and our Systems Solutions operating segment.

Employees
Supporting people. Driving performance.
We at Deutsche Telekom are actively shaping the digitalization of society and are engaged in the cultural and digital
transformation of our own company. In many areas, environmental effects, new technologies, and business models entail
fundamental changes to our working world and the skills we require for it. Our aspiration is to steer this change process and, in
doing so, shift the focus of attention to people. After all, it is our employees who make all the difference. In order to offer our
customers not only outstanding products and services, but also excellent customer service, we need the very best employees
– now and in the future. That is why we also have to remain an attractive employer for talented individuals. We need to create
a working environment that encourages flexible, participative ways of working, and entrench a culture of learning that enables
us to build up the new skills needed to meet current and future challenges.

Our priorities in 2020

1. Tackle the challenges posed by the coronavirus pandemic
2. Evolve our culture and design new working environments
3. Continue the long-term transformation of our workforce
In the following, we provide details of sample projects and initiatives designed with these priorities in mind.

Our HR work based on the priorities

1. Tackle the challenges posed by the coronavirus pandemic SDG 3 EMPLOYEES

Throughout 2020, the coronavirus pandemic compelled us to take special action to maintain our operational capability and
protect our employees. The Group-wide measures described below were taken in collaboration with the Group Situation Center
to prevent the spread of the pandemic, inform the workforce, and intervene where necessary. The Group Situation Center
forms part of Deutsche Telekom’s system for managing security incidents. It is responsible for coordinating, managing, and
monitoring the measures taken to tackle serious threats; it reviews and evaluates the available information, and implements
countermeasures – either directly, for example, as part of Deutsche Telekom Security’s master incident management system,
or by delegating responsibility to employees or units with the corresponding expertise.

Maintaining our operational capability. In order to maintain our operational capability, employees in the local organizations
who are responsible for operating critical infrastructure and maintaining business-critical processes were assigned to teams
at short notice and spread across various locations. In addition, 16,000 employees from the 49 service centers transitioned to
working from home within one week, and a further up to 80,000 colleagues in Germany and up to 180,000 colleagues globally
are also able to work remotely. This was made possible by the rapid rollout of mobile working options and IT support (new
facilities for remote working were set up for 16,000 employees at short notice). In addition, country-specific measures were
adopted in line with local requirements, e.g., risk bonuses, a monthly allowance for employees with direct customer contact (in
Greece, North Macedonia, Croatia, and Hungary, for instance), the introduction of short-time working, and the transfer of staff
between key areas such as shops and service centers. Our 7,000 field staff – equipped with appropriate protective gear and
information for customers (such as the recommendation to air the premises before the technician’s visit) – continued calling
on customers to configure connections, rectify faults, or optimize their WiFi so they could work from home (#MagentaHelden
(magenta heroes)). As a token of its appreciation, the Board of Management of Deutsche Telekom AG decided to award all
active employees (non-civil servants, trainees, civil servants, and in exceptional cases also loan and temporary staff) – with the
exception of the United States operating segment – a special coronavirus bonus of EUR 500 each.

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= p q Combined management report 101

Measures to protect employees and ensure hygiene. Measures that are key to preventing the spread of the pandemic within
the Group included the precautionary quarantining at home of suspected coronavirus cases, issuing protective clothing to
employees (especially service personnel and those working in our shops), supplying all employees with everyday masks, and
providing disinfectant. As early as in spring 2020, employees were obligated to wear masks in the office and the frequency of
cleaning was ramped up significantly. The maximum occupancy at meetings was reduced to match the corresponding room
size so as to enable proper physical distancing. Beyond that, business travel to high-risk COVID-19 destinations was stopped at
an early stage.

Information and offers of support. We were for the most part able to stop the spread of coronavirus within the Group by
providing all relevant contacts at the local organizations with daily briefings from the Group Situation Center, reporting all
suspected and actual cases of illness to the latter, and putting in place a process to intervene in confirmed cases. Our constant
efforts to inform and protect all our employees and establish rules of conduct were supplemented and reinforced by a personal
Coronavirus Update newsletter issued by our Board of Management member for Human Resources and Legal Affairs. We
also made use of our extensive network with other DAX-listed companies and the world of science to continually evolve
our practices and share our own best practice with other companies. Above and beyond that, we supported our employees
and managers by providing them with virtual formats on topics such as leadership, remote collaboration, and resilience (for
instance, the online seminar “Starke Psyche (A strong psyche)”) and by setting up additional IT support channels and a
helpline for dealing with psychological problems. Moreover, we were able to offer all our employees in Germany a regular
opportunity to chat online with a virologist and hygiene expert from the University of Bonn. This live chat option not only
provided the participants with a rundown of the current situation, but also covered key topics, gave recommendations on how
to behave, provided answers to employees’ questions, and dealt with the consequences for the “new normal” in working life at
Deutsche Telekom. We were also able to provide parents with a free one-year premium license for Sofatutor, Germany’s largest
online learning platform. SDG 4 EMPLOYEES

Social cohesion. Just how important social cohesion is for us has been evident throughout the course of the pandemic,
especially during the lockdown phases. Interaction, sharing ideas, and just being together and having common experiences
form the basis for innovation and creativity, and engender a feeling of safety and belonging. Since fall 2020, we have made
targeted investments in initiatives to promote social cohesion. These include formats such as culture gigs (live concerts), virtual
sporting and knowledge challenges, and virtual lunches with colleagues from different parts of the Company. We also offered
our employees the opportunity to get together virtually for a digital Christmas party. More than 11,000 of our staff took part in
the event via live stream.

Health rate and health management. As a result of the comprehensive measures taken, the Company’s health rate reached
historic highs in May, June, and August 2020. What is more, the figures throughout 2020 were consistently higher than in
the previous year. In 2020, Deutsche Telekom AG was once again honored with the Corporate Health Award, Germany’s most
prestigious prize for excellence in corporate health management. A total of 352 employers across 15 industries took part in
the demanding scientific selection process. Among the reasons given for the award this time around were our comprehensive,
convincing, and targeted offerings, and our innovative ideas for responding to current trends and challenges – such as My
Health Journey, an annual program for mental strength.

Employee satisfaction. According to data collected by the Group-wide employee survey conducted in 2019 (excluding
T‑Mobile US), our commitment index score – i.e., our measure of employee satisfaction – was good at 4.0 (on a scale from 1.0 to
5.0). We also conduct regular pulse surveys to obtain feedback from our employees. The survey conducted in November 2020
resulted in record figures in almost all areas: employee participation (120,000 colleagues or a return rate of 77 %) and top
survey results regarding satisfaction (80 %), leadership quality (88 %), brand identity (85 %), learning (85 %), COVID-19 –
information (94 %), COVID-19 – mobile working (88 %), and COVID-19 – protection (91 %).

Employee satisfaction (commitment index)a

2019 2017
Group (excluding T‑Mobile US) 4.0 4.1
Of which: Germany 4.1 4.1
Of which: international 3.9 4.1

a Commitment index according to the employee surveys carried out in 2019 and 2017.

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= p q Combined management report 102

T‑Mobile US conducts its own employee survey. The results of the survey conducted in 2020 (survey period: January through
September, excluding former Sprint employees) showed that 92 % of respondents take pride in working for the company.
85 % said they would recommend T‑Mobile US as a great place to work, and 84 % believe the Company inspires them to go
above and beyond their usual work-related duties. These results are among the highest in the Group. T‑Mobile US has been
awarded numerous accolades in recent years for its appeal as an employer. In 2020, T‑Mobile US was once again named Best
Place to Work by the independent employee platform Glassdoor. In addition, T‑Mobile US improved its position in the Fortune
Best Companies to Work For top 100 list, moving up from 49 (2019) to 42 (2020). Ethisphere Institute named T‑Mobile US
one of the World’s Most Ethical Companies for the twelfth year in a row. T‑Mobile US also scored 100 in the Human Rights
Campaign’s Corporate Equality Index for the eighth time in a row, making it the best place to work in terms of equal treatment
of homosexual, bisexual, and transgender people.

2. Evolve our culture and design new working environments SDG 8 EMPLOYEES

We are convinced that corporate culture is a key factor in a company’s long-term success. That is why culture has always played
a crucial role at Deutsche Telekom. But corporate culture must also reflect the changing needs of customers and employees.
For this reason, we understand culture to be a process and not something static. In January 2020, we announced our corporate
purpose: “We won’t stop until everyone is connected.” It has since proven itself to be a widely accepted cultural framework and,
in times of physical distancing, has gained even more in importance.

Our Guiding Principles. Culture is part of the corporate DNA and, as such, influences not only our ways of working. That is
what makes our Guiding Principles so important, leading us to reflect on our behavior on a daily basis and acting as a cultural
indicator. When our updated Guiding Principles, revised in a dialog-driven process, were presented in February 2020, we could
not have known just how quickly the coronavirus pandemic would put them to the test. Our living culture stood the test,
providing our employees with support and guidance throughout the pandemic. Apart from a largely virtual, international Living
Culture Day that scored over 16,000 mentions on social media, we offered numerous formats for focusing on corporate culture
and implemented specific measures, for instance, digital collaboration formats and a redesigned learning platform.

Our six Guiding Principles

DELIGHT OUR GET THINGS ACT WITH TEAM I AM T – STAY CURIOUS

CUSTOMERS DONE RESPECT TOGETHER – COUNT ON ME & GROW
& INTEGRITY TEAM APART

Designing new working environments. SDG 8 RELATIONSHIPS The coronavirus pandemic has dramatically changed where and

how we work together. Even after the pandemic has passed, many of these changes will remain. After all, the new trails we have
blazed have proven their worth. With that in mind, Deutsche Telekom and the Group Works Council agreed on a Manifesto on
the new Way of Working, the goal of which is to maintain performance, employee satisfaction, and employer attractiveness:

1. We will take the best of both worlds: the type of work will determine the mix of mobile and in-person work, whether the
latter is performed on the customers’ premises, in our shops, or in the office. The share of mobile working is set to rise
significantly, not just because it “works,” but because it even enhances productivity in many areas. But real-life interaction,
too, will remain a key component of our working life. That is because the success of creative collaboration, complex
problem-solving, and team processes often hinges on physical proximity.
2. Our offices will become places of encounter: the office is set to remain the most important location for our identity. More
than ever before, our office buildings will become places for teamwork, encounters, and social and creative interaction.
3. Digital tools will become even more important: digital collaboration tools have become our constant companions and
key helpers in our daily work. For this reason, we will ramp up our Group-wide investment in IT tools, equipment, and
enablement.
4. We will travel less: going forward, we will get by with fewer business trips, thus making a contribution to sustainability.
5. Our understanding of leadership will change: it will not be based on attendance and control, but on trust and transparency.
We will face new challenges when it comes to virtual leadership and to leading hybrid teams. It will become even more
important for our managers to create a safe, motivating “space,” formulate clear objectives, provide feedback, and monitor
results. We will offer a wide range of virtual tools to support our managers in this area.

Deutsche Telekom. The 2020 financial year.

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3. Continue the long-term transformation of our workforce

It is our responsibility to ensure that we have the right employees in the right place at the right time, that they enjoy competitive
conditions, and are able to grow and develop. In addition to both the transformation initiatives driven by digitalization and
automation, and to staff reduction and restructuring measures, the decisive tools in achieving this goal are proactive total
workforce management, the digitalization of our core processes, and massive investment in developing skills.

Major transformation initiatives. In 2020, we again succeeded in transforming individual business areas of the Group, e.g.,
Deutsche Telekom IT at T‑Systems, and our consumer sales entity. Against the backdrop of digitalization and changing
customer behavior, the difficult realignment of consumer sales was also implemented in a socially responsible manner. What
is more, we successfully realigned our B2B telecommunications business and combined it within the Germany operating
segment.

Collective bargaining round for 2020. In the midst of the coronavirus pandemic, we negotiated a new collective agreement
in record time at the end of March 2020. The collective agreement applies nationwide to around 60,000 employees, trainees,
and students on dual study programs. Despite the prevailing economic uncertainty, Deutsche Telekom’s intention was to offer
(planning) certainty early on both for the employees covered by the collective bargaining round and for the company itself, and
send a clear and positive signal for the economy. In line with the ongoing push to digitalize our core processes, the collective
bargaining round was conducted for the first time in virtual form.

Skills development. Our employees’ skills and expertise are among our Company’s most important resources and thus crucial
to our business success. These skills must be geared to the future and kept up to date. We are responsible for providing
an environment in which employee skills can be transformed. With the introduction of a Global Job Architecture (GJA) and
the continued harmonization of collective agreements on remuneration, the ver.di trade union, the Group Works Council, and
Deutsche Telekom were jointly responding to the challenges this future presents. The aim of the GJA is to comprehensively
consolidate and simplify the function structures. Under the GJA, all jobs in the Group are grouped together according to
job families and job clusters. This is important to allow all jobs in the Group to be clearly identified. With the help of these
tools, 7,500 required future profiles were identified, which will now be used for recruitment and reskilling/upskilling initiatives.
Simplifying and standardizing our Group-wide job profiles is also a key prerequisite for rolling out our skills management
program SkillsUP! in selected corporate units. Personal development talks help pinpoint where individual skills are lacking,
while development plans can be continuously adapted by means of tailored training programs. Strategic, qualitative HR
planning takes changing market conditions into account to plot the right course when investing in the skills that will be needed
going forward. That includes cutting-edge performance management that enables an ongoing dialog between managers and
employees.

Youlearn. Two of our top priorities are to digitalize our portfolio of training courses and strengthen our culture of learning. With
our Youlearn initiative – aimed at entrenching self-paced learning in our everyday working life – we have significantly enhanced
our employees’ options for upgrading their skills. Employees in Germany and our European national companies devoted over
2.3 million hours of their time to learning in the reporting year – that was 2.4 working days per employee on average. That figure
was down from the previous year due to the pandemic and the consequent cancellation of virtually all traditional classroom
seminars from March 2020 onward. But the digital training courses developed with the Youlearn initiative helped us fill the gap
in offerings and further increase acceptance of digital learning. SDG 4 EMPLOYEES

Percipio & Coursera. Yet, to achieve simplicity and take the digital transformation forward, we need new organizational forms,
expertise, and a cultural change – in short, we need to master a whole host of new skills if we are to tackle current and
future challenges. We tackled these developments head on with measures such as the introduction of the Youlearn initiative
to promote a culture of self-paced learning in our everyday working life. What is more, we rolled out Percipio (an intelligent
learning platform also dubbed the “Netflix of learning”) and integrated Coursera as a provider of digital further-training courses
offered by top-ranking universities, thus providing our employees with a high-quality training service. The increase in our digital
learning rate from 46 % to 69 % and over 170,000 registrations for Percipio since the third quarter of 2019 validate our efforts
in this area. We firmly believe that a state-of-the-art learning environment is central to our obligation as an employer to act
responsibly. SDG 4 EMPLOYEES

Employer brand. We maintained our presence in the recruitment market in 2020 and, despite the coronavirus pandemic, stayed
in contact with the talents in order to enhance trust in our employer brand. The crisis precipitated by coronavirus has changed
the needs of both society as a whole and our target group of IT/NT talents, heightening the need for meaning, participation,
and security. We integrated this change in values into our employer brand strategy, channeling it directly into specific employer
messages. In our #IWILLNOTSTOP campaign, mission and purpose as well as meaningful work have already become part and
parcel of the promise we make as an employer. The coronavirus pandemic further strengthened our focus on digital employer
branding. New digital formats were developed to get Deutsche Telekom’s culture as an employer across.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 104

Recruiting and onboarding. We want to be the magnet for global digital talent. Even amid the coronavirus pandemic, we
succeeded in recruiting around 800 new employees in Germany in 2020, including in the ICT sector, and 2,150 new trainees,
a high percentage of whom have technical/IT backgrounds. A quick digital recruiting process with a positive digital candidate
journey is the key to success here. Particularly during the pandemic, we relied on our motto “Stronger together” to reinvent our
onboarding process. One highlight of this is the virtual global welcome event entitled “New Unstoppables.” Our international
careers website is a platform offering job-seekers clear and transparent information, for example, on the digital/virtual
recruiting process. We also make use of game-based assessments in the recruitment process. These are a new generation of
psychometric tests in the form of online games and are being deployed in the context of our hiring process for the Start up!
trainee program. In addition, we use digital tools that rank final university grades on the basis of algorithms, thus enabling a
fair comparison. By addressing specific target groups, our recruiting strategy also aims to encourage more talented women
to join our Company. 2020 marked the eighth time that female students of STEM subjects (science, technology, engineering,
mathematics) from all over the world were able to compete for our Women’s STEM Award. We are also involved in Femtec,
a career program for female STEM students, and in the Global Digital Women network. SDG 5 EMPLOYEES We have
shown that digital recruitment is a crucial success factor when it comes to responding rapidly to changing requirements and
continuing to secure employees with critical profiles for the Company.

Practicing diversity. We are committed to equal opportunity and diversity at the Group. Promoting diversity – also in our
management teams – is part of our identity. Our target to fill 30 % of management positions across the Group with women still
applies. Across the Group, the proportion of women in middle and upper management stood at 27.1 % at the end of 2020. At
45 %, Deutsche Telekom AG had an above-average proportion of women on its Supervisory Board, and with women occupying
37.5 % of the positions on its Board of Management, the Company occupies first place among the 30 DAX-listed companies.
SDG 5 EMPLOYEES

Diversity is a key success factor and goes beyond just gender. In order to develop successful products, we must understand
the needs of our customers, and we can do that only if our Company is just as diverse as society. The Human Resources
and Legal Affairs Board of Management department is responsible for the Group’s diversity and inclusion strategy, while a
large number of diversity allies in the individual subsidiaries and different countries are tasked with putting the corresponding
measures into practice and implementing the relevant offerings. In early summer 2020, our Board of Management member for
Human Resources launched the RethinkDiversity initiative to take a creative approach to developing and implementing further
measures and projects. It includes, for example, the establishment of a diverse talent pool, with women making up at least
40 % of the members, and a program in which top male managers are assigned to mentor up-and-coming female employees
destined to take over as the next generation of managers. We thus also focus on diversity aspects – such as age, cultural
background, and gender – in the succession management process at senior management level. When it comes to diversity
and inclusion, we continue to pursue a steady, long-term policy, also collaborating with external diversity partners such as
the Competence Center Technology-Diversity-Equal Opportunities e.V. The goal is for everyone to be able to achieve their full
potential and to make diverse management teams our “new normal.”

levelUP! In the age of digitalization, managers must possess skills and methods that differ greatly from those needed in the
analog world. That is why we support our executives with levelUP!, an innovative digital further-training service for successful
leadership in the digital age. levelUP! comprises modules that can be combined as required. Knowledge is shared primarily via
interactive, digital learning formats in combination with classroom training. In 2019, the levelUP! program underwent a change
of content, focusing primarily on agile leadership. Some 1,200 executives participated in the first two rounds of this latest
incarnation of the levelUP! program. In 2020, the program was held in a fully digital format for the first time.

Due to the huge success of levelUP!NextGeneration in 2019, we offered the program again in 2020. In view of the particular
challenges posed by the coronavirus pandemic, we decided to offer this program for motivated high potentials in a purely
digital form. 500 employees from all over the world took part in this four-month development program, which features digital
learning and imparts innovative, inspiring, and concrete leadership topics and skills. levelUP!NextGeneration also helps us
strengthen and encourage intragroup and cross-segment collaboration. SDG 4 EMPLOYEES

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= p q Combined management report 105

Major HR and CR awards in 2020 SDG 17 RELATIONSHIPS

Corporate Equality Index 2020 Comenius Award 2020

For the eighth consecutive time, Deutsche Telekom won two Corporate Health Award 2020 Building Public Trust Award 2020
T-Mobile US earned the top score Comenius Awards for its digital Deutsche Telekom received the The PwC jury honored Deutsche
of 100 in the Human Rights education media Scroller-TV and award for excellence in health and Telekom as the DAX 30 company
Campaign Foundation’s Corporate children’s magazine Scroller. safety management. with the best climate reporting.
Equality Index.
FTSE4Good Index “Favorite employer” in Deutscher
World’s Most Ethical For the twelfth consecutive year, Kurier ranking Personalwirtschaftspreis
Companies 2020 OTE in Greece was ranked one of For the second time in a row, With its cutting-edge HR apps,
Ethisphere Institute named the leading companies for its Magenta Telekom (T-Mobile Deutsche Telekom Services
T-Mobile US one of the World’s commitment to environmental Austria) was named “favorite Europe took first place in the
Most Ethical Companies for the protection, a caring society, and employer” by the Austrian daily Digital HR category of the
twelfth year in a row. corporate governance. newspaper Kurier. German HR management award.

2020

DAX ESG 50 Index CSR Index 2020 Smart City Poland Award “Best employee training
Deutsche Telekom was added to Telekom Romania was awarded T-Mobile Polska came first in the in Germany” in Capital
the new sustainability index. a Gold Level prize for corporate Environmental Protection category magazine’s ranking
sustainability and social with a project for smart trash cans. Magazine ranked Deutsche Telekom
Excellence in Challenges
responsibility in Romania. as leading provider of training in
by Selectio Top Employer 2020
2020, in particular for its trainee
Hrvatski Telekom honored with Power of Attraction Award 2020 Magenta Telekom (T-Mobile
courses and dual study programs.
Excellence in Challenges award T-Mobile Polska came out on top in Austria) took third place in
by the leading HR consulting the Recruiting Process category at Austria’s Top Employer awards. Sustainable Company 2021
company in Croatia. the award ceremony organized by Magenta Telekom (T-Mobile
Puls Biznesu, a Polish magazine. Austria) was given the Kurier
newspaper’s seal of approval for its
climate protection activities, and its
social and economic responsibility.

For an overview of which sustainability indexes list the T-Share, please refer to the section “Corporate responsibility and non-financial statement.”

Headcount development
The Group’s headcount increased by 7.5 % compared with the end of the prior year, mainly due to the integration of Sprint
employees in the United States. The developments were varied across our segments: In our Germany operating segment
the number of employees decreased by 4.4 % compared with 2019 due to the take-up of socially responsible instruments in
connection with staff restructuring, such as the dedicated retirement and phased retirement programs. The total number of
employees in our United States operating segment increased by 50.7 % compared with December 31, 2019, primarily due to
the integration of the Sprint workforce. In our Europe operating segment, the headcount was down 7.1 % compared with the
end of the prior year, with staff levels decreasing in Hungary, Greece, and Romania in particular. The total headcount in our
Systems Solutions operating segment was down 4.7 % against year-end 2019, primarily as a result of efficiency enhancement
measures. In the Group Development operating segment, the 3.1 % increase in the number of employees can be attributed to
the insourcing of activities previously carried out externally to achieve cost savings at T‑Mobile Netherlands. The headcount
in the Group Headquarters & Group Services segment was down 4.1 % compared with the end of 2019, mainly due to ongoing
staff restructuring at Vivento.

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= p q Combined management report 106

Workforce statistics

Headcount development

Dec. 31, Dec. 31, Change Dec. 31, Dec. 31, Dec. 31,
2020 2019 % 2018 2017 2016
FTEs in the Group 226,291 210,533 7.5 215,675 217,349 218,341
Of which: Deutsche Telekom AG 15,374 17,461 (12.0) 19,259 21,428 22,571
Of which: civil servants (in Germany,
with an active service relationship) 10,583 12,153 (12.9) 13,507 15,482 15,999
Germany operating segment 66,051 69,117 (4.4) 71,549 64,798 66,410
United States operating segment 71,303 47,312 50.7 46,871 45,888 44,820
Europe operating segment 41,273 44,410 (7.1) 47,964 47,421 46,808
Systems Solutions operating segment 28,395 29,800 (4.7) 28,945 37,924 37,472
Group Development operating segment 2,684 2,603 3.1 1,976 1,967 2,572
Group Headquarters & Group Services 16,585 17,292 (4.1) 18,370 19,351 20,258
Breakdown by geographic area
Germany 89,032 94,111 (5.4) 98,092 101,901 104,662
International 137,258 116,422 17.9 117,582 115,448 113,679
Of which: other EU member states 55,816 58,743 (5.0) 61,249 59,952 59,456
Of which: rest of Europe 2,168 2,055 5.5 2,471 2,620 2,581
Of which: North America 71,617 47,652 50.3 47,245 46,332 45,364
Of which: rest of world 7,658 7,971 (3.9) 6,618 6,543 6,278
Natural attrition % 3.9 5.3 (26.4) 5.1 4.7 4.0
Of which: Germany % 2.0 2.3 (13.9) 1.9 1.7 1.4
Of which: international % 6.6 9.5 (30.5) 9.8 9.2 8.1
Productivity trenda
thousands
Net revenue per employee of € 452 378 19.4 350 346 331

a Based on average number of employees.

Personnel costs
billions of €
Change
2020 2019 % 2018 2017 2016
Personnel costs in the Group 18.9 16.7 12.7 16.4 15.5 16.4
Of which: Germany 8.8 8.7 0.7 9.2 8.5 9.8
Of which: international 10.1 8.0 25.7 7.3 7.0 6.6
Special factorsa 1.8 1.0 77.0 1.2 0.6 1.6
Personnel costs in the Group (adjusted for
special factors) 17.0 15.7 8.2 15.2 14.9 14.8
Net revenue 101.0 80.5 25.4 75.7 74.9 73.1
Adjusted personnel cost ratio % 16.8 19.5 (13.7) 20.1 19.9 20.3
Personnel costs at Deutsche Telekom AG
under German GAAP 2.3 2.3 (1.5) 2.5 2.7 3.5

a Expenses for staff-related measures.

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= p q Combined management report 107

Forecast1
Statement by the Board of Management on the expected development of the Group
In 2020, we broke new ground: the business combination of T‑Mobile US and Sprint has made us a Group generating revenue
of over EUR 100 billion, with almost 230,000 employees worldwide and a unique 5G spectrum position on our most important
mobile communications markets. At the same time, we successfully continued our growth course on both sides of the Atlantic
despite the difficult economic environment as a result of the coronavirus pandemic. Furthermore, it is already clear that the
synergies arising from the business combination of T‑Mobile US and Sprint are impacting on our results faster than previously
expected. We want to use this strong starting position going forwards to underpin our success with solid financial growth
rates, further extend our technology leadership with the best state-of-the-art networks, and thereby continue to systematically
implement our Leading European Telco strategy.

As communicated at our 2018 Capital Markets Day, we are targeting the following compound annual growth rates (CAGR) for
the period from 2017 through 2021 – taking into account the implications of the business combination of T‑Mobile US and
Sprint:

Revenue: 1 to 2 %
Adjusted EBITDA: 2 to 4 %
Free cash flow (before dividend payments and spectrum investment): around 10 %
For 2021, we expect to post the following year-on-year trends, assuming a comparable consolidated group and constant
exchange rates:

Revenue is likely to increase again slightly in 2021. We expect service revenue to increase.
Adjusted EBITDA AL is expected to be EUR 37.0 billion in 2021. In the reporting year, adjusted EBITDA AL came in at
EUR 35.0 billion; on a like-for-like basis, i.e., adjusted for comparability with the adjusted EBITDA AL forecast for 2021,
adjusted EBITDA AL stood at EUR 37.6 billion.
Free cash flow AL is expected to grow to around EUR 8.0 billion in 2021. Free cash flow AL in 2020 was EUR 6.3 billion; on
a like-for-like basis, i.e., adjusted for comparability with the free cash flow AL forecast for 2021, free cash flow AL stood at
EUR 6.6 billion.
Economic outlook
In its economic forecast from January 2021, the International Monetary Fund (IMF) expects global economic growth to return
to 5.5 % in 2021 after the historic downturn in 2020. We also expect to see a tangible economic recovery in our core markets,
although it will likely be the end of 2021/the start of 2022 before economic activity returns to pre-coronavirus levels.

Forecast on the development of GDP and the unemployment/non-employment rates in our core markets for 2021 and 2022
%
GDP for 2021 GDP for 2022 Unemployment/ Unemployment/
compared compared non-employment non-employment
with 2020 with 2021 rate in 2021 rate in 2022
Germany 3.7 3.6 6.1 5.7
United States 4.4 3.4 6.0 4.8
Greece 3.8 5.3 17.5 16.7
Romania 4.0 4.9 6.2 5.1
Hungary 4.4 4.6 4.4 3.9
Poland 4.1 4.6 5.3 4.1
Czech Republic 3.6 4.9 3.3 3.2
Croatia 4.7 5.0 7.5 6.9
Netherlands 2.8 2.9 6.4 6.1
Slovakia 4.7 4.4 7.8 7.1
Austria 3.4 3.6 5.1 4.9

Source: Consensus Economics, European Commission; last revised: January 2021.

The unemployment rate for Germany and the non-employment rates for the other countries are presented in conformance with ILO standards.

1 The forecasts contain forward-looking statements that reflect management’s current views with respect to future events. Words such as “assume,” “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “could,” “plan,” “project,” “should,” “want,” and similar expressions identify forward-looking statements. These
forward-looking statements include statements on the expected development of revenue, EBIT, EBITDA after leases, adjusted EBITDA after leases, ROCE, cash
capex, and free cash flow after leases. Such statements are subject to risks and uncertainties, such as an economic downturn in Europe or North America, changes
in exchange and interest rates, the outcome of disputes in which Deutsche Telekom is involved, and competitive and regulatory developments. Some uncertainties
or other imponderables that might influence Deutsche Telekom’s ability to achieve its objectives, are described in the “Risk and opportunities management”
section of the combined management report and in the “Disclaimer” at the end of the Annual Report. Should these or other uncertainties and imponderables
materialize, or the assumptions underlying any of these statements prove incorrect, the actual results may be materially different from those expressed or implied
by such statements. We do not guarantee that our forward-looking statements will prove correct. The forward-looking statements presented here are based on
the future structure of the Group, without regard to significant acquisitions, disposals, business combinations, or joint ventures that may arise at a later date. These
statements are made with respect to conditions as of the date of this document’s publication. Without prejudice to existing obligations under capital market law,
we do not intend, or assume any obligation, to update forward-looking statements.

Deutsche Telekom. The 2020 financial year.

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Expectations for the Group

Expectations up to 2022. We expect profitable growth to continue over the next two years. This will provide a sound basis for
achieving our financial ambitions – as communicated at our 2018 Capital Markets Day and taking into account the implications
of the business combination of T‑Mobile US and Sprint.

We expect our financial performance indicators to develop as follows in 2021 and 2022:

Revenue should increase slightly year-on-year in 2021 and remain stable in 2022. The forecast for 2021 is based on a
slight increase in revenue in the Germany, United States, and Group Development operating segments. Revenue is expected
to remain stable in the Europe operating segment and to decline slightly in the Systems Solutions operating segment in
2021. Then in 2022, we expect revenue to increase slightly in the Germany operating segment and to increase in Group
Development. In our other operating segments, revenue is expected to remain stable in 2022. Service revenue is projected
to increase year-on-year in both 2021 and 2022.
Adjusted EBITDA AL is expected to come in at around EUR 37.0 billion in 2021 and to rise in 2022. In the next two years,
adjusted EBITDA AL will be negatively affected by the gradual exit from the business model of terminal equipment leases in
the United States, with revenues from terminal equipment leases being offset primarily by the depreciation of the capitalized
terminal devices on the expenses side. Terminal equipment leases were a major pillar, in particular, at Sprint. In its place,
marketing activities are set to shift increasingly toward terminal equipment sold under installment plans.
We are forecasting a slight decrease for EBIT in 2021. The partial reversal of impairment losses on spectrum licenses at
T‑Mobile US had a strong positive effect in the reporting year. We expect EBIT to rise sharply again in 2022. The expiry of the
amortization of UMTS licenses in the Germany operating segment will contribute to the positive trend.
Return on capital employed (ROCE) is expected to decline in 2021 and return to growth in 2022. Hence, we expect to achieve
our target for ROCE to be higher than the expected weighted average cost of capital (WACC) again in 2022, following a
briefly increased burden in 2021 from the integration costs arising from the business combination of T‑Mobile US and Sprint.
Our investments – measured in terms of cash capex (before spectrum investment) – are expected to amount to around
EUR 18.4 billion in 2021 and to remain stable in 2022. We want to continue investing heavily in building out our network
infrastructure in Germany, the United States, and Europe in order to safeguard our technology leadership in the long term.
Free cash flow AL (before dividend payments and spectrum investment) is expected to reach around EUR 8.0 billion in 2021.
We also expect a strong increase in free cash flow AL in 2022 due to good operational development.
At the end of 2020, we had the following ratings: BBB with a stable outlook (Standard & Poor’s – S&P); BBB+ with a stable
outlook (Fitch); and Baa1 with a negative outlook (Moody’s). Maintaining an investment grade rating within the A– to BBB
range will enable us to retain access to the international capital markets and is thus a key component of our finance strategy.
We are forecasting a slight decrease for our EPS (adjusted for special factors) in 2021. The EPS for 2020 includes a positive
effect from the subsequent measurement of the stock options to buy shares in T‑Mobile US received from SoftBank in
June 2020. We expect to see a strong increase in adjusted EPS in 2022.
Our debt issuance program puts us in a position to place issues in the international capital markets at short notice, while
our commercial paper program enables us to issue short-term papers in the money market. T‑Mobile US is being refinanced
primarily in the form of senior secured and unsecured notes.

Bonds and loans in the total amount of EUR 7.2 billion and EUR 7.0 billion will fall due for repayment in 2021 and 2022,
respectively. A number of T‑Mobile US bonds include issuer termination rights. If the premature termination and refinancing
of these bonds result in economic gains, this could give rise to further refinancing requirements. We plan to issue new bonds
in various currencies. The exact financing transactions will depend on developments in the international finance markets. In
January 2021, T‑Mobile US placed unsecured notes with a total volume of USD 3 billion on the market. We also intend to cover
part of our liquidity requirements by issuing commercial paper.

We want to continue leveraging economies of scale and synergies through suitable partnerships or appropriate acquisitions in
our footprint markets. There are no plans, however, to expand into emerging markets. We will continue to subject our existing
partnerships and equity investments to regular strategic reassessments with a view to maximizing the value of our Company.

Deutsche Telekom. The 2020 financial year.

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Our expectations for the period until 2022 for the Group and the operating segments as regards our financial and non-financial
performance indicators are shown in the following tables. They assume a comparable consolidated group and constant
exchange rates. If the economic situation should deteriorate or any unforeseen state or regulatory interventions arise, the
expectations expressed here may change accordingly. Given the level of macroeconomic uncertainty in the context of the
continuation of the coronavirus pandemic, we cannot rule out the possibility of deviations either. All trends denote year-on-
year changes. To indicate the intensity and trends of our forecasts, we apply the following assessment matrix: strong decrease,
decrease, slight decrease, stable trend, slight increase, increase, strong increase.

Financial performance indicators

Results Pro forma Expectations Expectations

in 2020 in 2020a for 2021b for 2022b
Net revenue
Group billions of € 101.0 106.7 slight increase stable trend
Germany billions of € 23.8 23.6 slight increase slight increase
United States (in local currency) billions of $ 70.1 76.4 slight increase stable trend
Europe billions of € 11.3 11.3 stable trend stable trend
Systems Solutions billions of € 4.2 4.2 slight decrease stable trend
Group Development billions of € 2.9 3.0 slight increase increase
Service revenues
Group billions of € 78.9 83.3 increase increase
United States (in local currency) billions of $ 50.6 55.4 increase increase
Profit (loss) from operations (EBIT) billions of € 12.8 13.5 slight decrease strong increase
EBITDA AL billions of € 33.2 35.9 decrease slight increase
EBITDA AL (adjusted for special factors)
Group billions of € 35.0 37.6 37.0 increase
Germany billions of € 9.2 9.2 9.4 increase
United States (in local currency) billions of $ 24.0 26.8 25.8 increase
Europe billions of € 3.9 3.9 3.9 slight increase
Systems Solutions billions of € 0.2 0.3 0.3 slight increase
Group Development billions of € 1.1 1.2 1.2 increase
ROCE % 4.6 decrease increase
Cash capex (before spectrum investment)
Group billions of € 17.0 17.8 18.4 stable trend
Germany billions of € 4.2 4.2 stable trend increase
United States (in local currency) billions of $ 10.7 11.7 increase stable trend
Europe billions of € 1.8 1.8 slight decrease stable trend
Systems Solutions billions of € 0.3 0.2 stable trend stable trend
Group Development billions of € 0.5 0.5 strong increase increase
Free cash flow AL (before dividend payments and
spectrum investment) billions of € 6.3 6.6 around 8.0 strong increase
Rating
Standard & Poor’s, Fitch BBB, BBB+ from A- to BBB from A- to BBB
Moody’s Baa1 from A3 to Baa2 from A3 to Baa2
Other
Dividend per sharec, d € 0.60 Dividend follows
EPS (adjusted for
special factors)
growth, minimum of Dependent on
€ 0.60 finance strategye
EPS (adjusted for special factors) € 1.20 slight decrease strong increase
Equity ratio % 27.4 25 to 35 25 to 35
Relative debt 2.78x > 2.75xf > 2.75xf

a Significant changes in the organizational structure and in the composition of the consolidated Group included up to the date of preparation of the
consolidated financial statements and the combined management report (e.g., the business combination with Sprint in the course of the year and the
divestiture of Sprint’s prepaid business, the acquisition of Simpel, the reassignment of the growth area Internet of Things (IoT) to the Germany operating
segment, and the reassignment of the Austrian cell tower business to the Group Development operating segment).
b On a comparable basis.
c The expectation regarding the dividend per share refers to the respective financial year indicated.
d Subject to approval by the relevant bodies and the fulfillment of other legal requirements.
e We will provide information about the further development of our finance strategy for the years following 2021 at our Capital Markets Day, which is planned
for 2021.
f Deviation from the target range of 2.25-2.75x for a short period due to the business combination of T‑Mobile US and Sprint.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 110

Non-financial performance indicators

Results Pro forma Expectations Expectations

in 2020 in 2020a for 2021 for 2022
Group
Customer satisfaction (TRI*M index) 72.2 slight increase slight increase
Employee satisfaction (commitment index) 4.0 stable trend stable trend
Fixed-network and mobile customers
Germany
Mobile customers millions 48.5 48.5 increase increase
Fixed-network lines millions 17.6 17.6 stable trend slight decrease
Retail broadband lines millions 14.1 14.1 increase increase
Television (IPTV, satellite) millions 3.9 3.9 increase increase
United States
Postpaid customers millions 81.4 81.4 increase increase
Prepaid customers millions 20.7 20.7 increase increase
Europe
Mobile customers millions 45.6 45.6 slight increase increase
Fixed-network lines millions 9.1 9.1 stable trend stable trend
Broadband customers millions 7.0 7.0 increase increase
Television (IPTV, satellite, cable) millions 5.1 5.1 increase increase
Systems Solutions
Order entry billions of € 4.6 4.6 stable trend slight increase
ESG KPIs
Total CO2e emissions (Scope 1+2) kt CO2e 2,512 strong decrease strong decrease
Energy Intensity ESG KPI kWh/terabyte 119 strong decrease strong decrease
Carbon Intensity ESG KPI kg CO2/terabyte 23 strong decrease strong decrease
Order Volume Verified as Non-Critical ESG KPI % 62 increase increase

a Significant changes in the organizational structure and in the composition of the consolidated Group included up to the date of preparation of the
consolidated financial statements and the combined management report.

For further information on the development of the non-financial performance indicators of our operating segments, please refer to the section
“Expectations for the operating segments.”

In both 2021 and 2022, we intend to achieve a moderate improvement in customer loyalty/satisfaction – which is measured
using the TRI*M index performance indicator.

Having achieved a high level of 4.0 – on a scale of 1.0 to 5.0 – on the commitment index in the 2019 employee survey, and in
view of the results of the pulse surveys conducted in 2020, we expect the positive response of our employees regarding our
Company to remain stable in the next employee survey in 2021.

For further information on our ESG KPIs and our expectations, please refer to the section “Corporate responsibility and non-financial statement.”

Our planning is based on the following exchange rates:

Currency Exchange rate

Croatian kuna HRK 7.54
Polish zloty PLN 4.44
Czech koruna CZK 26.46
Hungarian forint HUF 351.20
U.S. dollar USD 1.14

Expectations for Deutsche Telekom AG. The development of business at Deutsche Telekom AG, the Group’s parent company,
is reflected particularly in its service relationships with its subsidiaries, the results of the subsidiaries’ domestic reporting
units, and other income from subsidiaries, and from associated and related companies. In other words, our subsidiaries’
results from operations and the opportunities and challenges they face are key factors shaping the future development of
Deutsche Telekom AG’s figures. Accordingly, in addition to our expectations for the Group, the expectations described on
the following pages concerning the operating segments’ revenue and earnings – such as strong competition, regulatory
intervention, market and economic expectations, etc. – have an impact on our expectations concerning the development of
Deutsche Telekom AG’s future income after taxes.

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= p q Combined management report 111

For the 2020 financial year, we will propose a dividend of EUR 0.60 per dividend-bearing share, which will also serve as a
baseline for the dividend for the 2021 financial year. Since the 2019 financial year, the dividend has reflected relative growth in
adjusted earnings per share. Based on the aforementioned expectations for our operating segments and the resulting effects,
and taking existing retained earnings into account, Deutsche Telekom AG expects to distribute a dividend of at least EUR 0.60
per dividend-bearing share for the 2021 financial year, subject to approval by the relevant bodies and the fulfillment of other
legal requirements.

Expectations for the operating segments

Germany
The German market for telecommunications services again saw a slight further contraction of 0.4 % in 2020 largely driven
by the impact of the coronavirus pandemic. Revenue losses were recorded primarily due to declines in roaming and visitor
revenues. The downward trend in revenue is expected to slow to -0.2% in 2021. Ongoing revenue losses due to the pandemic,
regulatory effects, and the decline in traditional fixed-network telephony will not be fully offset by still growing demand for
mobile data volumes and faster connectivity in the consumer and business customer area. In the German mobile market,
revenues are expected to increase by 0.4 % in 2021 (source: EITO).

For the wider ICT market, which covers IT services as well as telecommunications, EITO forecasts growth of 1.6 % for 2021. This
plus will primarily result from IT market growth, which, at 2.3 %, will continue to exceed growth in telecommunications revenues
in 2021. The already high demand regarding services for business customers (e.g., outsourcing, project business, consulting)
and software-based services (virtualization and cloud business, e.g., in the form of software as a service, platform as a service,
or infrastructure as a service) has gained further momentum following the rise in internet use prompted by the coronavirus
pandemic.

Innovative integrated products and attractive supplementary services – such as TV and streaming options, and smart-home
services – are becoming increasingly important for our competitive position with consumers, while cloud services, security
applications, and solutions for Industry 4.0 are gaining in significance with business customers. We set ourselves apart from
other providers with our broad range of products and services, rate plan innovations like our new convergent offering
MagentaEINS Plus, and innovative fixed-network products like our Smart Speaker Mini. We are the first telecommunications
company in Germany to have tackled the topic of sustainability head on in the form of our “we care” sustainability label, which
we launched to improve the transparency of our products.

The mobile communications market in Germany is currently dominated by three providers, each with its own network
infrastructure, who deploy 4G/LTE and 5G technology to ensure that the majority of the population has access to high-speed
mobile Internet. At the spectrum auction that concluded on June 12, 2019, Drillisch Netz AG, a subsidiary of United Internet AG,
acquired mobile spectrum and has announced its intention to set up a fourth mobile network. This is not a new market player,
as United Internet AG is already active on the market as a service provider with around 10 million customers. It will presumably
take years to build-up its own mobile network and United Internet has announced it intends to make use of wholesale national
roaming services while it does so. United Internet is currently in negotiations with all three network operators regarding these
wholesale services.

By contrast, the fixed-network broadband market hosts a large number of players with differing infrastructures – from national
through to regional providers. We are assuming that competition from cable network operators will remain intense and that
the number of providers who have their own DSL and fiber-optic networks will increase. Competition is also being increased by
providers specializing in FTTH infrastructure.

In our Germany operating segment, we continue to work on our comprehensive transformation program and are aiming
to secure our market position as the leading integrated telecommunications provider in Germany by means of innovative,
competitive offers. We completed the IP migration in Germany at the end of 2020, creating a foundation from which we
can effectively implement further technological innovations in the future. We will increasingly reduce the complexity of our
products and processes through automation and digitalization initiatives, and ensure greater end-to-end responsibility. Our
goal is to deliver the best customer experience with the best service. Hence, we continue to make systematic investments in
the brand and shopping experience and are working to realign consumer sales. The aim of our realignment activities, which
we started in 2020, is to improve the organizational structure and make the necessary workforce adjustments by the end of
2021. Nevertheless, we remain committed to our nationwide shop infrastructure in Germany, via which we offer personalized
advice and one-on-one customer contact. Our network of shops is the largest of all our German competitors. Furthermore, as of
January 1, 2021, Deutsche Telekom reassigned the business and profit responsibility for Deutsche Telekom IoT GmbH from the
Systems Solutions operating segment to the Business Customers unit in the Germany operating segment. The Group subsidiary
established in summer 2020 is responsible for the IoT business of Deutsche Telekom. This reassignment puts us in a position to
serve the IoT market more quickly and thus to strengthen Deutsche Telekom’s position on this growth market. The combining of
the Business Customers unit’s telecommunications services under one roof in mid-2020 brings us a step closer to our ambition
of becoming the preferred partner for digitalization. From now on, small and large business customers as well as multinational
corporations will increasingly be served worldwide with an integrated portfolio for telecommunications and IoT services. From
fixed network and mobile communications through to IT, we plan to create one-stop integrated solutions professionally and
fast that provide our customers with optimum, sustainable support in a digital world.

Deutsche Telekom. The 2020 financial year.

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In the fixed network, we want to offer fiber-optic-based products to more and more customers, creating for them the best
customer experience. Our Germany-wide IP-based network achieves high transmission bandwidths of up to one gigabit per
second. In order to always offer our customers competitive high-speed lines, we increasingly invest in our fiber-optic network
build-out. From 2021, we plan to build out fiber to the home (FTTH) to an average 2 million households per year. Our build-out
will benefit both people in towns and cities and those in rural areas. What is more, we are working towards further partnerships
to provide even more customers with high-bit-rate internet access – and setting a benchmark for sustainable broadband
infrastructure.

In mobile communications, we are keeping our promise to build out the network and are therefore the leader in terms of network
coverage, speeds, and customer experience. In total, two thirds of the population of Germany can already use this state-of-the-
art mobile technology on the Telekom network. The 5G network is being built out with a combination of two spectrum bands.
The 2.1 GHz band, which has wide reach, will provide high mobile bandwidths in rural areas in particular. The 3.6 GHz band offers
high-speed 5G in densely populated areas like big cities. The service is already available in 26 German cities.

We want to set ourselves apart from our competitors by offering the best convergent connectivity. In September 2020, we
extended our convergent offering with MagentaEINS Plus, thereby setting yet another benchmark – the first fully-integrated
offering combining fixed network and mobile communications in one contract with more freedom, more to share, more
simplicity, and more flexibility. When designing our products, we pay particular attention to consistently high quality, a simple
rate plan structure, and the innovative evolution of our existing service portfolio. With the introduction of our new cloud gaming
service, MagentaGaming, we offer customers the opportunity to access a wide-ranging games portfolio without downloads for
a small monthly price. We are focusing on enhancing the performance of our rate plans and will orient the latter to the needs
of our customers – for example, by expanding all our MagentaMobil rate plans to include StreamOn flat rates and higher data
volumes, and by utilizing the 5G mobile communications standard.

In addition, our multi-brand strategy in mobile communications allows us to address the entire customer spectrum – from
smart shoppers through to premium customers. We impress our business customers with our Business Mobile rate plans, which
already include the new 5G standard and can be expanded with additional options catering exclusively to this target group.

We want to secure an ever larger share of the growing TV market, with a focus on our entertainment and exclusive streaming
offers in the Megathek library on MagentaTV, i.e., a wide array of entertainment: from action to drama, from originals and
exclusives to top international series and films, as well as the best of the German TV stations ARD and ZDF. In order to give our
customers the best possible television experience, we are expanding our offering with streaming services and partners, such
as TVNOW, Netflix, Prime Video, Sky, Disney+, DAZN, and Videoload. In this way, MagentaTV combines multiple entertainment
worlds in one. To this end, we are investing in our IPTV platform and winning new customers with attractive content, services,
and strong partnerships.

We want to remain the market leader in Germany in terms of revenue over the coming years and extend our lead through
rising service revenues. We are responding to our customers’ constantly growing demand for bandwidth and continuing to
invest extensively in broadband networks, innovative products, and outstanding customer service. In our broadband business,
revenues are constantly growing and customer satisfaction levels rising, and we want to continue this growth trend again in
2021. We will improve customer satisfaction by actively evolving our mobile services (e.g., Mein Magenta app) and ensuring
seamless service across all channels (e.g., web, hotline, shop).

We expect revenue to grow slightly in our Germany operating segment in 2021 and 2022 alike, despite regulatory effects in
our core business and tough competition. Our value drivers are growing mobile and TV revenues (a result of our multi-brand
strategy), rising numbers of customers with high-speed lines, and revenue growth with business customers, for example, thanks
to the positive trend in IT and cloud business. We want to continue expanding our fiber-optic services, both by means of
business models with wholesale products (such as the contingent model) and through further partnerships.

We also anticipate that our growth initiatives in Germany will offset the volume-driven decline in revenue from traditional
fixed-network business and that we will continue consolidating our position as market leader in mobile and fixed-network
communications. Thanks to our outstanding network quality and the progress we are making with fiber-optic build-out, we
expect to see an increase in the next two years in the number of mobile customers as well as growth in our broadband products,
fueled by demand for TV and high-speed lines. Our initiatives to digitalize ICT solutions business for our business customers will
continue enhancing revenues from IT and cloud services, and from M2M/IoT business. In wholesale business, we expect sales
volumes to fall overall, mainly due to the fact that our wholesale customers are migrating their end customers to alternative
cable and fiber-optic-based infrastructure. We nevertheless expect demand for our contingent model to be high.

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= p q Combined management report 113

In each of the next two years, we expect to post year-on-year increases in earnings in our Germany operating segment. For
2021, we expect adjusted EBITDA AL to increase to around EUR 9.4 billion, driven in particular by high-value revenue growth
and a simultaneous reduction in indirect costs, mainly through digitalization and automation. Our adjusted EBITDA AL is likely
to rise further in 2022. We are forecasting a slight improvement in the adjusted EBITDA AL margin through 2022.

Our course is set for innovation and growth: While we will continue to consistently promote investments in new technologies
with great intensity in the future, we will wind down legacy systems, cutting costs in the process. Over the coming years, we
will focus our investments on building out a forward-looking fixed-network and mobile infrastructure (e.g., FTTH and 5G). Our
aim here will be to close gaps in the network in rural areas and provide urban centers with the high bandwidth they require. We
want to continue this rollout efficiently and, to this end, are participating in funding programs. We expect our cash capex to
remain stable year-on-year in 2021 and to increase year-on-year in 2022.

United States
The global economic slowdown of 2020 was reflected, although not severely, in the overall U.S. ICT market, declining from
2019 by 1.9 %. Growth was down or reversed across nearly all ICT sectors, including IT equipment and services, and total
telecommunications infrastructure and services. Only the market value of voice and data services remained stable compared
with 2019. Some reversals are forecast for 2021 – with growth expected in total market ICT growth, mobile data services, and
telecommunications equipment.

The U.S. mobile market continues to be characterized by competition among the major mobile carriers – now numbering
three after the successful merger of Sprint and T‑Mobile US. Overall mobile revenues are expected to increase annually
with subscriber growth, data consumption increases, and growth in the device market. Plan rates remain competitive. As
anticipated, the MVNO offerings from cable companies Altice, Charter, and Comcast increased in competitive prominence
in 2020. Cable outpaced their MNO counterparts through the second quarter of 2020, netting one million adds compared
to 882,000. Cable can present an even greater competitive threat if they are able to leverage recently acquired mid-band
spectrum; Charter and Comcast both won sizeable amounts of spectrum in the recent 3.5 GHz band auction, as did Cox cable
who has yet to deploy a MVNO.

Leading industry associations such as GSMA expect the United States to lead global migration to 5G. The United States’ 5G is
expected to accelerate in 2020 and beyond, with providers expanding their capacity and coverage in spectrum bands below 6
GHz. The FCC has also taken an aggressive stance on putting millimeter Wave (mmWave) frequencies in the hands of operators,
auctioning off the 24 and 28 GHz bands, and undertaking more mmWave auctions (in the 37, 39, and 47 GHz bands) in late
2019. GSMA expects almost half of all mobile connections to be running on 5G networks by 2025. T‑Mobile US expanded its
5G network leadership, by reaching 280 million people, utilizing the 600 MHz spectrum holdings it acquired in April 2017 and
covering over 100 million people with Ultra Capacity 5G by 2020, utilizing the 2.5 GHz spectrum holdings it acquired in the
merger with Sprint.

Following the completion of the merger with Sprint, T‑Mobile US hit the grounding running with its initiatives for 2020, carrying
great momentum into 2021 even against the backdrop of the coronavirus pandemic. In 2021, T‑Mobile US will continue to
focus on creating shareholder value and providing the best value experience in the U.S. wireless industry. Key elements of
the company’s focus include consistently and profitably outgrowing the competition, unlocking the value of synergies faster
and bigger than anticipated, and making the necessary investments in the near term to position the company for long-term
success. T‑Mobile US customer growth initiatives center on attracting and retaining a loyal customer base by offering devices
when and how customers want them, and providing plans that are simple, affordable, and without unnecessary restrictions
to deliver the best value in wireless. T‑Mobile US continues to keep this winning formula through providing this best value
proposition in the market, while providing winning customer service married with its leading 5G network.

T‑Mobile US expects continued increases in postpaid and prepaid customers in 2021 and 2022 with expansion in
underpenetrated growth vectors such as small town rural and enterprise to fuel future growth. Military, 55+, family plans, and
previous greenfield retail expansion have all helped fuel industry-leading growth over the last few years while allowing T‑Mobile
US to deliver great financial returns along with industry-leading subscriber growth. In addition, continued growth of the upper
and lower age demographics is expected in the U.S. wireless market. However, competitive pressures and unforeseen changes
in the wireless communications industry in the United States may significantly affect the expected ability to attract and retain
postpaid and prepaid customers.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 114

T‑Mobile US expects a slight increase in total revenues in U.S. dollars in 2021 and a stable trend for 2022 as postpaid customer
growth momentum is partially offset by the continued adoption of lower ARPU customer categories (Military, 55+, and family
plans) somewhat pressuring ARPU. Further adoption of 5G devices is anticipated to lead to equipment revenue growth and
increases in installment device financing, but partially offset by lower lease revenues, extended device upgrade cycles, and
increased rates of customers activating with a previously purchased device.

For 2021, T‑Mobile US expects adjusted EBITDA AL of USD 25.8 billion and an increase in 2022. The development of
adjusted EBITDA AL will be affected by the gradual exit from handset leasing in the upcoming years. Sprint had a higher focus
on handset leasing, which shall be replaced by an increased focus on equipment installment plans. Revenue growth is expected
to outpace increases in expense as T‑Mobile US is focused on customer growth and delivering synergies of the merger with
Sprint by driving operating cost efficiencies and site decommissioning as the network is integrated and customers are migrated
to the destination network. However, investments to unlock growth vectors such as the growth in digitalization and supporting
small town, rural, and enterprise growth, as well as the expectation of increased switching activity from network migrations,
will impact adjusted EBITDA AL.

Excluding expenditures relating to spectrum, T‑Mobile US expects an increase in 2021 and stable cash capex growth in 2022 in
U.S. dollars as capex remains elevated for the network integration and the rapid pace of deployments to continue building out
the 5G network which now covers more than 100 million people with Ultra Capacity 5G.

Europe
In 2020, the coronavirus pandemic had a substantial negative impact on economic output in the countries of our Europe
operating segment. In 2021, the economy is likely to recover. Real GDP will rise in our segment’s footprint countries by
between 3.4 and 4.7 % per annum in 2021. However, a potential increase in unemployment in conjunction with ongoing
economic uncertainty could have a negative impact on household and business expenditure for telecommunications services.
The (partial) lockdown imposed at the start of 2021 could have a detrimental effect on revenues from business customers,
roaming, and prepaid services in particular.

We are assuming that the forecast of these macroeconomic conditions will only have a limited impact on the development of
our telecommunications markets (including IT). This assumption has been confirmed by EITO, which anticipates a modest initial
recovery for the countries of our Europe operating segment for 2021, with slight growth of 0.4 %. This is based on an improved
forecast for IT business, while the telecommunications market is expected to remain at the prior-year level.

Taking the telecommunications market on its own, Analysys Mason also forecasts a stable trend for total revenues for 2021 and
an increase of almost 2 % for 2022. Customer demand for a fast and reliable broadband connection is also expected to lead to
growth in broadband revenues of around 3 % for the next two years. According to Analysys Mason, the trend towards increased
data usage will also continue, especially in households that have not previously had a sufficiently fast broadband line. Demand
has also grown as a result of the coronavirus-induced shift towards working from home. On top of this, the fiber-optic build-
out is being accelerated. In most Central and Eastern European countries, there is still the possibility of increasing broadband
network coverage. Additional regulatory-induced measures will likely further boost investments in network infrastructure. This
growth is being bolstered by the growing number of companies offering convergent products. In traditional pay-TV business,
according to Analysys Mason, the number of customers using an OTT offer will increase significantly over the next two years,
as will the number of IPTV lines. Accordingly, TV revenues for 2021 will also increase by 1 % and for 2022 by more than 2 %.
Following the downturn in 2020, mobile business will slowly start to recover again in 2021, according to the Analysys Mason
forecast – with modest growth of just under 1 % in 2021 and almost 2 % in 2022.

We aspire to remain Europe’s leading telecommunications provider in the coming years. We are convinced that a country-
wide integrated fixed-network and mobile network infrastructure will be a key success factor. Our FMC product portfolio is
already available to customers in all of our national companies. Another milestone on the road to success is digitalization: by
making intelligent use of our network infrastructure, which comprises a range of technologies, especially 5G, we want to offer
innovative solutions for households, business customers, and municipalities. With our fully integrated offers and digitalization,
which is fast gaining momentum, we plan to continue to ensure the best customer experience and continue to improve
customer satisfaction.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 115

The Europe operating segment is distinguished by its strong investment portfolio: All of our national companies are integrated
providers of telecommunications services and, as well as having a high brand recognition value, are substantially relevant in
their respective home markets. In the last year, for instance, we were already able to provide our customers in Poland with
comprehensive convergent services by utilizing Orange’s fiber-optic network. In the Czech Republic, we are working with a
partner to run our own fiber-optic network. In Romania, we will take a different tack and transform the company from an
integrated provider into a mobile-only provider: On November 6, 2020, OTE concluded an agreement with Orange Romania
concerning the sale of the 54 % stake in Telekom Romania Communications, which operates the Romanian fixed-network
business, to Orange Romania. The transaction is subject to approval by the authorities as well as other closing conditions.

Our goal is to deliver the best customer experience. Our successful convergent product portfolios MagentaOne and
MagentaOne Business provide strong offerings with which we can help shape developments in the European markets. We made
significant progress in the reporting year: we doubled the penetration rate in the last three years, and more than 50 % of our
customers already have a MagentaOne contract. We want to increase this share successively over the next two years. Our FMC
offering is to provide the best customer experience: With a strong set of add-on services (“more for more” principle), it is our
view that MagentaOne is an excellent option for getting the best out of the mobile and fixed-network world. We believe it will
lead to higher levels of customer satisfaction and a lower churn rate. Over the next two years, we plan to maximize the business
benefits arising from greater customer satisfaction, further lower the churn rate, and increase FMC revenues as a percentage
of total revenues.

We are convinced that only top customer service will enable us to take the next step toward achieving the best customer
experience. Digitalization can make a major contribution in this regard. The service app for consumers enables us to largely
digitalize our interaction with customers, meaning we can meet customer needs in a more personalized and efficient way,
and position products and innovative services in the market more quickly. This service app has been established in all of
our national companies; in the reporting year, we achieved a penetration rate in the Europe operating segment of 62 %. We
firmly believe that our customers will reward the benefits it brings. Thus, we believe we can achieve first or second place in
customer satisfaction rankings of telecommunications companies in the respective national companies in the next two years,
as measured by the TRI*M index which is based on empirical research.

Our TV business remains key to the success of FMC. In addition to a seamless experience of TV and entertainment offers, we
continue to attach importance to high quality and – where it makes sense – exclusive proprietary content. Going forward, we
will continue negotiations, depending on local market conditions, to acquire (co-)exclusive rights to broadcast sports events,
such as the UEFA Champions League and the Europa League, or the rights to TV movies/series. However, we still believe high-
quality local content to be very relevant in our markets. This is why we would like to offer our customers a wide range of such
content. By implementing a new TV platform, we can improve the customer experience on the one hand, and rapidly roll out
new services and content on the other. We are also working together with what are known as OTT players, like Netflix or Prime
Video, and gradually expanding our range of OTT services to all screens – especially to our Android-TV-based terminals. Overall,
we expect to continue growing our revenues from TV business over the next two years.

The broadband build-out will remain a key focus of activities in the coming years. Our state-of-the-art network infrastructure
supports the digital transformation and enables us to leverage our technology leadership. We therefore plan to take part
in further spectrum auctions – particularly for 5G. The 5G launch is advancing in our national companies: after Austria, the
marketing of 5G also officially began in Hungary, Poland, the Czech Republic, Slovakia, Croatia, and Greece in 2020. Further
countries in our Europe operating segment will gradually follow suit over the next year, depending on their local market needs
and on the results of spectrum auctions. To this end, we have completed initial pilot projects in almost all our footprint countries
and made the necessary technical preparations. In parallel to the launch of 5G, we continue to expand LTE reach and implement
further LTE frequency layers in order to increase network capacity. In this way, we will achieve our target of 99 % network
coverage in our European footprint in the next year. One aim of our integrated network strategy is to make further advances
in the fiber-optic rollout. In addition to Hungary, Greece, Slovakia, Croatia, North Macedonia, and Montenegro, we are also
investing massively in building out our fiber-optic networks in Austria and the Czech Republic. We plan to achieve fiber-optic
coverage of 38 % by 2022.

In the next two years, our business customers in the Europe operating segment will have even better options to shape their
future in digitalized business life. First of all, we will further tailor our offers to the changed needs of our customers. For
example, our MagentaOne Business offers include video conferencing solutions for all business customer groups. Whether
small or large, companies can further increase their productivity thanks to our exclusive partnership with Microsoft. In the
area of security, we provide solutions, for example, for smart video surveillance for cities and municipalities, but also for
private companies of all sizes. For our corporate customer business, we expect this to result in rising revenues from both
telecommunications and ICT/cloud services. Our product portfolio continues to center on the efficiency of our business
customers: as a strong partner for digitalization, we make it possible to satisfy additional customer needs, for example by
optimizing websites or increasing payment options. Connectivity is also more important than ever for business customers.
We would like to serve this need with our convergent offers, comprising the best connectivity (5G and optical fiber), efficient
productivity, and state-of-the-art security solutions.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 116

In our Europe operating segment, we expect to increase our customer base over the next two years, mainly thanks to a strong
focus on MagentaOne, our convergence brand. Consequently, we expect the number of TV and broadband customers to
increase in 2021 and 2022. We are also planning for slight growth in the number of mobile customers in 2021, gaining further
momentum in 2022. We expect the number of fixed-network lines to remain stable in 2021 and 2022.

We expect revenues for our Europe operating segment to remain stable in 2021 and 2022, measured on a comparable basis,
i.e., at constant exchange rates and market conditions, and given an unchanged organizational structure.

Vigorous competition in the markets of our operating segment could potentially put pressure on our margins. To be ready for
such an eventuality, we want to increase our productivity and exploit the benefits of digitalization, for instance by automating
processes in order to realize cost-cutting potential. Accordingly, we anticipate adjusted EBITDA AL to develop positively. We
expected adjusted EBITDA AL to amount to around EUR 3.9 billion in 2021 and to increase slightly in 2022.

In order to maintain our technology leadership, we continue to invest in our integrated networks and plan to maintain our
high level of investments over the next few years. Since we invested more than planned in the reporting year, cash capex will
decrease slightly year-on-year in 2021. It is expected to level out in 2022.

Systems Solutions
Overall, growth in the IT market is expected to continue apace over the next two years, while cost pressure and intense
competition are likely to persist. The impact of the coronavirus pandemic has accelerated digitalization in many areas. As
a consequence, we expect further growth in demand for solutions for cloud services, big data, the Internet of Things, the
digitalization of business processes, and IT security (cybersecurity).

After a brief decline in 2020, the market for IT services is likely to continue growing over the next few years. At the same time,
this market is undergoing a radical transformation, e.g., due to ongoing standardization and automation, demand for smart
services, and the changes being wrought by cloud services in outsourcing business. Further challenges have arisen in the shape
of digitalization, the growing importance of cybersecurity, big data, and increasing mobility. Traditional IT business will continue
to decline, while cloud services, the Internet of Things, mobility, and cybersecurity may achieve double-digit growth rates. In
view of all this, our plan is to continue investing increasingly in growth markets – especially in digitalization (e.g., EDGE, artificial
intelligence (AI), and blockchain), multi- and hybrid cloud services, and cybersecurity.

Part of our Group strategy is the ambition to be a leading partner for business customer productivity. We give our customers
help and guidance in implementing digital business models with our offerings for connectivity, digital business, cloud and
infrastructure, and security, as well as through our strategic partnerships.

Under the program to transform our systems solutions business, we realigned our organization and workflows on a portfolio
basis, thereby creating the basis for business transparency and dedicated portfolio management and strategy. We are
continuing to drive forward expansion of the growth business (e.g., public cloud managed services) while at the same time
stabilizing and making further cost savings in established IT business (e.g., managed infrastructure services and private cloud),
with the aim of bringing about a significant shift in the revenue mix towards our growth areas.

We are among the top providers in the European IT market. Our very high levels of customer satisfaction are a core element in
maintaining this position in the long term as well as in playing a leading role in digitalization.

Overall, we are forecasting a stable trend in order entry and a slight decline in revenues for the Systems Solutions operating
segment in 2021. Adjusted EBITDA AL is expected to develop stably and come in at around EUR 0.3 billion. Due to ongoing
investments in growth areas, we expect cash capex to remain stable. For 2022, we expect to see a slight year-on-year increase
in order entry, stable revenues, a slight increase in adjusted EBITDA AL, and stable cash capex.

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Group Development
Our companies T‑Mobile Netherlands and GD Towers dominate the performance of our Group Development operating
segment.

While the Dutch mobile communications market continues to be shaped by sustained high price pressure and intense
competition, this is expected to ease moderately in the coming years. The Netherlands is ahead of much of Europe with
its bundling of fixed-network and mobile products into convergent offers (FMC). Nevertheless, the strong discount segment
comprising mobile providers’ secondary brands will continue to make for lively competition. The main components of our
strategy for T‑Mobile Netherlands continue to be the repositioning of the T‑Mobile core brand, expansion of our portfolio of
convergent products, and efficient cost management. Following the successful integration of Tele2 Netherlands, the Dutch
MVNO and SIM provider Simpel was acquired to support our long-term strategy. The acquisition of Simpel secures our mobile
market shares, creates synergies, and makes us more competitive in the consumer market.

GD Towers comprises the equity investments DFMG, T‑Mobile Infra B.V., and, since the start of 2021, Magenta Telekom
Infra GmbH. With some 32,500 sites, DFMG is the biggest provider of passive wireless infrastructure for mobile
communications and broadcasting in Germany. We expect demand for cell sites to rise steadily over the next few years, given
that network operators plan both to close gaps in coverage and to increase the density of mobile networks to meet the growing
demand for mobile data services. With around 3,150 sites, T‑Mobile Infra B.V. is one of three providers of passive wireless
infrastructure in the Netherlands. On January 21, 2021, Deutsche Telekom, Cellnex Telecom S.A., the newly established,
independently managed investment company Digital Infrastructure Vehicle I SCSp (DIV), and others signed an agreement to
merge Deutsche Telekom’s and Cellnex’s respective Dutch subsidiaries for mobile infrastructure. Under the deal, the Dutch cell
tower company T‑Mobile Infra B.V. will be sold to DIV and subsequently merged into Cellnex Netherlands B.V. Magenta Telekom
Infra GmbH bundles the Austrian radio tower business, operating around 7,000 sites.

We expect the revenues of our Group Development operating segment to increase slightly in 2021, as well as in 2022. Adjusted
EBITDA AL is set to increase in 2021 to around EUR 1.2 billion; for 2022 we expect a further increase. The positive trend in
revenue and adjusted EBITDA AL is mainly driven by the continued build-out of sites at DFMG and the FMC strategy with
planned customer additions at T‑Mobile Netherlands.

We expect investments in our Group Development operating segment to continue growing strongly in 2021, with a further
increase projected for 2022. This is mainly on account of the ongoing build-out of cell sites by DFMG in Germany together
with a slight decrease in investment activity at T‑Mobile Netherlands due to the advanced stage of the integration of
Tele2 Netherlands.

Group Headquarters & Group Services

At Group Headquarters & Group Services, we will stay focused over the next two years on our ongoing efficiency enhancement
measures, with which we are further optimizing our structures, especially within Group Services. We will also continue to focus
on implementing our cost-cutting measures. This will primarily involve reallocating human resources, bundling standardized
processes for the Group, and enhancing the value of our real estate portfolio by means of innovative space and workplace
concepts. As these cost cuts will put us in a position to offer our services more cost-effectively, the operating segments stand
to benefit from them as well. Against the backdrop of the pandemic, we are working on flexible concepts that will enable us to
adjust our capacities at short notice to take account of current developments.

In the coming years, too, our Board of Management department Technology and Innovation will drive not only the development
of innovative technologies, products, and services, but also IT standardization and the ongoing establishment of centralized
production platforms. Major areas of capital expenditure in the years 2021 and 2022 will include technology development,
the implementation of our IT strategy, and security. We expect this to reduce overheads and capital expenditure, driven by IT
operating costs and by the ongoing standardization of IT infrastructure and platforms.

In the long term, these savings will help the Group finance its innovation endeavors. We are focusing innovation topics, such
as development of the new 5G mobile communications standard and network slicing, evolution of a proprietary smart system
for the voice control of Deutsche Telekom products and services, and introduction of a uniform operating system for the
routers marketed by the Group. Technological innovations will serve to safeguard the network and technology leadership of
our Germany and Europe operating segments in the long term and to evolve the campus networks, which are designed to
improve the integrated automation of our international industrial customers’ production processes. Ultimately, every one of our
investment projects revolves around enhancing the customer experience.

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Risk and opportunity management

Board of Management’s assessment of the aggregate risk and opportunity position
The assessment of the aggregate risk position is the outcome of the consolidated analysis of all material risk categories or
individual risks. The aggregate risk position did not change fundamentally in 2020 compared with the previous year. Our major
challenges particularly include the regulatory factors, economic uncertainty in consequence of the coronavirus pandemic,
the implementation of the business combination of T‑Mobile US and Sprint, intense competition and the associated price
pressure in the telecommunications business, as well as the pressure to change arising from new technologies and strategic
transformation. As it stands today, Deutsche Telekom AG’s Board of Management sees no risk to the Group’s continued
existence as a going concern. As of the reporting date and the time of preparing the financial statements, there were no risks
that jeopardize Deutsche Telekom AG’s and key Group companies’ continued existence as a going concern.

We are convinced that we will also be able to master challenges and exploit opportunities in the future without having to take
on any unacceptably high risks either for our business or for society and the environment. We strive to achieve a good overall
balance between opportunities and risks, with the aim of increasing added value for our stakeholders by analyzing and seizing
new market opportunities. SDG 16 FINANCE

For further information on sustainability, please refer to the section “Corporate responsibility and non-financial statement.”

Risk and opportunity management system

As one of the world’s leading providers in the telecommunications and information technology industry, we are subject to all
kinds of uncertainties and change. In order to operate successfully in this ongoing volatile environment, we need to anticipate
any developments at an early stage and systematically identify, assess, and manage the resulting risks. It is equally important
that we recognize and exploit opportunities. We therefore consider a functioning risk and opportunity management system to
be a central element of value-oriented corporate governance.

A risk and opportunity management system of this kind is not only necessary from a business point of view; it is also required by
laws and regulations, in particular § 91 (2) of the German Stock Corporation Act (Aktiengesetz – AktG). Deutsche Telekom AG’s
Audit Committee monitors the effectiveness of the internal control system and the risk management system as required by
§ 107 (3) sentence 2 AktG.

Our Group-wide risk and opportunity management system covers strategic, operational, financial, and reputational risks as well
as the corresponding opportunities for our fully consolidated entities. The aim is to identify these risks and opportunities early
on, monitor them, and manage them in accordance with the desired risk profile. For this purpose, we make use of internal and
external information sources.

The standard process described below provides a framework. Once risks and opportunities have been identified, we move on
to analyze and assess them in more detail; the effects of risks and opportunities are not offset against each other. We then
decide on the specific course of action to be taken, for example, in order to reduce risks or seize opportunities. The respective
risk owner implements, monitors, and evaluates the associated measures. The steps are repeatedly traversed as required and
modified to reflect the latest developments and decisions.

The risk and opportunity management system

Objectives

Avoid Risk

Reduce
Aggregate risk

Transfer
Residual
risk

Identification and Monitoring and

assessment reporting
Opportu-

planned
nities as

Seize
opportunity

Enhance
Extended

Cooperate
Opportunity
Handling

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Our risk and opportunity management system is based on the globally applicable risk management standard of the
International Standards Organization (ISO). ISO standard 31000 “Risk management – Principles and guidelines” is regarded as
a guideline for internationally recognized risk management systems.

Our Internal Audit unit reviews the functionality and effectiveness of elements of our risk management system at regular
intervals. The external auditor mandated by law to audit the Company’s annual financial statements and consolidated financial
statements in accordance with § 317 (4) of the German Commercial Code (Handelsgesetzbuch – HGB) examines whether the
risk early warning system is able to identify at an early stage risks and developments that could jeopardize the Company’s
future. Our system complies with the statutory requirements for a risk early warning system.

In addition, our Group Controlling unit specifies a series of Group guidelines and processes for the planning, budgeting,
financial management, and reporting of investments and projects. These guidelines and processes guarantee both the
necessary transparency during the investment process and the consistency of investment planning and decisions in our Group
and operating segments. They also provide the Board of Management with support in reaching its decisions. This process also
includes the systematic identification of strategic risks and opportunities.

Organization of the risk and opportunity management system

The Group Risk Governance unit defines the methods for the risk and opportunity management system that is applied Group-
wide and for the associated reporting system, in particular the Group risk report. All of our operating segments as well as
the Group Headquarters & Group Services segment are connected to the central risk and opportunity management system
of the Group via their own risk and opportunity management. The Group risk report, which primarily aggregates the contents
provided by our segments, is approved by the Board of Management on a quarterly basis and presented to the Audit Committee
of the Supervisory Board. We inform the Audit Committee about all of the latest developments and/or changes in the risk
management system at a special meeting held annually. The relevant owners in each of the segments are responsible for
identifying, assessing, and continuously monitoring risks. Management takes potential opportunities into account in the annual
planning process and continuously develops them further during business operations.

Risk identification and reporting

Each operating segment produces a quarterly risk report in accordance with the standards laid down by the central risk
management and based on specific materiality thresholds. These reports assess risks, taking into account their extent in terms
of impact on results of operations or financial position, as well as their probability of occurrence, and they identify action to be
taken and suggest or initiate measures. The assessment additionally includes qualitative factors that could be important for our
strategic positioning and reputation, and that also determine the aggregate risk. We base our assessment of risks on a period of
two years. This is also the length of our forecast period. If significant risks exist beyond the forecast period, these are monitored
on an ongoing basis.

The Group risk report, which presents the main risks, is prepared for the Board of Management on the basis of this information.
The Board of Management informs the Supervisory Board. The Audit Committee also examines this report at its meetings. If
any unforeseen risks arise outside regular reporting of key risks, they are reported ad hoc.

Identification and assessment of opportunities in the annual planning process

The systematic management of risks is one side of the coin; securing the Company’s long-term success by means of integrated
opportunities management is the other. That is why identifying opportunities and subjecting them to a strategic and financial
assessment is an essential part of our annual planning process. It allows us to factor those opportunities into our forecasts for
financial and non-financial performance indicators.

The short-term monitoring of results and the medium-term planning process help our operating segments and Group
Headquarters identify and seize the opportunities in our business throughout the year. While short-term monitoring of results
mainly targets opportunities for the current financial year, the medium-term planning process focuses on opportunities that
are strategically important for our Group. In this context we distinguish between two types of opportunity:

External opportunities, i.e., those with causes over which we have no influence, for example, the revocation of additional
taxes in Europe.
Internal opportunities, i.e., those that arise within the Company, for example by focusing our organizational structure on
innovation and growth areas and products, or through business partnerships and collaborations from which we expect to
reap synergies.

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= p q Combined management report 120

We are constantly enhancing the efficiency of our planning process so as to gain greater scope for action. This puts the
organization in a position to identify and seize new opportunities and generate new business. The preliminary plans of our
operating segments form the basis for a concentrated planning phase during which members of the Board of Management,
business leaders, senior executives, and experts from all business areas intensively discuss the strategic and financial focus
of the Group and its operating segments, and from all of which they ultimately produce an overall picture. The identification
of opportunities from innovation and their strategic and financial assessment play a major role throughout this process. This
“brainstorming” may result in opportunities being taken and transferred to the organization, or rejected and passed back to the
respective working groups for revision.

Risk assessment and risk containment

Assessment method
Risks are assessed on the basis of “probability of occurrence” and “risk extent.” The following assessment yardsticks apply:

Probability of occurrence Description

<5% Very low
≥ 5 to 25 % Low
≥ 25 to 50 % Medium
> 50 % Large

Risk extent Description

Low Limited negative effects on business activities, results of operations, financial position, and reputation;
individual EBITDA AL risk < € 100 million
Medium Certain negative effects on business activities, results of operations, financial position, and reputation;
individual EBITDA AL risk ≥ € 100 million
Large Significant effects on business activities, results of operations, financial position, and reputation;
individual EBITDA AL risk ≥ € 250 million, and/or affects more than one Group entity
Very large Damaging negative effects on business activities, results of operations, financial position, and reputation;
individual EBITDA AL risk ≥ € 500 million, and/or affects more than one Group entity

By assessing risks according to the aspects described above, we classify them as low, medium, and high risks, as shown in the
following graphic.

Risk significance

Very large

Large
Risk extent

Medium

Small

<5% ≥ 5–25 % ≥ 25–50 % > 50 %

Very low Low Medium High

Probability of occurrence

High risk Medium risk Low risk

We report all risks classified as “high” and “medium.” Exceptions are possible, for example, risks from prior years that we can
continue to list for the sake of reporting continuity although they are classified as “low” in the current reporting period.

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It should be noted that risks with an extent currently assessed as being small may in the future have a stronger impact than
risks currently assessed as having a larger extent. This may be due to uncertainties that cannot be assessed at present and
over which we have no influence. Uncertainties of this kind also give rise to risks that are currently unknown to us or that we
presently consider to be insignificant and that may affect our business activities in the future.

Risk containment measures

Group insurance management. To the extent possible and economically viable, we take out adequate Group-wide insurance
cover for insurable risks. DeTeAssekuranz – a subsidiary of Deutsche Telekom AG – acts as an insurance broker for Group
insurance management. It develops and implements solutions for the Group’s operational risks using insurance and insurance-
related tools and places them on the national and international insurance markets.

Taking out insurance cover is an essential option for our external risk transfer. The coverage of risks in our Group insurance
programs requires the transfer of risk for the purpose of protecting the Group’s financial position. That means that the possible
extent of the risk must have reached a volume “relevant for the Group” or the risks have to be bundled and managed at Group
level to protect the Group’s interests (opportune reasons/cost optimization/risk reduction).

Business continuity management (BCM). BCM is a process within operational security and risk management that helps protect
business processes from the consequences of damaging incidents and disruptions. It ensures the continuation of business
processes through ongoing analysis, assessment, and management of relevant risks for people, technology, infrastructure,
supply and service relationships, and information. The aim is to identify potential threats at an early stage and to keep the
impact and duration of a disruption of critical business processes to an acceptable minimum by ensuring appropriate resilience
in the organization plus the ability to effectively cope with threats. SDG 8 FINANCE

To this end, BCM identifies critical business processes and business processes requiring protection, including any supporting
processes, process steps, and assets (people, technology, infrastructure, information, and supply and service relationships).
Appropriate precautionary measures are also defined. In particular, security management works in coordination with the
relevant units and process owners to analyze the possible consequences of external and internal threats with relevance for
security, such as natural disasters, vandalism, or sabotage. Once the extent of potential losses and probability of occurrence
have been assessed, preventive measures can be put in place and contingency plans developed.

The individuals responsible initiate and execute further measures to mitigate the risks. A wide range of measures are available,
depending on the risk type. A few examples of these measures are:

We tackle market risks with comprehensive sales controlling and intensive customer management.
We manage interest and currency risks by means of systematic risk management and hedge them using derivative and non-
derivative financial instruments.
We also take a whole array of measures to deal with operational risks: for example, we constantly implement operational
and infrastructural measures in order to improve our networks; continually enhance our quality management system, the
associated controls, and quality assurance; and offer our employees systematic training and development programs.
We deal with risks from the political and regulatory environment through an intensive, constructive dialog with policymakers
and the authorities.
We deal with risks arising from brand, communication, and reputation by continuously analyzing the market and
communications.
We minimize risks in connection with legal proceedings by ensuring suitable support for those proceedings and by designing
contracts appropriately in the first place.
The Group Tax unit identifies potential tax-related risks at an early stage and systematically records, assesses, and monitors
them. It takes any measures necessary to minimize tax-related risks and coordinates them with the Group companies
affected. The unit also draws up and communicates policies for avoiding tax risks.
Risks and opportunities
In the following section, we present all risks and opportunities of significance to the Group that, as things currently stand, could
affect the results of operations, financial position, and/or reputation of Deutsche Telekom and, via the subsidiaries’ results,
the results of operations, financial position, and/or reputation of Deutsche Telekom AG. We describe the majority of the risks
before the measures for risk containment are taken. If any remaining risks have been identified despite such measures for
risk containment, they are labeled as such. If risks and opportunities can be clearly allocated to an operating segment, this is
presented accordingly in the following.

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= p q Combined management report 122

In order to make it easier to understand and see their effects, we have allocated the individually assessed risks to the following
categories:

Corporate risks

Change
Risk against
Probability of occurrence Risk extent significance prior year
Industry, competition, and strategy
Economic risks, Germany Medium Medium Medium Deteriorated
Economic risks, United States Medium Medium Medium Deteriorated
Economic risks, Europe Medium Medium Medium Deteriorated
Risks relating to the market and environment, Germany Medium Medium Medium Unchanged
Risks relating to the market and environment, United States Medium Very large High Deteriorated
Risks relating to the market and environment, Europe Medium Medium Medium Unchanged
Risks relating to innovations (substitution) Medium Medium Medium Unchanged
Risks relating to strategic transformation and integration Medium Very large High Unchanged
Regulation see Risks and opportunities
relating to regulation
Operational risks
Employees Medium Small Low Unchanged
Risks relating to IT/NT network operations, Germany Low Large Medium Unchanged
Risks relating to IT/NT network operations, United States Very low Large Low Unchanged
Risks relating to IT/NT network operations, Europe Very low Large Low Unchanged
Risks relating to existing IT architecture, United States Medium Medium Medium Unchanged
Future viability of the IT architecture, United States Medium Medium Medium Unchanged
Procurement Low Small Low Unchanged
Data privacy and data security High Medium Medium Unchanged
Brand, communication, and reputation
Brand and reputation (reporting in the media) Low Small Low Unchanged
Sustainability risks Low Medium Low Unchanged
Health and environment Low Medium Low Unchanged
Litigation and anti-trust proceedings see Litigation
Financial risks
Liquidity, credit, currency, interest rate risks Medium Medium Medium Unchanged
Tax risks see Tax risks
Other financial risks see Other financial risks

Risks and opportunities from industry, competition, and strategy

Risks and opportunities relating to the macroeconomic environment. As an international corporation, we operate in a large
number of countries, using a range of currencies. A substantial economic downturn could generally reduce the purchasing
power of our customers and adversely affect our access to the capital markets. Exchange rate fluctuations could impact on our
earnings.

The coronavirus pandemic threw the global economy into deep recession in 2020 and will also continue to shape its course
in 2021. Leading institutes and organizations do not expect economic activity to return to pre-pandemic levels until the end
of 2021/start of 2022. Apart from the coronavirus pandemic, the main risks to future economic development are potential
geopolitical shocks and uncertainties from international trade conflicts.

Higher demand for certain telecommunications services means the impact of the coronavirus pandemic is being felt less
severely by the telecommunications industry than by other industries. Nevertheless, there is still uncertainty regarding the
extent to which business activities and thus the results of operations and financial position of Deutsche Telekom could be
affected overall depending on how the pandemic develops. Possible factors could include renewed travel restrictions, the
closure of Telekom Shops, disrupted supply chains, further declines in roaming and visitor volumes, falling terminal equipment
sales, or a drop in the number of new contracts being taken out. In addition, corporate customer business may decline further,
for example, due to delayed or changed customer decisions. The possibility of an increase in the number of consumers and
business customers defaulting on their payments cannot be ruled out either. Deutsche Telekom has put in place cost-saving
measures to mitigate potential effects on earnings. The coronavirus pandemic has a negative impact on the Group’s economic
business risks. In the United States, Germany, and Europe operating segments, the risk significance was regraded from “low” to
“medium.”

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These risks are counterbalanced by opportunities, especially if the coronavirus pandemic can be contained on a lasting basis.
After a harsh coronavirus winter, we expect the European economy to see recovery from spring 2021. The pace of economic
recovery is also likely pick up in the United States. Many countries in Eastern Europe saw relatively robust economic growth in
the coronavirus pandemic, and are expected to perform above the EU average again in 2021.

Risks relating to the market and environment. The main market risks we face include the steadily falling price level for voice
and data services in the fixed network and in mobile communications. In addition to price reductions imposed by regulatory
authorities, this is primarily attributable to ongoing intense competition in the telecommunications industry.

Competitive pressure is expected to continue, especially in the fixed network in Germany and the countries of our Europe
operating segment. In the broadband market, the trend of disproportionate growth in the market shares of regional network
operators and supra-regional specialist FTTH providers, particularly in Germany, continues to establish itself. They build out
their own infrastructure and thus increase their market coverage. Increasingly this is done with fiber-optic infrastructure,
thereby increasing their customer numbers and expanding their own value added. There is still strong competition to gain new
customers by cutting prices and offering introductory discounts.

We expect ongoing price pressure for mobile voice telephony and mobile data services, which could adversely affect our
mobile service revenue. Among the main reasons for this price pressure are data-centric, aggressively priced offers. Providers
that do not have their own infrastructure (MVNOs) market such offers over the internet, for instance, while there is also the risk
that smaller competitors will take unforeseen, aggressive pricing measures. Technological innovations such as the use of pure
eSIMs in smartphones could put further pressure on prices by increasing the willingness of customers to switch providers.

Drillisch Netz AG acquired mobile spectrum in the spectrum auction held in Germany in 2019 and subsequently made a public
statement declaring its intention to begin setting up a fourth mobile network over the next few years. Furthermore, Drillisch has
defined access to an existing network via national roaming to be a prerequisite to building out its own network and has begun
negotiations with all three German network providers. In fall of 2020, Drillisch called upon the Bundesnetzagentur in its role as
arbitrator to move forward the negotiations on national roaming with Deutsche Telekom and Vodafone. Changes in the market
for wholesale mobile services may affect the retail and wholesale area.

Another competitive risk lies in the fact that, both in the fixed network and in mobile communications, we are increasingly faced
with competitors who are not part of the telecommunications sector as such, but are increasingly moving into the traditional
telecommunications markets. This mainly relates to major players in the internet and consumer electronics industries. As a
result, we are exposed to the risk of a further loss of share of value added and falling margins due to increasingly losing direct
customer contact to competitors.

T‑Mobile US has multiple wireless competitors, some of which have greater resources and compete for customers based
principally on service/device offerings; price; network coverage, speed, and quality; and customer service. Market saturation
in the United States will continue to cause the wireless industry’s customer growth rate to be moderate in comparison
with historical growth rates, or possibly negative, leading to ongoing competition for customers. T‑Mobile US expects that
its customers’ appetite for data services will place increasing demands on its network capacity. The scarcity and cost of
additional wireless spectrum, and regulations relating to spectrum use, may adversely affect T‑Mobile US’ business, financial
condition, and operating results. T‑Mobile US faces intense and increasing competition from other service providers as industry
sectors converge, such as cable, telecommunications services and content, and satellite television. Joint ventures, mergers,
acquisitions, and strategic alliances in the wireless sector have resulted in and are expected to result in larger competitors
competing for a limited number of customers.

The business combination of T‑Mobile US and Sprint was consummated on April 1, 2020. Implementing the business
combination poses complex challenges for T‑Mobile US, which must be successfully overcome in order to realize the predicted
synergies and to meet the conditions imposed by the authorities. The combination of the two companies to form the new
T‑Mobile US affects all operational areas; for instance, the integration of the mobile networks and the IT and technology
environments, customer management, sales, HR management, logistics, and the control environment. At the same time, it
will be necessary to fulfill multiple conditions, including those agreed with the antitrust and regulatory authorities such as the
Federal Communications Commission (FCC), the U.S. Department of Justice (DoJ), the supervisory authorities in various U.S.
states, and the Committee on Foreign Investment in the United States (CFIUS). With the divestiture of Sprint’s prepaid business
and the confirmation of an agreement to sell spectrum to DISH, on July 1, 2020, we fulfilled a major prerequisite of the U.S.
authorities for approving the merger. Following the first half of 2020, we increased the risk significance in the risk category
“Risks relating to the market and environment, United States” to “high” to reflect the challenges posed by the integration.

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Our Systems Solutions operating segment also faces challenges. Continued strong competition and persistent cost pressure
are adversely affecting traditional IT business. In addition, the technological shift toward cloud solutions and digitalization in
the IT sector is prompting new, strongly capitalized, competitors to enter the market. This may lead to revenue losses and
declining margins at T‑Systems. On the other hand, innovation areas such as artificial intelligence (AI) and industrial IoT create
opportunities for new project business.

Opportunities relating to the market and environment. The telecommunications and IT market is extremely dynamic and
highly competitive. The economic and competition conditions as well as customers’ changing wants and needs affect our
actions and impact on our Company indicators. We generally expect the situation to develop as described in the section
“Forecast.”

Risks relating to innovations (substitution). Innovation cycles are getting shorter and shorter. This confronts the
telecommunications sector with the challenge of bringing out new products and services at shorter and shorter intervals. New
technologies are superseding existing technologies, products, or services in part, in some cases even completely. This could
lead to lower prices and revenues in both voice and data traffic. These substitution risks could impact our revenue and earnings.
We deal with the impact of substitution risks by offering package rates, for example: we offer new and existing customers
integrated solutions from our product portfolio. The introduction of the new 5G mobile standard as a technological innovation
entails uncertainties in the form of upcoming spectrum auctions and their conditions of award, regulatory requirements, public
discussions on security and electromagnetic compatibility, and the limited number of telecommunications hardware providers
represented in planning scenarios.

Opportunities relating to innovations. In addition to the risks described, ever-shorter innovation cycles enable us to drive
the digital transformation of our society and to provide our consumers and business customers with innovative products
and solutions. That is why our innovation and product development activities are decisive when it comes to identifying
opportunities and making the most of them in an increasingly competitive environment. In order to guarantee this, and
do justice to the growing convergence of networks, products, and IT, we have combined all relevant functions under joint
management in our Board of Management department Technology and Innovation, in order to enable closer integration of
the areas of innovation, networks, IT, and security. SDG 9 FINANCE By doing so, we are putting the development of
outstanding, seamless customer experiences front and center, and this year we won awards, for example, for our smart-home
products and our digital assistant “Frag Magenta.”

For further information on our innovation activities, please refer to the section “Innovation and product development.”

5G is the new generation of mobile telecommunications networks. Not only are we involved in a large number of different
organizations and forums, we are also working intensively in collaboration with research institutions and industry to continue
developing this standard, which will address an array of challenges facing telecommunication networks. These include purely
technical requirements, such as achieving a substantial increase in capacity, bandwidth, and availability, and lower latency.
In addition, there are fundamental issues, such as IoT communication on a large scale in the Internet of Things (IoT) and the
growing need for reliability, security, and guaranteed service quality in industrial applications. 5G thus offers not only the
immediate opportunity of cost-effectively managing rapidly increasing demands in existing business models going forward,
but also opportunities for further business models by marketing network capabilities (e.g., network access, localization,
security, identity, storage location, temporary storage, real-time processing) to relevant partners. We are already working on
implementing the first use cases such as campus networks, mobile gaming, and mobile edge computing, in which data is
processed in a decentralized manner (at the edges of the network). Together with other technologies like the NarrowBand
Internet of Things (NB-IoT) and artificial intelligence (AI), 5G and edge computing provide the underpinnings for the further
digital transformation of society. SDG 13 STRUCTURE

Risks relating to strategic transformation and integration. We are in a continuous process of strategic adjustments and cost-
cutting initiatives. If we are unable to implement these projects as planned, we will be exposed to certain risks. In other words,
the benefit of the measures could be less than originally estimated, take effect later than expected, or not at all. Each of these
factors, individually or in combination, could have a negative impact on our business situation, financial position, and results of
operations.

Collaboration with Chinese suppliers was impeded in 2020 by the enduring trade conflict between the United States and China.
Since 2020, on account of security concerns, the United States has restricted the use of U.S. technology for and by Chinese
suppliers. A large number of countries in which Deutsche Telekom also operates (including Greece and Poland) supported
this Clean Network initiative, which prohibits the use of products from critical vendors in telecommunications networks in
the medium term. The long-running debate on 5G security in Germany may result in Chinese manufacturers being partially
excluded from networks. In that case, we, too, would face a cost-intensive process of replacing all installed products.

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Opportunities relating to strategic transformation and integration. SDG 9 FINANCE The IP transformation (all IP)
concluded in Germany in the reporting year offers many opportunities: the resulting logical network speaks one language
and, in technical terms, functions largely independently of the services transmitted. This will enable efficiency gains, e.g., by
reducing the complexity of maintenance and operation, switching off service-specific legacy platforms, and saving energy. In
addition, all IP will generate growth potential in the short to medium term by improving the customer experience of existing
services (e.g., better voice quality, more customer self-service, greater configuration flexibility) and, in the medium to long
term, by providing an indispensable basis for convergence products and the Internet of Things (IoT), and by shortening the time
to market for new products.

One of the key benefits of the all-IP network is that it also acts as a foundation for the future cloud- and software-based
production of networks and services. It creates opportunities to increase efficiency, accelerate the provision of new services
and features, improve quality, and tap into new revenue potential, while at the same time increasing automation.

We are driving forward the transformation of our IT using agile development. This approach allows us to exploit new
opportunities for efficient IT production, through the modular provision of components as well as through accelerated
development. Furthermore, agile development makes it possible to reduce big bang risks in the delivery of major software
releases.

Risks and opportunities relating to regulation SDG 16 RELATIONSHIPS

In the following section, we describe the main regulatory risks and opportunities that, as things currently stand, could affect
our results of operations and financial position, and our reputation.

Regulatory risks arise from telecommunications-specific statutory regulations at the national, European, and U.S. level, and
from the consequent powers of national authorities to regulate or intervene in the market and limit our freedom as regards
product design and pricing. Deregulation can give rise to regulatory opportunities. Regulatory intervention, which we can only
anticipate to a limited extent, may exacerbate existing price and competitive pressure. There are concerns that regulation in
Germany and other European countries may also impact revenue and earnings trends in the medium to long term.

Changes in regulatory policy and legislation

EU legal framework for telecommunications. The European Electronic Communications Code, which reforms central EU
regulation of the telecommunications sector, primarily price and access regulation, spectrum policy, sector-specific rules
on consumer protection, and the universal service regime, entered into force on December 20, 2018. The member states
had 24 months as of that date to transpose the requirements into national law. However, implementation has been delayed
in a number of countries, including Germany. The corresponding Telecommunications Modernization Act
(Telekommunikationsmodernisierungsgesetz) is not expected to pass into law before the second quarter of 2021.

The revision of the EU legal framework for telecommunications remains part of a package of new EU legislation on the single
market for electronic communications that provides for amendments to the regulations governing media services – mainly
due to the growing importance of internet offerings – which are competing with the TV services previously focused on (e.g.,
regarding copyright law, laws for the protection of minors from harmful media, consumer protection, and the liability of internet
service providers (in particular hosting) for third-party content). At the national level, too, specific amendments (for instance, to
the German State Media Treaty and the German Telemedia Act, as well as to competition law) are being discussed in response
to the phenomena of digitalization and convergence.

For further information on key regulatory decisions, please refer to the section “The economic environment.”

Awarding of spectrum
Risks could arise from the fact that inappropriate auction rules and frequency usage requirements, excessive reserve prices, or
disproportionately high annual spectrum fees could jeopardize our planned acquisition of spectrum. Inappropriate conditions
for the awarding of spectrum can include, for example, extensive build-out requirements and, in some cases, requirements to
grant network access (national roaming, service provider access). By contrast, we see an opportunity in particular in the fact
that such spectrum award procedures enable mobile network operators to obtain the optimum amount of spectrum for their
future business. We would thus be equipped for further growth and innovation. The upcoming award procedures mainly relate
to the auctioning of additional spectrum in the 700 MHz, 2,500 MHz, 3,400 MHz to 3,800 MHz, and the 26,000 MHz ranges.
In addition, spectrum licenses, especially in the 900 MHz, 1,800 MHz, and 2,100 MHz ranges, will expire between 2021 and
2022 in some countries and need to be renewed. Award procedures are currently being prepared in Croatia, Poland, Romania,
Slovakia, Hungary, and the United States.

For further information on spectrum auctions that were completed in 2020 or are still ongoing, please refer to the section “The economic environment.”

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Areas in which national regulators may intervene

European and national laws and regulations grant national regulators extensive powers of intervention. In addition to the
aforementioned Code, a case in point at the European level is the EU Regulation concerning the single market for electronic
communications, which was enacted in 2015. It contains provisions on international roaming, net neutrality, and obligations
to provide information, which restrict our product design options, mainly as regards retail products. The Body of European
Regulators for Electronic Communications (BEREC) has published guidelines for implementing this regulation. Risks arise from
how the national regulators interpret both the regulation and these guidelines. When the Telecommunications Modernization
Act enters into force in 2021, the previously non-binding communication by the Bundesnetzagentur on the interpretation of
certain parts of the regulation will be replaced by a legally binding administrative order issued by the Bundesnetzagentur. In
addition, national regulatory authorities have wide-ranging powers under law to require products to be adjusted in order to
enforce the regulation and to impose fines in cases of non-compliance.

Our Group companies in Germany and Europe continue to be subject to extensive regulation of wholesale products, obligating
us to make our network and services available to our competitors wherever we are deemed to have significant market power
as an operator. The national regulators regularly check and determine the corresponding terms, conditions, and prices of these
wholesale offerings. The key wholesale products subject to regulation are unbundled local loop lines, bitstream products,
leased lines, and the associated services. As of 2021, termination rates will be determined directly by the European Commission
by way of a “Delegated Act.” In addition, European and national consumer protection regulations apply. In Germany, for
instance, the Transparency Regulation came into force on June 1, 2017, the main objective of which is to enhance transparency
and cost control with telecommunications services for consumers. In this context, the Bundesnetzagentur introduced a system
that enables consumers to measure the bandwidths available on their fixed-network and mobile lines.

In addition to the requirements of telecommunications law, our media products are also subject to special European and
national regulations under media law, as well as non-sector-specific regulations such as data and consumer protection. These
include, in the broader sense, copyright law, regulations concerning the responsibility for published content, requirements in
relation to ensuring the protection of minors in the media, and requirements in relation to the content and user interfaces of
media distribution platforms. Barring any changes to its shareholder structure on the one hand (the Federal Republic and KfW
being its major shareholders), or to the legal situation, or the prevailing opinions of media regulators on the other, it is unlikely
that Telekom Deutschland will be granted a license to broadcast radio and television programs.

Operational risks and opportunities

Employees. Our employees play a crucial role in the transformation of Deutsche Telekom. Their skills are a key factor to our
business success. The general high demand on the labor market, in particular for specialists in highly relevant areas such as IT,
makes it difficult to recruit new employees. An inability to attract and/or retain the necessary experts would have a negative
impact on our business in the future.

In 2020, we once again used socially responsible measures to restructure the workforce in the Group, mainly by means of
severance payments, phased and dedicated retirement, internal retraining measures, and employment opportunities in public
service for civil servants offered by Vivento. We will continue this restructuring in the coming year. If it is not possible to
implement the corresponding measures as planned or at all (for example, due to limited interest in severance payments), this
may have negative effects on our financial targets. To avoid the risk of high potentials leaving the Group as a result of the staff
reduction instruments, we make sure that the arrangement is voluntary on both sides in each individual case.

The right of civil servants to return to Deutsche Telekom also carries risks: When Group entities that employ civil servants are
disposed of, it is generally possible to continue to employ them at the Group entity to be sold, provided the civil servant agrees
or submits an application to be employed at the respective unit in future. However, there is a risk that they may return to us
from a sold entity, for instance after the end of their temporary leave from civil servant status, without the Company being able
to offer them jobs. Currently 1,343 civil servants are entitled to return from outside the Group to Deutsche Telekom in this way
(as of December 31, 2020).

Risks relating to IT/NT network operations. We have an increasingly complex information/network technology infrastructure,
which we constantly expand and upgrade to ensure the best customer experience and consolidate our technology leadership.
Outages in the current and also future technical infrastructure cannot be completely ruled out and could in individual cases
result in revenue losses or increased costs. After all, our IT/NT resources and structures are the key organizational and technical
platform for our operations. The ongoing convergence of IT and NT harbors risks. In order to counter these holistically,
our network, innovation, and IT activities are combined under the Board of Management department for Technology and
Innovation.

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Risks could arise in this area relating to all IT/NT systems and products that require internet access. For instance, faults between
newly developed and existing IT/NT systems could cause interruptions to business processes, products, and services, such
as smartphones and MagentaTV. In order to avoid the risk of failures, e.g., due to natural disasters or fires, we use technical
early warning systems and redundant IT/NT systems. The Computer Emergency Response Team (CERT) at Deutsche Telekom
Security is in charge of protecting our business customers’ servers. In cloud computing, all data and applications are stored at
a data center. Our data centers have security certification and meet strict data protection provisions and the EU regulations.
All data relating to companies and private persons is protected from external access. Constant maintenance and automatic
updates keep the security precautions up to date at all times. On the basis of a standardized Group-wide business continuity
management (BCM) process, we also take organizational and technical measures to prevent damage from occurring or, if we
cannot, to mitigate the subsequent effects. We also have insurance cover for insurable risks. SDG 9 FINANCE

Opportunities relating to IT/NT network operations. The utilization of large data volumes (big data) from our networks can
improve and speed up decision-making processes by enhancing transparency. It does so by shifting the basis for decisions from
hypotheses to facts and, for example, enabling correlations to be recognized.

Our Systems Solutions operating segment covers innovative business areas in the digital transformation of business processes,
such as the Internet of Things and cybersecurity. These business areas could develop faster than expected. As a pioneer of
the digital transformation, we have an opportunity not only to participate in, but also actively shape, the market trend through
a variety projects in the fields of healthcare and mobility solutions. In the ramp-up phase of these new business models
based on M2M communication and big data, our partner-oriented approach is a highly promising way of contributing our core
competencies – in cloud computing and cybersecurity – to various projects. What is more, we already have initial references in
areas of the Internet of Things market, e.g., predictive maintenance. SDG 12 FINANCE

As a technology and development partner for toll collection business in Europe, we already have a strong competitive position.
We have earned valuable references in European toll collection projects in Belgium and Austria and through the planned launch
of a Europe-wide toll collection system (Toll4Europe). This will help to give us an edge over our competitors.

Risks relating to the existing IT architecture in the United States. T‑Mobile US relies upon its systems and networks and the
systems and networks of other providers and suppliers, to provide and support services. T‑Mobile US’ business, like that of
most retailers and wireless companies, involves the receipt, storage, and transmission of customers’ confidential information,
including sensitive personal information, payment card information, and confidential information about their employees and
suppliers, as well as other sensitive information about T‑Mobile US, such as business plans, transactions, and intellectual
property. Cyberattacks, such as denial of service and other malicious attacks, could disrupt T‑Mobile US’ internal systems,
networks, and applications, impair its ability to provide services to customers, and have other adverse effects on its business.

Future viability of the IT architecture in the United States. In order to grow and remain competitive with new and evolving
technologies in the industry, T‑Mobile US will need to adapt to future changes in technology, continually invest in its network,
increase network capacity, enhance existing offerings, and introduce new offerings to address its current and potential
customers’ changing demands. If T‑Mobile US is unable to take advantage of technological developments on a timely basis,
then it may experience a decline in demand for its services or face challenges in implementing or evolving its business strategy.
Following the business combination with Sprint, T‑Mobile US operates and maintains several customer billing systems and will
continue to run them until all of Sprint’s legacy customers have been successfully migrated to T‑Mobile US’ existing billing
systems. Unexpected difficulties or delays could cause major system or business disruptions.

Procurement. Deutsche Telekom cooperates with a variety of suppliers of technical (information and communication
technology) and non-technical products and services. Products and services that might involve a higher risk include software
and hardware, network technology components, and all products and services provided directly to end customers.

Supply risks cannot be entirely ruled out. Pandemics, other delivery bottlenecks, price increases, changes in the prevailing
economic or political conditions, or suppliers’ product strategies may have a negative impact on our business processes and our
results. Additional risks may also result from the dependence on individual suppliers or from individual suppliers defaulting. This
is especially true for Chinese telecommunications suppliers. We employ organizational, contractual, and procurement strategy
measures to counteract such risks. SDG 17 RELATIONSHIPS

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Data privacy and data security. Following the successful implementation of the General Data Protection Regulation (GDPR)
in 2018 and the harmonization of the increased data protection requirements under the GDPR in the EU and in Germany in
2019, these regulations were adjusted to new developments and further consolidated in 2020. For instance, the GDPR has
introduced new procedures such as the Privacy Impact Assessment for assessing and documenting risks in data processing.
We have already had such a procedure in place for ten years in the form of the Privacy and Security Assessment (PSA),
which is fully digital. But such procedures also need to adapt to modern agile working methods and move with the Group’s
changing organizational structures and ways of working. That is why, with the PSA@AGIL project, we have updated the
procedure and also introduced new roles with explicit data privacy and security responsibility in agile product development.
In addition to new ways of working, we have carefully examined technical developments and, for example, provided support
within the Group for the service app solution introduced in many European countries, which our customers can use to manage
their Deutsche Telekom products and contracts. Furthermore, we have supported the further development of our MagentaTV
product, where, for example, we have introduced a privacy dashboard, which enables users to manage and change their data
privacy settings. In addition, in collaboration with the Robert Koch Institute, SAP, and other partners, we developed the German
coronavirus tracing app (Corona-Warn-App) and the subsequent European solution. Deutsche Telekom played a decisive role in
the data privacy concept throughout the development of the app, coordinating between the partners, the Federal Government,
and other parties involved. We were thus able to make a substantial contribution to fighting the coronavirus pandemic in
Germany and Europe. In accordance with the requirements of the Federal Government, user IDs are stored in a decentralized
manner, i.e., on the smartphones of the people you meet. SDG 3 RELATIONSHIPS The GDPR has created a good basis for

data processing in the EU, based on a set of uniform rules. It assures Europe of a high level of data protection and, at the
same time, will pave the way for new digital business models. However, experience gained so far shows that the intended
harmonization is at risk. The regulatory authorities of the member states are called upon to strengthen coherence as part of the
consistency mechanism. This relates in particular to positioning on individual data protection issues, but also to divergences in
the application of the framework for fines. SDG 16 STRUCTURE

On July 16, 2020, the European Court of Justice issued a landmark judgment (Schrems II). Europe’s highest court has
addressed the concerns on the level of data protection in the United States and declared the adequacy decision of the EU
Commission for the United States (Privacy Shield) void. Since that date, the Privacy Shield has been invalid. The standard
contractual clauses on data privacy were confirmed in the ruling because they contain suitable protection mechanisms for data
transfer in general. This ensures an adequate level of data protection can be observed by both contracting parties. However,
extensive inspection obligations apply for the contracting parties and the data protection authorities to verify that the data
protection level is in fact adequate. Extensive technical and legal checks must be carried out for all third-country transfers.
Group Privacy is working with all affected Group units to work through the implementation requirements arising from the ruling
and the publications of the European Data Protection Board to ensure that the necessary changes in business and contractual
relationships can be made. In addition, as a result of the ruling by the EU Commission, new standard contractual clauses
have been proposed. The draft stipulates that all agreements with companies in third countries must be amended to take
account of these new clauses by the end of 2021. All companies in the EU, but also their contractual partners around the globe,
must rise to the significant challenges of this ruling. However, since the ePrivacy Regulation has still not yet been adopted,
there is yet another sector-specific regulatory challenge for the telecommunications sector in the EU. As telecommunications
providers’ data processing options are substantially restricted compared with what is possible under the GDPR, innovative big
data and artificial intelligence applications in the field of telecommunications cannot realize the same kind of potential as those
of companies that are only subject to the GDPR. It would be a huge stride forward for telecommunication providers if the
ePrivacy Regulation, which has been under negotiation at a European level since 2017, were to be adopted and the possibility of
processing communication metadata for compatible purposes were to be permitted. This would be an important step towards
innovation-friendly regulation while at the same time maintaining a high level of data protection.

IT security continues to pose major challenges. In addition to preventive measures such as integrated security in business
processes and measures to raise security awareness among employees, we counter these challenges with increased focus on
the analysis of threats and cyber risks. This is where our early warning system comes in: It detects new sources and types of
cyberattack, analyzes the behavior of the attackers while maintaining strict data privacy, and identifies new trends in the field
of security. Along with the honeypot systems, which simulate vulnerabilities in IT systems, our early warning system includes
alerts and analytical tools for spam mails, viruses, and Trojans. We exchange the information we obtain from all these systems
with public and private bodies to detect new attack patterns and develop new protection systems.

Cybercrime and industrial espionage are on the rise. We are addressing these risks with comprehensive security concepts. In
order to create greater transparency and thus be in a stronger position to tackle these threats, we are relying more and more on
partnerships, e.g., with public and private organizations. By means of the Security by Design principle we have made security
an integral part of our development process for new products and information systems. In addition, we carry out intensive and
obligatory digital security tests.

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We are continually striving to accelerate our growth through IT security solutions. To this end, we have combined our security
units within Deutsche Telekom Security. We want to leverage this end-to-end security portfolio to secure market shares and
score points with security concepts on the back of megatrends like the Internet of Things and Industry 4.0. We are also
continuing to gradually expand our partner ecosystem in the area of cybersecurity. SDG 17 RELATIONSHIPS

We provide regular updates on the latest developments in data protection and data security on our website at
www.telekom.com/en/corporate-responsibility/data-protection-data-security.

Risks and opportunities arising from brand, communication, and reputation

Negative media reports. An unforeseeable negative media report on our products and services or our corporate activities
and responsibilities can have a huge impact on the reputation of our Company and our brand image. Social networks have
made it possible that such information and opinions can spread much faster and more widely. Ultimately, negative reports can
impact on our revenue and our brand value. In order to avoid this, we engage in a constant, intensive, and constructive dialog,
in particular with our customers, the media, and the financial world. For us, the top priority is to take as balanced a view as
possible of the interests of all stakeholders and thereby uphold our reputation as a reliable partner.

Sustainability risks and opportunities. For us, comprehensive risk and opportunity management also means considering the
opportunities and risks arising from ecological or social aspects or from the management of our Company. To this end, we
actively and systematically involve all relevant stakeholders in the process so as to identify current and potential risks and
opportunities. In parallel with our ongoing monitoring of ecological, social, and governance issues, we systematically determine
our stakeholders’ positions on these issues. The key tools we use here are: our stakeholder survey; a document analysis,
covering legal texts, studies, and media publications, amongst other things; our involvement in working groups and committees
of national and international business associations and social organizations, e.g., GeSI, ETNO, BDI, Bitkom, Econsense, and
BAGSO; stakeholder dialog formats organized by us; and our various publications, such as the press review and newsletter.
We also integrate the biggest sustainability risks in our internal compliance assessment, thereby recording the associated
positioning and development of measures in the various business areas. SDG 17 RELATIONSHIPS

For further information on sustainability, please refer to the section “Corporate responsibility and non-financial statement.”

We have identified the following as our main sustainability management issues:

Reputation. How we deal with sustainability issues also entails both opportunities and risks for our reputation. A high level
of service quality is one of the most important factors for improving customer perception. Customer satisfaction has been
embedded in our Group management as a non-financial performance indicator to underline the importance of this issue.
Transparency and reporting help to promote the trust of other external stakeholders in our Group. Our annual and CR reports
also serve this purpose. However, issues such as business practices, data privacy, and work standards in the supply chain,
conduct in relation to human rights, and ethical conduct in relation to and use of artificial intelligence also entail reputational
risks: if our brands, products, or services are connected with such issues in negative media reports, this can cause substantial
damage to our reputation. As part of our sustainability management activities, we continuously review such potential risks
and take measures to minimize them. This includes systematically incorporating them in the Group’s internal compliance
management system, so as to determine the relevance of the risks in relation to sustainability issues and their effect on
reputation across units. We also ascertain how our products and services make a positive contribution to sustainability in
order to enhance our reputation. SDG 16 FINANCE

Climate protection. SDG 13 ENVIRONMENT We pursue an integrated climate strategy, which means focusing not only on the

risks that climate change poses for us and our stakeholders, but also on the opportunities it presents. By 2030, ICT products
and services will have the potential to save up to seven times as much in CO2 emissions in other industries as the ICT sector
itself generates, even taking into account the expected rebound effects (according to the GeSI Digital for Purpose study).
Taking an optimistic view, this could mean a 9 % reduction in global CO2 emissions by 2030. In addition, investments of
around USD 3 trillion in innovative solutions are expected by 2030, which will not only expand the business, but will also
support the SDGs. We are supporting this trend by evaluating our product portfolio to identify sustainability benefits. In
addition, we want to continuously improve the ratio of the emissions that our products and services save to those generated
by our own value chain. According to this figure, the positive CO2 effects facilitated for our customers in Germany were 610 %
higher in 2020 than our own CO2 emissions (enablement factor of 7.1 to 1).

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Climate change risks are already visible in the form of increasingly extreme weather conditions. This is having a direct effect
on our stakeholders, e.g., our customers, suppliers, and employees. The risk is assessed in relation to the continuation of
operations as part of risk management and is managed at an operational level in the business units. Deutsche Telekom
welcomes the targets behind the Task Force on Climate-related Financial Disclosures (TCFD) and is actively working to
implement them. In a first step, we conducted a gap analysis on the coverage of TCFD recommendations. In a number
of workshops with relevant players from technology, procurement, strategy, and risk management, we defined
Deutsche Telekom AG’s key climate-related opportunities and risks and gave them an initial weighting. The next step will be
to conduct a location analysis, with the example of Germany, of the physical climate risks in various scenarios (business as
usual / 4-degree scenario).

Detailed information on this will be published in our 2020 CR report.

We can take further preventive action in this area by also reducing our own CO2 emissions. For this reason, in 2019 we set
ourselves the ambitious target of cutting 90 % of emissions across the Group by 2030 as compared with 2017. Climate
protection also carries financial risks, whether from the introduction of levies on CO2 emissions or increased energy costs, as
well as stricter requirements for products, for example in relation to energy efficiency. The measures we are taking to counter
these risks include measuring our own energy efficiency and finding ways to improve it. We have a Group-wide program to
specifically address our supply chain and we are working to optimize our products and their packaging. In 2020, several of
our national companies sourced 100 % of their electricity from renewables (Deutsche Telekom Group in Germany, Magyar
Telekom in Hungary, OTE in Greece, as well as T‑Mobile Netherlands, T‑Systems Iberia, T‑Systems India, and all T‑Systems
and GBS entities in Russia). A further six entities procured almost all of their electricity needs from renewable energies
(T‑Mobile and T‑Systems Austria, T‑Systems Nordic, T‑Systems Netherlands, T‑Systems Brazil, and Hrvatski Telekom). All of
these entities are thus actively working to manage the risks from climate change.

Suppliers. SDG 8 RELATIONSHIPS We see more sustainability in our supply chain as an opportunity – for our reputation

and our business success. Apart from the general risks associated with our global procurement activities, we can be
exposed to country- and supplier-specific risks. These include, for example, the use of child labor, the conscious acceptance
of environmental damage, or inadequate local working and safety conditions. We reduce these risks by systematically
reviewing our suppliers. We conduct these audits within the scope of the Joint Audit Corporation (JAC). The aim of the JAC is
to reduce sustainability risks in our supply chain and to improve ecological and social aspects, including the issue of human
rights. As such, the audit is compliant with internationally recognized guidelines and standards, such as the ILO Core Labor
Standards, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises.
Our partnerships with suppliers that comply with international sustainability standards ensure a high level of product quality
and reliable procurement. We have a special development program in place to help strategic suppliers introduce business
practices that are both socially and ecologically acceptable while remaining economically efficient. This program showed
measurable successes again in the reporting period and has three major advantages: It has a positive impact on our suppliers’
working conditions, enhances their profitability, and makes the economic relevance of sustainability clear for both sides, i.e.,
for our suppliers and for the Group alike. For instance, better working conditions at our suppliers reduces the number of work-
related accidents as well as the attrition rate. That, in turn, ensures high product quality and increases productivity, while at
the same time lowering costs for recruitment and training. Thus, not only are we strengthening our suppliers’ profitability
and CR performance, we are also significantly reducing identified risks.
Health and environment. Mobile communications, or the electromagnetic fields used in mobile communications, regularly
give rise to concerns among the general population about potential health risks. This issue continues to be the subject of
public, political, and scientific debate. Acceptance problems among the general public mostly concern mobile communications
networks and occasionally the use of mobile terminals such as smartphones, tablets, and laptops. The discussion has
intensified repercussions for the build-out of the mobile infrastructure. In the fixed network, this can affect the use of traditional
IP and DECT (digital cordless) phones, and devices that use Wi-Fi technology. There is a risk of regulatory interventions, such as
tightened thresholds for electromagnetic fields or the implementation of precautionary measures in mobile communications,
e.g., amendments to building law, or also the risk of a labeling requirement for handsets.

Over the past few years, recognized expert organizations such as the World Health Organization (WHO) and the International
Commission on Non-Ionizing Radiation Protection (ICNIRP) have repeatedly reviewed the current thresholds for mobile
communications and confirmed that – if these values are complied with – the use of mobile technology is safe based on current
scientific knowledge. Various expert organizations, currently the ICNIRP, regularly review the recommended thresholds on the
basis of the latest scientific findings.

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We are convinced that mobile communications technology is safe if specific threshold values are complied with. We are
supported in this conviction by the assessment of the recognized bodies. Our responsible approach to this issue finds
expression in our Group-wide EMF Policy, with which we commit ourselves to more transparency, information, participation,
and support of independent mobile communications research, far beyond that which is stipulated by legal requirements. We
aim to overcome concerns among the general public by pursuing an objective, scientifically well-founded, and transparent
information policy. We thus continue to see it as our duty to continue our trust-based dialog with local authorities and to ensure
its successful progress. This particularly applies since our long-standing collaboration with municipalities to expand the mobile
network was enshrined in law in 2013. Previously, this collaboration was based on voluntary self-commitments by the network
operators. SDG 3 RELATIONSHIPS

Litigation
Major ongoing legal proceedings
Deutsche Telekom is party to proceedings both in and out of court with government agencies, competitors, and other parties.
The proceedings listed below are of particular importance from our perspective. If, in extremely rare cases, required disclosures
on the significance of individual litigation and anti-trust proceedings are not made, we concluded that these disclosures may
seriously undermine the outcome of the relevant proceedings.

Prospectus liability proceedings (third public offering, or DT3). This relates to initially around 2,600 ongoing lawsuits from
some 16,000 alleged buyers of T-Shares sold on the basis of the prospectus published on May 26, 2000. The plaintiffs
assert that individual figures given in this prospectus were inaccurate or incomplete. The amount in dispute currently totals
approximately EUR 78 million plus interest. Some of the actions are also directed at KfW and/or the Federal Republic of
Germany as well as the banks that handled the issuances. The Frankfurt/Main Regional Court had issued orders for reference
to the Frankfurt/Main Higher Regional Court in accordance with the German Capital Investor Model Proceedings Act
(Kapitalanleger-Musterverfahrensgesetz – KapMuG) and has temporarily suspended the initial proceedings. On May 16, 2012,
the Frankfurt/Main Higher Regional Court had ruled that there were no material errors in Deutsche Telekom AG’s prospectus. In
its decision on October 21, 2014, the Federal Court of Justice partly revoked this ruling, determined that there was a mistake in
the prospectus, and referred the case back to the Frankfurt/Main Higher Regional Court. On November 30, 2016, the Frankfurt/
Main Higher Regional Court ruled that the mistake in the prospectus identified by the Federal Court of Justice could result
in liability on the part of Deutsche Telekom AG, although the details of that liability would have to be established in the initial
proceedings. Both Deutsche Telekom AG and some of the individual plaintiffs in the model proceedings have brought an appeal
before the Federal Court of Justice against this decision. We continue to hold the opinion that there are compelling reasons
why Deutsche Telekom AG should not be liable for damages. An adequate contingent liability has been recognized and is shown
in the notes to the consolidated financial statements. In the annual financial statements of Deutsche Telekom AG prepared in
accordance with German GAAP, adequate provisions for this risk have been recognized.

Claims relating to charges for the shared use of cable ducts. In 2012, Kabel Deutschland Vertrieb und Service GmbH (today
Vodafone Kabel Deutschland GmbH (VKDG)) filed a claim against Telekom Deutschland GmbH to reduce the annual charge for
the rights to use cable duct capacities in the future and gain a partial refund of the payments made in this connection since
2004. According to VKDG’s latest estimates, its claims amounted to around EUR 624 million along with around EUR 9 million
for the alleged benefit from additional interest, plus interest in each case. Claims prior to 2009 are now no longer being
asserted by VKDG. After the Frankfurt/Main Regional Court had dismissed the complaint in 2013, the Frankfurt/Main Higher
Regional Court also rejected the appeal in December 2014. In the ruling dated January 24, 2017, the Federal Court of Justice
reversed the appeal ruling and referred the case back to the Frankfurt/Main Higher Regional Court for further consideration.
In its ruling dated December 20, 2018, the Frankfurt/Main Higher Regional Court again rejected the appeal and disallowed
a further appeal. In similar proceedings, Unitymedia Hessen GmbH & Co. KG, Unitymedia NRW GmbH, and Kabel BW GmbH
filed claims against Telekom Deutschland GmbH in January 2013, demanding that it cease charging the plaintiffs more than a
specific and precisely stated amount for the shared use of cable ducts. In addition, the plaintiffs are demanding a refund of
currently around EUR 570 million plus interest. The claim was dismissed in the first instance by the Cologne Regional Court
on October 11, 2016. In its ruling dated March 14, 2018, the Düsseldorf Higher Regional Court rejected the appeal against this
decision. In both proceedings, the plaintiffs have lodged a complaint against the non-allowance of appeal with the Federal
Court of Justice. At present the financial impact of both these proceedings cannot be assessed with sufficient certainty.

Claim for damages in Malaysia despite an earlier, contrary, legally binding arbitration ruling. Celcom Malaysia Berhad
(Celcom) and Technology Resources Industries Berhad are pursuing actions with the state courts in Kuala Lumpur, Malaysia,
against eleven defendants in total, including DeTeAsia Holding GmbH, a subsidiary of Deutsche Telekom AG. The plaintiffs are
demanding damages and compensation of USD 232 million plus interest. DeTeAsia Holding GmbH had enforced this amount
against Celcom in 2005 on the basis of a final arbitral award in its favor. The main proceedings in the court of first instance
began in January 2018. Adequate provisions for this risk were recognized.

Patents and licenses. Like many other large telecommunications and internet providers, Deutsche Telekom is exposed to
a growing number of intellectual property rights disputes. There is a risk that we may have to pay license fees and/or
compensation; we are also exposed to a risk of cease-and-desist orders, for example relating to the sale of a product or the use
of a technology.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 132

Further, Deutsche Telekom intends to defend itself and/or pursue its claims vigorously in each of these proceedings.

Proceedings concluded
Arbitration proceedings against T‑Mobile Polska S.A. In August 2019, Polish telecommunications provider P4 Sp. z o.o. had
initiated arbitration proceedings against T‑Mobile Polska S.A. The plaintiff claimed around PLN 400 million (around
EUR 93 million) plus interest as payment for its alleged entitlement to retroactive mobile termination rates. The arbitration
proceedings filed by P4 Sp. z o.o. were dismissed in a final arbitral award dated December 30, 2020.

Anti-trust proceedings
Like all companies, our Group is subject to anti-trust law. In recent years, we have notably stepped up our compliance efforts
in this area too. Nevertheless, Deutsche Telekom and its subsidiaries are from time to time subject to proceedings under
competition law or follow-on damage actions under civil law. In the following, we describe material anti-trust proceedings and
resulting claims for damages.

Claims for damages against Slovak Telekom following a European Commission decision to impose fines. The European
Commission decided on October 15, 2014 that Slovak Telekom had abused its market power on the Slovak broadband market
and as a result imposed fines on Slovak Telekom and Deutsche Telekom, which were paid in full in January 2015. Slovak Telekom
and Deutsche Telekom challenged the European Commission’s decision on December 29, 2014 before the General Court of the
European Union. On December 13, 2018, the court partially overturned the European Commission’s decision and reduced the
fines by a total of EUR 13 million. Despite this positive judgment, on February 21, 2019, Slovak Telekom and Deutsche Telekom
filed an appeal with the European Court of Justice against the ruling by the General Court. With this appeal, Slovak Telekom and
Deutsche Telekom are seeking, inter alia, to overturn the findings of the European Commission determining Slovak Telekom’s
behavior as abusive. Following the decision of the European Commission, competitors filed damage actions against Slovak
Telekom with the civil court in Bratislava. These claims seek compensation for alleged damages due to Slovak Telekom’s abuse
of a dominant market position, as determined by the European Commission. At present, two claims totaling EUR 112 million
plus interest are still pending. It is currently not possible to estimate the financial impact with sufficient certainty.

Financial risks
Liquidity, credit, currency, interest rate risks
With regard to its assets, liabilities, and planned transactions, our Group is particularly exposed to liquidity risks, credit risks,
and the risk of changes in exchange rates and interest rates. We want to contain these risks. Risks with an impact on cash flows
are monitored in a standard process and hedged accordingly using derivative and non-derivative hedges. Derivative financial
instruments are used solely for hedging and never for speculative purposes. The following risk areas – liquidity, credit, currency,
and interest rate risks – are evaluated taking into account all hedges.

For further information on the risk assessment, please refer to the “Corporate risks” table above.

Liquidity risk. To ensure the Group’s and Deutsche Telekom AG’s solvency and financial flexibility at all times, we maintain
a liquidity reserve in the form of credit lines and cash as part of our liquidity management. Since the successful business
combination of T‑Mobile US and Sprint, T‑Mobile US has pursued its own separate financing and liquidity strategy.

At December 31, 2020, Deutsche Telekom (excluding T‑Mobile US) had standardized bilateral credit agreements with 21 banks
for a total of EUR 12.6 billion. At all times, our liquidity reserve covered the bonds falling due and long-term loans of
Deutsche Telekom (excluding T‑Mobile US) for the next 24 months at least (see graphic below). From today’s perspective,
Deutsche Telekom’s (excluding T‑Mobile US) access to the international debt capital markets is not jeopardized.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 133

Development of the liquidity reserve (excluding T‑Mobile US), maturities in 2019a/2020

billions of €

20
17.8 17.5 17.1 17.5 17.1
15.8 16.0 15.7
15

11.0 11.4 11.6

10 9.6
8.1 7.9
7.0
5.5
5

0
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020

Liquidity reserve (absolute figures)

Maturities in the next 24 months

a 2019 pro forma figures for Deutsche Telekom (excluding T‑Mobile US).

Furthermore, bilateral credit lines with an aggregate total volume of USD 5.5 billion (EUR 4.5 billion) plus a cash balance
of USD 10.4 billion (EUR 8.5 billion) were available to T‑Mobile US as of December 31, 2020. This liquidity reserve covers
T‑Mobile US’ maturing bonds at all times for at least the next 24 months. From today’s perspective, access to the international
debt capital markets for T‑Mobile US is not jeopardized.

Credit risks. In our operating business and certain banking activities, we are exposed to a credit risk, i.e., the risk that a
counterparty will not fulfill its contractual obligations. To keep this credit risk to a minimum, we conclude transactions with
regard to financing activities only with counterparties that have at least a credit rating of BBB+/Baa1; we also actively manage
limits. In addition, we have concluded collateral agreements for our derivative transactions.

Currency risks. The currency risks result from investments, financing measures, and operations. Risks from foreign-currency
fluctuations are hedged if they affect the Group’s cash flows. However, foreign-currency risks that do not influence the Group’s
cash flows (e.g., risks resulting from the translation of assets and liabilities of foreign operations into euros) are not hedged.
Deutsche Telekom may nevertheless also hedge these foreign-currency risks under certain circumstances.

Interest rate risks. Our interest rate risks mainly result from financing activities. In addition to the interest rate risk pertaining
to variable-interest debt, this also includes the issue of new liabilities. With interest rates still at an all-time low, our risk
assessment for a rise in interest rates is unchanged against the prior year. As such, the risk significance in the risk category
“Liquidity, credit, currency, interest rate risks” remains at “medium” overall. Interest risks are managed as part of our interest
rate management activities. A maximum, variable component is set each year for the debt position in euros; the debt position
of T‑Mobile US in U.S. dollars primarily comprises fixed-income securities, some of which include issuer cancellation rights. The
Board of Management and the Supervisory Board are regularly informed about the situation.

For further information, please refer to Note 41 “Financial instruments and risk management,” in the notes to the consolidated financial statements.

Tax risks
We are subject to the applicable tax laws in many different countries. Risks can arise from changes in local taxation laws or case
law and different interpretations of existing provisions. These risks can impact both our tax expense and benefit as well as tax
receivables and liabilities.

Other financial risks

This section contains information on other financial risks that we consider to be immaterial at present or cannot evaluate based
on current knowledge.

Rating risk. As of December 31, 2020, Deutsche Telekom AG’s credit rating with Moody’s was Baa1 with a negative outlook,
while Standard & Poor’s rated us BBB with a stable outlook, and Fitch confirmed its current rating of BBB+ with a stable outlook.
Standard & Poor’s reduced its rating from BBB+ to BBB, as previously announced, upon the closing of the business combination
of T‑Mobile US and Sprint. Over time, a lower rating is likely to lead to an increase in the cost of debt financing.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 134

Sales of shares by the Federal Republic or KfW Bankengruppe. As of December 31, 2020, the Federal Republic and KfW
Bankengruppe jointly held 31.9 % in Deutsche Telekom AG. It is possible that the Federal Republic will continue its policy of
privatization and sell further equity interests in a manner designed not to disrupt the capital markets and with the involvement
of KfW Bankengruppe. There is a risk that the sale of a significant volume of shares by the Federal Republic or KfW
Bankengruppe, or any speculation to this effect, could have a negative impact on the price of the T-Share.

Our CR strategy enhances the value of our Company in the long term, which also has a positive effect of reducing business
risks. Investors with a long-term horizon acknowledge this approach. In the capital markets, this is evident, for example, in the
proportion of T-Shares held by investors that base their investment decisions, at least in part, on sustainability criteria. As of
September 30, 2020, around 13 % of all T-Shares were held by SRI (socially responsible investment) investors, and 9 % were
held by investors who manage their funds primarily in accordance with SRI aspects. SDG 8 FINANCE

Impairment of Deutsche Telekom AG’s assets. The value of the assets of Deutsche Telekom AG and its subsidiaries is reviewed
periodically. In addition to the regular annual measurements, specific impairment tests may be carried out, for example, where
changes in the economic, regulatory, business, or political environment suggest that the value of goodwill, intangible assets,
property, plant and equipment, investments accounted for using the equity method, or other financial assets might have
decreased. These tests may lead to the recognition of impairment losses that do not, however, result in cash outflows. This
could impact to a considerable extent on our results, which in turn may negatively affect the T-Share price.

For further information, please refer to the section “Summary of accounting policies – Judgments and estimates” in the notes to the consolidated financial
statements.

Other disclosures
Significant events after the reporting period
For information on events after the reporting period, please refer to Note 46 “Events after the reporting period” in the notes
to the consolidated financial statements and to the notes to the annual financial statements of Deutsche Telekom AG as of
December 31, 2020.

Accounting-related internal control system

Deutsche Telekom AG’s internal control system (ICS) is based on the internationally recognized COSO (Committee of
Sponsoring Organizations of the Treadway Commission) Internal Control – Integrated Framework, COSO I, as amended on
May 14, 2013.

The Audit Committee of the Supervisory Board of Deutsche Telekom AG monitors the effectiveness of the ICS as required
by § 107 (3) sentence 2 AktG. The Board of Management is responsible for defining the scope and structure of the ICS at its
discretion. Internal Audit is responsible for independently reviewing the functionality and effectiveness of the ICS in the Group
and at Deutsche Telekom AG, and, to comply with this task, has comprehensive information, audit, and inspection rights.

The accounting-related ICS comprises the principles, methods, and measures used to ensure appropriate accounting. It is
continuously being refined and aims to ensure the consolidated financial statements of Deutsche Telekom are prepared in
accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, as well as with
the regulations under commercial law as set forth in § 315e (1) HGB. Another objective of the accounting-related ICS is the
preparation of the annual financial statements of Deutsche Telekom AG and the combined management report in accordance
with German GAAP.

It is generally true of any ICS that regardless of how it is specifically structured there can be no absolute guarantee that it
will achieve its objectives. Therefore, as regards the accounting-related ICS, there can only ever be relative, but no absolute,
certainty that material accounting misstatements can be prevented or detected.

Group Accounting manages the processes of Group accounting and management reporting. Laws, accounting standards, and
other pronouncements are continuously analyzed as to whether and to what extent they are relevant and how they impact
on financial reporting. The relevant requirements are defined in the Group Accounting Manual, for example, communicated
to the relevant units and, together with the financial reporting calendar that is binding throughout the Group, form the
basis of the financial reporting process. In addition, supplementary process directives such as the Intercompany Policy,
standardized reporting formats, IT systems, as well as IT-based reporting and consolidation processes support the process of
uniform and compliant Group accounting. Where necessary, we also draw on the services of external service providers, for
example, to measure pension obligations. Group Accounting ensures that these requirements are complied with consistently
throughout the Group. The staff involved in the accounting process receive regular training. Deutsche Telekom AG and the
Group companies are responsible for ensuring that Group-wide policies and procedures are complied with. The Group
companies ensure the compliance and timeliness of their accounting-related processes and systems and, in doing so, are
supported and monitored by Group Accounting.

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= p q Combined management report 135

Operational accounting processes at the national and international level are increasingly managed by our shared service
centers. Harmonizing the processes enhances their efficiency and quality and, in turn, improves the reliability of the internal
ICS. The ICS thus safeguards both the quality of internal processes at the shared service centers and the interfaces to the Group
companies by means of adequate controls and an internal certification process.

Internal controls are embedded in the accounting process depending on risk levels. The accounting-related ICS comprises both
preventive and detective controls, which include:

IT-based and manual matching

The segregation of functions
The dual-checking principle
Monitoring controls
General IT checks such as access management in IT systems, and change management
We have implemented a standardized process throughout the Group for monitoring the effectiveness of the accounting-related
ICS. This process systematically focuses on risks of possible misstatements in the consolidated financial statements. At the
beginning of the year, specific accounts and accounting-related process steps are selected based on risk factors. They are
then reviewed for effectiveness in the course of the year. If control weaknesses are found, they are analyzed and assessed,
particularly in terms of their impact on the consolidated financial statements and the combined management report. Material
control weaknesses, the action plans for eradicating them, and ongoing progress are reported to the Board of Management
and additionally to the Audit Committee of the Supervisory Board of Deutsche Telekom AG. In order to ensure a high-quality
accounting-related ICS, Internal Audit is closely involved in all stages of the process.

Corporate Governance Statement in accordance with §§ 289f, 315d HGB

The Corporate Governance Statement in accordance with § 289f and § 315d HGB forms part of the combined management
report.

The Declaration of Conformity can be found on Deutsche Telekom AG’s website: www.telekom.com/en/investor-relations/management-and-corporate-
governance

Legal structure of the Group

Deutsche Telekom AG, Bonn, is the parent of the Deutsche Telekom Group. Its shares are traded on the Frankfurt/Main Stock
Exchange as well as on other stock exchanges.

For information on the composition of capital stock in accordance with § 289a (1) HGB and § 315a HGB of direct and indirect equity investments, please
refer to Note 19 “Shareholders’ equity” in the notes to the consolidated financial statements and to the notes to the annual financial statements of
Deutsche Telekom AG as of December 31, 2020.

Shareholders’ equity
Each share entitles the holder to one vote. These voting rights are restricted, however, in relation to treasury shares (at
December 31, 2020: around 18 million in total).

Treasury shares. The amount of issued capital assigned to treasury shares was approximately EUR 46 million at
December 31, 2020. This equates to 0.4 % of the capital stock. 18,002,303 treasury shares were held at December 31, 2020.

For information on the treasury shares in accordance with § 160 (1) No. 2 AktG, please refer to Note 8 in the annual financial statements of
Deutsche Telekom AG as of December 31, 2020 and to Note 19 “Shareholders’ equity” in the notes to the consolidated financial statements.

The shareholders’ meeting resolved on May 25, 2016 to authorize the Board of Management to purchase shares in the Company
by May 24, 2021, with the amount of share capital accounted for by these shares totaling up to EUR 1,179,302,878.72, provided
the shares to be purchased on the basis of this authorization in conjunction with the other shares of the Company that the
Company has already purchased and still possesses or are to be assigned to it under § 71d and § 71e AktG do not at any time
account for more than 10 % of the Company’s share capital. Moreover, the requirements under § 71 (2) sentences 2 and 3 AktG
must be complied with. Shares shall not be purchased for the purpose of trading in treasury shares. This authorization may be
exercised in full or in part. The purchase can be carried out in partial tranches spread over various purchase dates within the
authorization period until the maximum purchase volume is reached. Dependent Group companies of Deutsche Telekom AG
within the meaning of § 17 AktG or third parties acting for the account of Deutsche Telekom AG or for the account of dependent
Group companies of Deutsche Telekom AG within the meaning of § 17 AktG are also entitled to purchase the shares. The shares
are purchased through the stock exchange in adherence to the principle of equal treatment (§ 53a AktG). Shares can instead
also be purchased by means of a public purchase or share exchange offer addressed to all shareholders, which, subject to a
subsequently approved exclusion of the right to offer shares, must also comply with the principle of equal treatment.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 136

The shares may be used for one or several of the purposes permitted by the authorization granted by the shareholders’ meeting
on May 25, 2016 under item 6 on the agenda. The shares may also be used for purposes involving an exclusion of subscription
rights. They may also be sold on the stock market or by way of an offer to all shareholders, or withdrawn. The shares may also
be used to fulfill the rights of Board of Management members to receive shares in Deutsche Telekom AG, which the Supervisory
Board has granted to these members as part of the arrangements governing the compensation of the Board of Management,
on the basis of a decision by the Supervisory Board to this effect.

Under the resolution of the shareholders’ meeting on May 25, 2016, the Board of Management is also authorized to acquire the
shares through the use of equity derivatives.

On the basis of the authorization by the shareholders’ meeting on May 25, 2016 described above and corresponding
authorizations by the shareholders’ meeting on May 12, 2011 and May 24, 2012, 110 thousand shares were acquired in
June 2011, 206 thousand shares in September 2011, and 268 thousand shares in January 2013. The total volumes amounted
to EUR 2,762 thousand in the 2011 financial year, and EUR 2,394 thousand in the 2013 financial year (excluding transaction
costs). This increased the number of treasury shares by 316 thousand and 268 thousand, respectively. Further, 90 thousand
shares and 860 thousand shares were acquired in September and October 2015, respectively, for an aggregate amount of
EUR 14,787 thousand (excluding transaction costs); these acquisitions increased the number of treasury shares by
950 thousand.

No treasury shares were acquired in the reporting period.

As part of the Share Matching Plan, 2 thousand treasury shares were transferred free of charge to the custody accounts
of eligible participants in 2012 and a further 2 thousand in 2013. A further 90 thousand treasury shares were transferred
free of charge in the 2014 financial year. An additional 140 thousand treasury shares were transferred in 2015. In the 2016
financial year, 232 thousand treasury shares were transferred, 300 thousand treasury shares were transferred in the 2017
financial year, and 312 thousand in the 2018 financial year. In the 2019 financial year, 448 thousand treasury shares were
transferred to the custody accounts of eligible participants. Transfers of treasury shares to the custody accounts of employees
of Deutsche Telekom AG are free of charge. In cases where treasury shares are transferred to the custody accounts of
employees of other Group companies, the costs have been transferred at fair value to the respective Group company since the
2016 financial year.

In all months of the reporting year with the exception of March and August, treasury shares (523 thousand in total) were
reallocated and transferred to the custody accounts of eligible participants of the Share Matching Plan. As of
December 31, 2020, disposals of treasury shares resulting from the transfers in the reporting period accounted for 0.01 %,
or EUR 1,338 thousand, of share capital. Gains on disposal arising from transfers of treasury shares amounted to
EUR 7,426 thousand. Transfers of treasury shares increased retained earnings by EUR 36 thousand and capital reserves by
EUR 6,052 thousand. In the reporting year, 266 thousand treasury shares with a fair value of EUR 3,885 thousand were billed to
other Group companies.

As part of the acquisition of VoiceStream Wireless Corp., Bellevue, and Powertel, Inc., Bellevue, in 2001, Deutsche Telekom AG
issued new shares from authorized capital to a trustee, for the benefit of holders of warrants, options, and conversion rights,
among others. These options or conversion rights expired in full in the 2013 financial year. As a result, the trustee no longer
had any obligation to fulfill any claims in accordance with the purpose of the deposit. The trust relationship was terminated
at the start of 2016 and the deposited shares were transferred free of charge to a custody account of Deutsche Telekom AG.
The previously deposited shares are accounted for in the same way as treasury shares in accordance with § 272 (1a) HGB. On
the basis of authorization by the shareholders’ meeting on May 25, 2016, the treasury shares acquired free of charge may be
used for the same purposes as the treasury shares acquired for a consideration. In the reporting year, 558 thousand previously
deposited shares were reallocated for issue to eligible participants of the Share Matching Plan (prior year: 61 thousand shares).

Authorized capital and contingent capital. The shareholders’ meeting on May 31, 2017 authorized the Board of Management
to increase the share capital with the approval of the Supervisory Board by up to EUR 3,600,000,000 by issuing up to
1,406,250,000 no par value registered shares against cash and/or non-cash contributions in the period ending May 30, 2022.
This authorization may be exercised in full or on one or more occasions in partial amounts. The Board of Management is
authorized, subject to the approval of the Supervisory Board, to exclude residual amounts from shareholders’ subscription
rights. Furthermore, the Board of Management is authorized, subject to the approval of the Supervisory Board, to disapply
shareholders’ subscription rights in the event of capital increases against non-cash contributions when issuing new shares
for business combinations or acquisitions of companies, parts thereof, or interests in companies, including increasing existing
investment holdings, or other assets eligible for contribution for such acquisitions, including receivables from the Company.
However, the value of the new shares for which shareholders’ subscription rights have been disapplied on the basis of this
authorization – together with the value of the shares or conversion and/or option rights or obligations under bonds issued or
sold since May 31, 2017 subject to the disapplication of subscription rights – must not exceed 20 % of the total share capital;
the latter is defined as the amount existing as of May 31, 2017, upon entry of the authorization, or upon the issue of the new
shares, whichever amount is lowest. If the issue or sale is carried out in analogous or mutatis mutandis application of § 186 (3)
sentence 4 AktG, this shall also constitute the disapplication of subscription rights. Further, the Board of Management is
authorized, subject to the approval of the Supervisory Board, to determine the further content of share rights and the conditions

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 137

under which shares are issued (2017 authorized capital). The 2017 authorized capital was entered into the commercial register
on July 11, 2017.

As of December 31, 2020, the share capital was contingently increased by up to EUR 1,200,000,000, comprising up to
468,750,000 no par value shares (2018 contingent capital). The contingent capital increase will be implemented only to the
extent that

a. the holders or creditors of bonds with warrants, convertible bonds, profit participation rights, and/or participating bonds
(or combinations of these instruments) with options or conversion rights, which are issued or guaranteed by
Deutsche Telekom AG or its direct or indirect majority holdings by May 16, 2023, on the basis of the authorization
resolution granted by the shareholders’ meeting on May 17, 2018, make use of their option and/or conversion rights or
b. those obligated as a result of bonds with warrants, convertible bonds, profit participation rights, and/or participating
bonds (or combinations of these instruments), which are issued or guaranteed by Deutsche Telekom AG or its direct or
indirect majority holdings by May 16, 2023, on the basis of the authorization resolution granted by the shareholders’
meeting on May 17, 2018, fulfill their option or conversion obligations (including in the event that, in exercising a
repayment option when the final due date of the bond is reached, Deutsche Telekom AG grants shares in
Deutsche Telekom AG completely or partially in lieu of payment of the amount due)
and other forms of fulfillment are not used. The new shares shall participate in profits starting at the beginning of the
financial year in which they are issued as the result of the exercise of any option or conversion rights or the fulfillment of
any option or conversion obligations. The Supervisory Board is authorized to amend § 5 (3) of the Articles of Incorporation of
Deutsche Telekom in accordance with the particular usage of the contingent capital and after the expiry of all the option or
conversion periods.

Main agreements including a change of control clause

The main agreements entered into by Deutsche Telekom AG that include a clause in the event of a change of control principally
relate to bilateral credit lines and several loan agreements. In the event of a change of control, the individual lenders have
the right to terminate the credit line and, if necessary, serve notice or demand repayment of the loans. A change of control is
assumed when a third party, which can also be a group acting jointly, acquires control over Deutsche Telekom AG.

On November 2, 2016, Deutsche Telekom AG signed a change agreement to the shareholder agreement with the Greek
government from May 14, 2008 on Hellenic Telecommunications Organization S.A., Athens, Greece (OTE). Under this
agreement, the Greek government is, under certain circumstances, entitled to acquire all shares in OTE from
Deutsche Telekom AG as soon as one (or more) person(s), with the exception of the Federal Republic of Germany, either directly
or indirectly acquire(s) 35 % of the voting rights of Deutsche Telekom AG.

In the master agreement establishing the procurement joint venture BuyIn in Belgium, Deutsche Telekom AG and Orange S.A.
(formerly France Télécom S.A.)/Atlas Services Belgium S.A. (a subsidiary of Orange S.A.) agreed that if Deutsche Telekom or
Orange comes under the controlling influence of a third party or if a third party that is not wholly owned by the Orange group of
companies acquires shares in Atlas Services Belgium S.A., the respective other party (Orange and Atlas Services Belgium S.A.
only jointly) may terminate the master agreement with immediate effect.

Changes in the consolidated group

61 German and 364 foreign subsidiaries are fully consolidated in Deutsche Telekom’s consolidated financial statements
(December 31, 2019: 61 and 206). 15 associates (December 31, 2019: 10) and 9 joint ventures (December 31, 2019: 7) are also
included using the equity method.

The principal subsidiaries of Deutsche Telekom AG are listed in the section “Summary of accounting policies – Principal subsidiaries” in the notes to the
consolidated financial statements.

Business combinations
T‑Mobile US and Sprint combined their two businesses effective April 1, 2020 to form the “all-new,” larger T‑Mobile US. The
business combination gave T‑Mobile US a more comprehensive spectrum portfolio. On December 1, 2020,
T‑Mobile Netherlands acquired the Dutch MVNO and SIM provider Simpel. This acquisition secures mobile market shares,
creates synergies, and makes us more competitive in the consumer market.

For further information, please refer to the section “Summary of accounting policies – Changes in the composition of the Group and other transactions” in
the notes to the consolidated financial statements.

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= p q Combined management report 138

Compensation report
The “Compensation report” details the compensation system underlying Board of Management compensation as well as
the specific remuneration received by the individual members of the Board of Management. It takes into consideration the
requirements of the German Commercial Code taking account of the provisions of German Accounting Standard No. 17 (GAS
17), the recommendations of the German Corporate Governance Code (GCGC) as amended on February 7, 2017, and the
International Financial Reporting Standards (IFRS).

Changes in the composition of the Board of Management and contract extensions. Dr. Thomas Kremer’s term of office ended
as scheduled on March 31, 2020. The Board of Management department for Data Privacy, Legal Affairs and Compliance headed
by Dr. Kremer was dissolved effective January 1, 2020 and its constituent units were assigned to the Finance; Human Resources
and Legal Affairs; and Technology and Innovation Board of Management departments. Until his departure, Dr. Kremer
supported the transition to the new structures as part of a designated mandate. Dr. Dirk Wössner informed the Supervisory
Board that he did not intend to extend his service contract beyond its scheduled expiration date at the end of 2020. Dr. Wössner
resigned from his position on the Board of Management with effect from October 31, 2020. The Supervisory Board appointed
Srini Gopalan to succeed Dr. Wössner as the Board of Management member for Germany. Srini Gopalan moved from the
Europe Board of Management department to the Germany Board department effective November 1, 2020. Dominique Leroy,
Srini Gopalan’s successor as the Board of Management member responsible for Europe, was appointed by the Supervisory
Board also effective November 1, 2020. By resolution of the Supervisory Board of Deutsche Telekom AG of December 16, 2020,
Claudia Nemat was reappointed as the Board of Management member for Technology and Innovation for the period from
October 1, 2021 to September 30, 2026.

Compensation of the Board of Management

Basis of Board of Management compensation. The current Board of Management compensation system was adopted by
the Supervisory Board on February 24, 2010. The shareholders’ meeting of Deutsche Telekom AG on May 3, 2010 approved
this system. The compensation of Board of Management members comprises various components. Under the terms of their
service contracts, members of the Board of Management are entitled to an annual fixed remuneration and annual variable
performance-based remuneration (Variable I), a long-term variable remuneration component (Variable II), as well as fringe
benefits and deferred benefits based on a company pension entitlement. The Supervisory Board defines the structure of the
compensation system for the Board of Management and reviews this structure and the appropriateness of compensation at
regular intervals. It is ensured that Board of Management compensation is oriented toward the sustained development of
the Company and that there is a multi-year measurement base for the variable components. Sideline employment generally
requires prior approval. Generally, no additional compensation is paid for being a member of the management or supervisory
board of other Group entities.

On December 16, 2020, the Supervisory Board resolved on the key features of a new compensation system which takes into
account the updates to the 2020 German Corporate Governance Code and the amendments to the German Stock Corporation
Act (ARUG II, the Act Implementing the Second Shareholder Rights Directive). This compensation system will be submitted for
vote at the shareholders’ meeting of Deutsche Telekom AG on April 1, 2021 and presented in detail in the invitation to the 2021
shareholders’ meeting. The rules of the current compensation system are described further on in this “Compensation report.”
As each of the compensation components are presented below, the annotation “ Planned change in 2021:” signifies elements
that will differ under the new compensation system, which is still to be voted on, from the current system described here.
Readers of this “Compensation report” should therefore be able to see at a glance which changes are planned.

Compensation of the Board of Management

Non-performance-based compensation components Performance-based compensation components

Basic Fringe benefits Pension Variable I Share Matching Variable II Bonus for
remuneration Company car commitments One-year variable, Plan Four-year extraordinary
Twelve monthly Driver service Since 2009: performance-based After a lock-up long-term variable performance
payments Insurance defined remuneration for period of four performance- The Supervisory
coverage contribution plans the current years the based remuner- Board can pay a
Non-cash financial year. Company matches ation. Composed bonus for
benefits each deferred of four equally extraordinary
Obligatory share with one weighted KPIs. performance at its
personal T-Share. discretion.
investment:
share deferral

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 139

Non-performance-based compensation components

Basic remuneration
The fixed annual remuneration is determined for all Board of Management members based on market conditions in accordance
with the requirements of stock corporation law and is paid on a monthly basis. In the event of temporary incapacity for work
caused by illness, accident, or any other reason for which the respective Board of Management member is not responsible, the
fixed basic remuneration continues to be paid. The continued payment of remuneration ends at the latest after an uninterrupted
period of absence of six months, or for a maximum of three months following the end of the month in which the Board of
Management member’s permanent incapacity for work is established.

Fringe benefits
In accordance with market-oriented and corporate standards, the Company grants all members of the Board of Management
additional benefits under the terms of their service contracts, some of which are viewed as non-cash benefits and taxed
accordingly. This mainly includes being furnished with a company car and accident and liability insurance, and reimbursements
in connection with maintaining a second household.

Pension commitments
New pension commitment. Since 2009, all Board members have been granted a company pension in the form of a defined
contribution plan. Under this arrangement, the Board member receives a one-time lump sum payout upon entering retirement.
A contribution is paid into the Board member’s pension account for each year of service at an interest rate corresponding
to market levels. Annual additions to the pension account have no effect on cash or cash equivalents. The cash outflow is
only effective upon the Board member’s retirement. As a rule, the date of retirement is the beneficiary’s 62nd birthday. The
amount to be provided annually is individualized and decoupled from other compensation components. The exact definition
of the contribution is based on a comparison with peer companies that are suitable for benchmarking and also offer defined
contribution plans. The contributions for Birgit Bohle, Srini Gopalan, Dr. Christian P. Illek, Dr. Thomas Kremer, Thorsten
Langheim, Claudia Nemat, and Dr. Dirk Wössner amount to EUR 250,000 each for each year of service rendered.

Legacy pension commitment. As the longest-serving Board member, CEO Timotheus Höttges is the only current Board
member to still benefit from a legacy pension commitment under the company pension plan. Benefits from the company
pension plan are in direct relation to the beneficiary’s annual salary. The Board of Management members receive company
pension benefits based on a fixed percentage of their last fixed annual salary for each year of service rendered prior to their date
of retirement. The pension payments may be in the form of a life-long retirement pension upon reaching the age of 62 or in the
form of an early retirement pension upon reaching the age of 60. Opting for the early retirement pension scheme is connected
with actuarial deductions. The company pension is calculated by multiplying a basic percentage rate of 5 % by the number of
years of service as a member of the Board of Management. After ten years of service, the maximum pension level of 50 % of the
last fixed annual remuneration is attained. Following Timotheus Höttges’ reappointment to the Board of Management and the
adjustment to his basic remuneration, the Supervisory Board decided to dynamically increase his pension entitlements accrued
up to December 31, 2018 by 2.4 % per year using the basic remuneration valid up to December 31, 2018 as the measurement
base. Future increases in his compensation will thus not lead to higher pension payments.

The pension payments to be made upon retirement increase dynamically, at a rate of 1 % per year. In addition, the pension
agreements include arrangements for pensions for surviving dependents in the form of entitlements for widows/widowers
and orphans. In specifically provided exceptional cases, entitlement to a widow’s/widower’s pension is excluded. The standard
criteria for eligibility in the pension arrangements are in line with market conditions. In the event of a permanent incapacity for
work (invalidity), the beneficiary is also entitled to the pension credit accrued.

Pension substitute. A “pension substitute” was agreed with Adel Al-Saleh in lieu of a pension commitment due to his U.S.
citizenship. The same applies to the new Board of Management member, Dominique Leroy. The arrangement provides for an
annual payment of EUR 250,000 for each full year of service rendered and is reported in the tables under fringe benefits. In
determining the amount, the Supervisory Board oriented itself to the level of the contributions for those Board members who
have received a contribution-based benefit promise (new pension commitment).

Planned change in 2021: Under the new compensation system, new members appointed to the Board of Management after its introduction will no longer
receive pension commitments.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 140

Service cost and defined benefit obligations for each member of the Board of Management with a pension commitment are
shown in the following table:

€
Defined benefit Defined benefit
Service cost obligation (DBO) Service cost obligation (DBO)
2020 Dec. 31, 2020 2019 Dec. 31, 2019
Birgit Bohle 321,623 682,824 307,304 329,515
Srini Gopalan 303,269 1,318,968 295,590 964,557
Timotheus Höttges 473,974 20,429,377 417,067 18,595,908
Dr. Christian P. Illek 263,774 1,687,449 262,191 1,377,980
Dr. Thomas Kremer (until March 31, 2020) 62,500 2,139,166 247,664 2,076,666
Thorsten Langheim 279,423 582,911 275,986 287,194
Claudia Nemat 289,561 3,261,930 281,885 2,851,583
Dr. Dirk Wössner (until October 31, 2020) 297,545 900,303 289,418 619,879

Performance-based compensation components

The variable remuneration of the members of the Board of Management is mainly divided into Variables I and II. Variable I
contains both short-term and long-term components consisting of the realization of budget figures for specific performance
indicators, strategic/functional targets, and adherence to the Group’s Guiding Principles. The payment amount of Variable I is
tied to an obligation to invest in shares of Deutsche Telekom AG, which results in a further inflow of shares after four years under
the current Share Matching Plan. Variable II is oriented solely toward the long term. This ensures that the variable remuneration
is oriented toward the sustained development of the Company and that there is a predominantly long-term incentive effect.
The variable compensation elements include clear upper limits, while the amount of compensation is capped overall. The
final component of performance-based compensation comprises an option for the Supervisory Board to award a bonus for
extraordinary performance. In the event of temporary incapacity for work caused by illness, accident, or any other reason for
which the respective Board of Management member is not responsible, claims to variable remuneration are reduced pro rata in
line with the uninterrupted period of absence; the uninterrupted period of absence must be more than one month in duration.

Variable I

Performance-based compensation components

Variable I (STI)
One-year variable performance-based remuneration

Group targets Personal targets Personal targets

50 % 30 % 20 %
Revenue (40 %) Strategy implementation Value adherence
EBITDA AL (40 %) within the Board member’s
Free cash flow AL (20 %) department

The annual variable remuneration of Board of Management members is based on the achievement of targets set by the
Supervisory Board of Deutsche Telekom AG for each member of the Board of Management at the beginning of the financial
year. The set of targets is composed of corporate targets (50 %) related to the unadjusted values – adapted for target-relevant
factors – for revenue, EBITDA after leases, and free cash flow after leases, as well as personal targets for the individual
members of the Board of Management. The three Group targets are weighted in relation to each other at 40/40/20. The
personal targets consist of targets oriented toward the sustained success of the Company concerning the implementation of
the strategy in the member’s respective department (30 %) and value adherence (adherence to Guiding Principles), which is
an indicator of compliance with value orientation and accounts for 20 %. The agreement on targets and the level of target
achievement for the respective financial year are determined by the plenary session of the Supervisory Board. Levels of target
achievement exceeding 100 % are capped at 150 % of the award amount. Any higher levels of target achievement will not be
taken into consideration. To ensure the long-term incentive effect and orientation toward the sustained development of the
Company, a third of the variable remuneration set by the plenary session of the Supervisory Board must be invested in shares
of Deutsche Telekom AG; these shares must be held by the respective Board member for a period of at least four years.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 141

Planned change in 2021: The new compensation system will also incorporate an existing ESG target into short-term variable remuneration. Additionally,
the individual target parameters for strategy implementation and value adherence will be taken into account in the form of a performance factor that can
be expressed as a value between 0.8 and 1.2. The performance factor is applied after the level of target achievement for Group and ESG targets has been
determined. With the application of the performance factor, a target achievement level of between 0 % and 180 % is possible.

Share Matching Plan

Share deferral and the Share Matching Plan

Variable I
(set by the Supervisory Board)

Share deferral Following expiry Share Matching Plan

of the four-year
Obligatory Optional lock-up period Release of shares Shares matched
investment of investment on the personal from the personal at a ratio of 1:1
⅓ of Variable I top-up investment investment made to the personal
in T-Shares of up to ½ four years prior investment made
of Variable I four years prior

In the 2020 financial year, the Board of Management members, as described above, were contractually obliged to invest a third
of Variable I in shares of Deutsche Telekom AG. The Supervisory Board made an offer to the Board members to increase the
obligatory personal investment in 2020 to up to 50 % of the Variable I payout. Deutsche Telekom AG will grant one additional
share for every share acquired as part of the Board of Management member’s aforementioned personal investment (Share
Matching Plan) on expiration of the four-year lock-up period, provided they are still a member of the Board of Management.

Disclosures are required not only of the total expense related to share-based remuneration from matching shares in the 2020
financial year and the fair value of the matched shares at their grant date, but also of the number of entitlements to matching
shares and their development in the current financial year.

The fair value of the matching shares at grant date shown in the following table does not represent a component of
remuneration for the Board of Management members in 2020. It is an imputed value of the entitlements to matching shares
determined on the basis of relevant accounting policies. Here, the fair value equates to the share price at grant date less an
expected dividend markdown. The following table is based on expected target achievement for the 2020 financial year and
thus on the estimated amount of the personal investment to be made by the respective Board of Management member to
establish his or her entitlements to matching shares. The final number of entitlements to matching shares identified for the
2020 financial year may be higher or lower than the amounts estimated here.

The total share-based remuneration expense for entitlements to matching shares from 2015 to 2020 to be recognized for the
financial years 2019 and 2020 pursuant to IFRS 2 is included in the two last columns of the table.

Cumulative Cumulative
total share- total share-
Number of based based
entitlements Number of remuneration remuneration
granted to Number of shares Fair value of expense in expense in
matching new transferred the 2020 for 2019 for
shares since entitlements in 2020 as entitlements matching matching
2010 at the to matching part of the to matching shares for the shares for the
beginning of shares Share shares at years 2016 years 2015
the financial granted in Matching grant date through 2020 through 2019
year 2020 Plan € € €
Adel Al-Saleh 53,100 21,845 0 291,412 194,984 120,780
Birgit Bohle 19,151 17,800 0 237,452 105,520 36,983
Srini Gopalan 69,740 21,845 0 291,412 237,132 167,268
Timotheus Höttges 423,174 58,253 38,969 777,095 856,400 683,151
Dr. Christian P. Illek 102,681 21,845 11,121 291,412 276,113 258,459
Dr. Thomas Kremer (until March 31, 2020) 142,813 0 43,991 0 (84,603) 253,751
Thorsten Langheim 23,503 21,845 0 291,412 138,309 45,387
Dominique Leroy (since November 1, 2020) 0 4,037 0 46,062 1,777 0
Claudia Nemat 187,904 21,845 18,120 291,412 307,351 297,804
Dr. Dirk Wössner (until October 31, 2020) 44,800 0 10,559 0 (9,910) 100,570

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 142

By December 31, 2020, Deutsche Telekom AG had acquired 565,596 shares for the purpose of awarding matching shares to
Board of Management members as part of the Share Matching Plan. In 2020, shares were once again transferred from the Share
Matching Plan for Board of Management members to individual members of the Board of Management. In total, 122,760 shares
(2019: 55,146) were transferred to Board of Management members in 2020; of this total, 54,550 shares were transferred to
Board of Management members who were no longer serving on the Board at the transfer date.

Variable II

Performance-based compensation components

Variable II (LTI)
Long-term variable performance-based remuneration

25 % 25 % 25 % 25 %
Return on capital Earnings per Employee Customer
employed (ROCE) share (EPS) satisfaction satisfaction

Variable II
The exclusively long-term-oriented Variable II is measured based on the fulfillment of four equally weighted performance
parameters (return on capital employed (ROCE), earnings per share (EPS), customer satisfaction, and employee satisfaction).
All four parameters are collected on a Group-wide basis. Each parameter determines a quarter of the award amount. Levels
of target achievement exceeding 100 % are capped at 150 % of the award amount. The measurement period is four years,
with the measurement being based on average target achievement across the four years planned at the time the tranche was
determined. The award amount is decoupled from other remuneration components and is set for each member of the Board of
Management individually.

Planned change in 2021: Variable II will remain as described here. However, Variable II will be supplemented by a share-based component. The individual
amount granted to each Board of Management member will be translated into phantom shares and thus additionally linked to the development of the share
price. The payment is then made by translating the phantom shares into a cash amount. Total payments are capped at 200 % of the target amount.

Bonus for extraordinary performance

At its discretion and after due consideration, the Supervisory Board may also reward extraordinary performance by individual
or all Board of Management members in the form of a special bonus.

Arrangements in the event of termination of a position on the Board of Management. Service contracts for members of the
Board of Management concluded since the 2009 financial year include a severance cap in case of premature termination
without good cause allowing a compensation payment that is limited to a maximum of two years’ remuneration (severance cap)
and may not exceed the remuneration due for the remaining term of the service contract.

Planned change in 2021: In the future, compensation paid in connection with a post-contractual prohibition of competition will be deducted from the
severance payment.

The service contracts for members of the Board of Management at Deutsche Telekom AG do not include any benefits in the
event of the termination of a position on the Board of Management as a result of a change of control.

Board of Management member service contracts generally stipulate a post-contractual prohibition of competition. Pursuant to
these provisions, members of the Board of Management are prohibited from rendering services to or on behalf of a competitor
for the duration of one year following their departure. As compensation for this restricted period, they receive either a payment
of 50 % of the last fixed annual remuneration and 50 % of the most recent Variable I on the basis of 100 % target achievement,
or 100 % of the last fixed annual remuneration.

Service contracts for members of the Board of Management concluded since the 2020 financial year contain extensive
clawback provisions entitling Deutsche Telekom to reclaim Variable I and Variable II payments if, within three years of
determining the variable remuneration, either part or all of the payment is deemed to have been made wrongly.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 143

Board of Management compensation for the 2020 financial year. In reliance on legal requirements and other guidelines, a
total of EUR 24.1 million (2019: EUR 23.3 million) is reported in the following table as total compensation for the 2020 financial
year for the members of the Board of Management. The Board of Management compensation comprises the fixed annual
remuneration as well as other fringe benefits, non-cash benefits and remuneration in kind, short-term variable remuneration
(Variable I), fully earned tranches of long-term variable remuneration (Variable II), a bonus for extraordinary performance, and
the fair value of the matching shares. This was calculated on the basis of the estimated amount of Variable I at the grant
date and the resulting number of entitlements to matching shares. Compensation also includes the bonus for extraordinary
performance described in the “Compensation report” and the sign-on bonus for a new Board of Management member.

Total compensation. The compensation of the Board of Management is shown in detail in the following table:

€
Non-performance-based Total
compensation Performance-based compensation compensation
Long-term
variable Long-term
performance- variable
based performance-
remuneration based
One-year (Variable II remuneration
variable and bonus for (fair value of
Fixed annual Other remuneration extraordinary matching
remuneration remuneration (Variable I) performance) shares)
Adel Al-Saleh 2020 900,000 273,078a 863,555 0 291,412 2,328,045
2019 900,000 322,776 771,525 0 270,987 2,265,288
Birgit Bohle 2020 700,000 15,891 731,313 0 237,452 1,684,656
2019 700,000 272,367 699,600 0 220,811 1,892,778
Srini Gopalan 2020 900,000 19,746 916,421 627,000 291,412 2,754,579
2019 700,000 20,137 723,800 0 220,811 1,664,748
Timotheus Höttges 2020 1,500,000 65,066 2,494,800 2,129,880b 777,095 6,966,841
2019 1,500,000 60,111 2,334,600 1,435,940 722,632 6,053,283
Dr. Christian P. Illek 2020 900,000 34,175 925,655 627,000 291,412 2,778,242
2019 900,000 34,540 895,725 588,500 270,987 2,689,752
Dr. Thomas Kremer 2020 175,000 17,392 178,063 509,438 0 879,893
(until March 31, 2020) 2019 700,000 63,546 704,550 588,500 220,811 2,277,407
Thorsten Langheim 2020 900,000 14,273 915,975 0 291,412 2,121,660
2019 900,000 17,657 839,700 0 270,987 2,028,344
Dominique Leroy 2020 150,000 151,766c 112,500 0 46,062 460,328
(since November 1, 2020) 2019 0 0 0 0 0 0
Claudia Nemat 2020 900,000 78,882 907,200 769,500 291,412 2,946,994
2019 900,000 78,586 845,775 722,250 270,987 2,817,598
Dr. Dirk Wössner 2020 583,333 20,637 622,875 0 0 1,226,845
(until October 31, 2020) 2019 700,000 23,466 696,850 0 220,811 1,641,127
2020 7,608,333 625,840 8,668,357 4,662,818 2,517,669 24,148,083
2019 7,900,000 893,186 8,512,125 3,335,190 2,689,824 23,330,325

a Other fringe benefits for Adel Al-Saleh include a “pension substitute” in the amount of EUR 250,000 to be paid annually in lieu of a German pension
commitment (please also refer to the previous section entitled “Pension commitments”).
b This figure includes a one-time bonus for extraordinary performance in the amount of EUR 600,000 granted for the performance of activities in connection
with the successful finalization of the business combination of T‑Mobile US and Sprint.
c This amount includes a one-time sign-on bonus of EUR 150,000 to compensate for all financial disadvantages resulting from the move to
Deutsche Telekom.

The amounts shown in the “Long-term variable performance-based remuneration (Variable II)” column had been pledged to
the eligible Board of Management members in the 2017 financial year.

No member of the Board of Management received benefits or corresponding commitments from a third party for his or her
activity as a Board of Management member during the past financial year.

Former members of the Board of Management. A total of EUR 8.5 million (2019: EUR 8.8 million) was included for payments to
and entitlements for former members of the Board of Management as well as any surviving dependents.

Provisions (measured in accordance with IAS 19) totaling EUR 223.9 million (December 31, 2019: EUR 213.4 million) were
recognized for current pensions and vested rights to pensions for this group of persons and their surviving dependents.

Other. The Company has not granted any advances or loans to current or former Board of Management members, nor were any
other financial obligations to the benefit of this group of people entered into.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 144

Table view in accordance with the requirements of the German Corporate Governance Code
The following tables are based on model tables 1 and 2 recommended by the German Corporate Governance Code (GCGC)
as amended on February 7, 2017, which present the total compensation granted for the reporting year and the remuneration
components allocated.

Benefits granted for the reporting year

Compensation of the Board of Management

€
Timotheus Höttges Adel Al-Saleh
Function: Chairman of the Board of Management (CEO) Function: T‑Systems
since Jan. 1, 2014 since Jan. 1, 2018
2020 2020 2020 2020
2019 2020 (min.) (max.) 2019 2020 (min.) (max.)
Fixed remuneration 1,500,000 1,500,000 1,500,000 1,500,000 900,000 900,000 900,000 900,000
Fringe benefits 60,111 65,066 65,066 65,066 322,776 273,078a 273,078a 273,078a
Total fixed annual remuneration 1,560,111 1,565,066 1,565,066 1,565,066 1,222,776 1,173,078 1,173,078 1,173,078
One-year variable remuneration 1,800,000 1,800,000 0 2,700,000 675,000 675,000 0 1,012,500
Multi-year variable remuneration 2,722,632 3,377,095 600,000 6,300,000 945,987 966,412 0 2,025,000
Of which: 2019 Variable II
(4-year term) 2,000,000 675,000
Of which: 2020 Variable II
(4-year term) 2,000,000 0 3,000,000 675,000 0 1,012,500
Of which: 2019 Share
Matching Plan (4-year term) 722,632 270,987
Of which: 2020 Share
Matching Plan (4-year term) 777,095 0 2,700,000 291,412 0 1,012,500
Of which: bonus for
extraordinary performance 0 600,000b 600,000b 600,000b 0 0 0 0
Total 6,082,743 6,742,161 2,165,066 10,565,066 2,843,763 2,814,490 1,173,078 4,210,578
Service cost 417,067 473,974 473,974 473,974 0 0 0 0
Total compensation 6,499,810 7,216,135 2,639,040 11,039,040 2,843,763 2,814,490 1,173,078 4,210,578

a Other fringe benefits for Adel Al-Saleh include a “pension substitute” in the amount of EUR 250,000 to be paid annually in lieu of a German pension
commitment (please also refer to the previous section entitled “Pension commitments.”
b The bonus for extraordinary performance was granted for the performance of activities in connection with the successful finalization of the business
combination of T‑Mobile US and Sprint.

€
Birgit Bohle Srini Gopalan
Function: Human Resources and Legal Affairs Function: Germany
since Jan. 1, 2019 since Jan. 1, 2017
2020 2020 2020 2020
2019 2020 (min.) (max.) 2019 2020 (min.) (max.)
Fixed remuneration 700,000 700,000 700,000 700,000 700,000 900,000 900,000 900,000
Fringe benefits 272,367 15,891 15,891 15,891 20,137 19,746 19,746 19,746
Total fixed annual remuneration 972,367 715,891 715,891 715,891 720,137 919,746 919,746 919,746
One-year variable remuneration 550,000 550,000 0 825,000 550,000 675,000 0 1,012,500
Multi-year variable remuneration 770,811 787,452 0 1,650,000 770,811 966,412 0 2,025,000
Of which: 2019 Variable II
(4-year term) 550,000 550,000
Of which: 2020 Variable II
(4-year term) 550,000 0 825,000 675,000 0 1,012,500
Of which: 2019 Share Matching
Plan (4-year term) 220,811 220,811
Of which: 2020 Share Matching
Plan (4-year term) 237,452 0 825,000 291,412 0 1,012,500
Of which: bonus for
extraordinary performance 0 0 0 0 0 0 0 0
Total 2,293,178 2,053,343 715,891 3,190,891 2,040,948 2,561,158 919,746 3,957,246
Service cost 307,304 321,623 321,623 321,623 295,590 303,269 303,269 303,269
Total compensation 2,600,482 2,374,966 1,037,514 3,512,514 2,336,538 2,864,427 1,223,015 4,260,515

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 145

€
Dr. Christian P. Illek Dr. Thomas Kremer
Function: Finance (CFO) Function: Data Privacy, Legal Affairs and
since Jan. 1, 2019 Compliance
until Mar. 31, 2020
2020 2020 2020 2020
2019 2020 (min.) (max.) 2019 2020 (min.) (max.)
Fixed remuneration 900,000 900,000 900,000 900,000 700,000 175,000 175,000 175,000
Fringe benefits 34,540 34,175 34,175 34,175 63,546 17,392 17,392 17,392
Total fixed annual remuneration 934,540 934,175 934,175 934,175 763,546 192,392 192,392 192,392
One-year variable remuneration 675,000 675,000 0 1,012,500 550,000 137,500 0 206,250
Multi-year variable remuneration 945,987 966,412 0 2,025,000 770,811 34,375 0 51,563
Of which: 2019 Variable II
(4-year term) 675,000 550,000
Of which: 2020 Variable II
(4-year term) 675,000 0 1,012,500 34,375 0 51,563
Of which: 2019 Share Matching
Plan (4-year term) 270,987 220,811
Of which: 2020 Share Matching
Plan (4-year term) 291,412 0 1,012,500 0 0 0
Of which: bonus for extraordinary
performance 0 0 0 0 0 0 0 0
Total 2,555,527 2,575,587 934,175 3,971,675 2,084,357 364,267 192,392 450,205
Service cost 262,191 263,774 263,774 263,774 247,664 62,500 62,500 62,500
Total compensation 2,817,718 2,839,361 1,197,949 4,235,449 2,332,021 426,767 254,892 512,705

€
Thorsten Langheim Dominique Leroy
Function: USA and Group Development Function: Europe
since Jan. 1, 2019 since Nov. 1, 2020
2020 2020 2020 2020
2019 2020 (min.) (max.) 2019 2020 (min.) (max.)
Fixed remuneration 900,000 900,000 900,000 900,000 0 150,000 150,000 150,000
Fringe benefits 17,657 14,273 14,273 14,273 0 151,766a 151,766a 151,766a
Total fixed annual remuneration 917,657 914,273 914,273 914,273 0 301,766 301,766 301,766
One-year variable remuneration 675,000 675,000 0 1,012,500 0 112,500 0 168,750
Multi-year variable remuneration 945,987 966,412 0 2,025,000 0 158,562 0 337,500
Of which: 2019 Variable II
(4-year term) 675,000
Of which: 2020 Variable II
(4-year term) 675,000 0 1,012,500 0 112,500 0 168,750
Of which: 2019 Share Matching
Plan (4-year term) 270,987
Of which: 2020 Share Matching
Plan (4-year term) 291,412 0 1,012,500 0 46,062 0 168,750
Of which: bonus for extraordinary
performance 0 0 0 0 0 0 0 0
Total 2,538,644 2,555,685 914,273 3,951,773 0 572,828 301,766 808,016
Service cost 275,986 279,423 279,423 279,423 0 0 0 0
Total compensation 2,814,630 2,835,108 1,193,696 4,231,196 0 572,828 301,766 808,016

a This amount includes a one-time sign-on bonus of EUR 150,000 to compensate for all financial disadvantages resulting from the move to
Deutsche Telekom.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 146

€
Claudia Nemat Dr. Dirk Wössner
Function: Technology and Innovation Function: Germany
since Oct. 1, 2011 until Oct. 31, 2020
2020 2020 2020 2020
2019 2020 (min.) (max.) 2019 2020 (min.) (max.)
Fixed remuneration 900,000 900,000 900,000 900,000 700,000 583,333 583,333 583,333
Fringe benefits 78,586 78,882 78,882 78,882 23,466 20,637 20,637 20,637
Total fixed annual remuneration 978,586 978,882 978,882 978,882 723,466 603,970 603,970 603,970
One-year variable remuneration 675,000 675,000 0 1,012,500 550,000 458,333 0 687,500
Multi-year variable remuneration 945,987 966,412 0 2,025,000 770,811 0 0 0
Of which: 2019 Variable II
(4-year term) 675,000 550,000
Of which: 2020 Variable II
(4-year term) 675,000 0 1,012,500 0 0 0
Of which: 2019 Share Matching
Plan (4-year term) 270,987 220,811
Of which: 2020 Share Matching
Plan (4-year term) 291,412 0 1,012,500 0 0 0
Of which: bonus for extraordinary
performance 0 0 0 0 0 0 0 0
Total 2,599,573 2,620,294 978,882 4,016,382 2,044,277 1,062,303 603,970 1,291,470
Service cost 281,885 289,561 289,561 289,561 289,418 297,545 297,545 297,545
Total compensation 2,881,458 2,909,855 1,268,443 4,305,943 2,333,695 1,359,848 901,515 1,589,015

Benefits allocated for the reporting year

The following table does not contain the target values, but the actual benefits allocated for 2020 for one- and multi-year
variable remuneration components. There is another difference between the following table and the table of benefits granted
with regard to the presentation of the Share Matching Plan: The figures for the Share Matching Plan disclosed in the following
table show the value of the benefits allocated applicable under German tax law at the time of transfer of the matching shares,
whereas the above table of benefits granted shows the fair values of remuneration at the grant date.

Compensation of the Board of Management

€
Timotheus Höttges Adel Al-Saleh
Function: Chairman of the Board of Management Function: T‑Systems
(CEO) since Jan. 1, 2018
since Jan. 1, 2014
2019 2020 2019 2020
Fixed remuneration 1,500,000 1,500,000 900,000 900,000
Fringe benefits 60,111 65,066 272,776 323,078a
Total fixed annual remuneration 1,560,111 1,565,066 1,172,776 1,223,078
One-year variable remuneration 2,334,600 2,494,800 771,525 863,555
Multi-year variable remuneration 1,822,707 2,721,235 0 0
Of which: Variable II (4-year term) b 1,435,940 1,529,880 0 0
Of which: Share Matching Plan
(4-year term) c 386,767 591,355 0 0
Of which: bonus for extraordinary
performance 0 600,000d 0 0
Other 0 0 0 0
Total 5,717,418 6,781,101 1,944,301 2,086,633
Service cost 417,067 473,974 0 0
Total compensation 6,134,485 7,255,075 1,944,301 2,086,633

a Other fringe benefits for Adel Al-Saleh include a “pension substitute” in the amount of EUR 250,000 to be paid annually in lieu of a German pension
commitment (please also refer to the previous section entitled “Pension commitments”) and a retroactive increase of EUR 50,000 to the flat-rate
reimbursement made in the prior year in connection with maintaining a second household.
b Variable II as shown in the column for 2020 relates to the payment of the 2017 tranche; the figure in the column for 2019 relates to the payment of the 2016
tranche (please also refer to the previous section “Variable II”).
c The Share Matching Plan relates to the non-cash benefit arising from the inflow of the matching shares, with the corresponding personal investment having
been made in 2015 or 2016.
d The bonus for extraordinary performance was granted for the performance of activities in connection with the successful finalization of the business
combination of T-Mobile US and Sprint.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 147

€
Birgit Bohle Srini Gopalan
Function: Human Resources and Legal Affairs Function: Europe
since Jan. 1, 2019 since Jan. 1, 2017
2019 2020 2019 2020
Fixed remuneration 700,000 700,000 700,000 900,000
Fringe benefits 272,367 15,891 20,137 19,746
Total fixed annual remuneration 972,367 715,891 720,137 919,746
One-year variable remuneration 699,600 731,313 723,800 916,421
Multi-year variable remuneration 0 0 0 627,000
Of which: Variable II (4-year term) a 0 0 0 627,000
Of which: Share Matching Plan
(4-year term) b 0 0 0 0
Of which: bonus for extraordinary
performance 0 0 0 0
Other 0 0 0 0
Total 1,671,967 1,447,204 1,443,937 2,463,167
Service cost 307,304 321,623 295,590 303,269
Total compensation 1,979,271 1,768,827 1,739,527 2,766,436

a Variable II as shown in the column for 2020 relates to the payment of the 2017 tranche; the figure in the column for 2019 relates to the payment of the 2016
tranche (please also refer to the previous section “Variable II”).
b The Share Matching Plan relates to the non-cash benefit arising from the inflow of the matching shares, with the corresponding personal investment having
been made in 2015 or 2016.

€
Dr. Christian P. Illek Dr. Thomas Kremer
Function: Finance (CFO) Function: Data Privacy, Legal Affairs and
since Jan. 1, 2019 Compliance
until Mar. 31, 2020
2019 2020 2019 2020
Fixed remuneration 900,000 900,000 700,000 175,000
Fringe benefits 34,540 34,175 63,546 17,392
Total fixed annual remuneration 934,540 934,175 763,546 192,392
One-year variable remuneration 895,725 925,655 704,550 178,063
Multi-year variable remuneration 588,500 769,516 784,761 1,059,989
Of which: Variable II (4-year term) a 588,500 627,000 588,500 509,438
Of which: Share Matching Plan
(4-year term) b 0 142,516 196,261 550,551
Of which: bonus for extraordinary
performance 0 0 0 0
Other 0 0 0 0
Total 2,418,765 2,629,346 2,252,857 1,430,444
Service cost 262,191 263,774 247,664 62,500
Total compensation 2,680,956 2,893,120 2,500,521 1,492,944

a Variable II as shown in the column for 2020 relates to the payment of the 2017 tranche; the figure in the column for 2019 relates to the payment of the 2016
tranche (please also refer to the previous section “Variable II”).
b The Share Matching Plan relates to the non-cash benefit arising from the inflow of the matching shares, with the corresponding personal investment having
been made in 2015 or 2016.

€
Thorsten Langheim Dominique Leroy
Function: USA and Group Development Function: Europe
since Jan. 1, 2019 since Nov. 1, 2020
2019 2020 2019 2020
Fixed remuneration 900,000 900,000 0 150,000
Fringe benefits 17,657 14,273 0 151,766a
Total fixed annual remuneration 917,657 914,273 0 301,766
One-year variable remuneration 839,700 915,975 0 112,500
Multi-year variable remuneration 0 0 0 0
Of which: Variable II (4-year term) b 0 0 0 0
Of which: Share Matching Plan
(4-year term) c 0 0 0 0
Of which: bonus for extraordinary
performance 0 0 0 0
Other 0 0 0 0
Total 1,757,357 1,830,248 0 414,266
Service cost 275,986 279,423 0 0
Total compensation 2,033,343 2,109,671 0 414,266

a This amount includes a one-time sign-on bonus of EUR 150,000 to compensate for all financial disadvantages resulting from the move to
Deutsche Telekom.
b Variable II as shown in the column for 2020 relates to the payment of the 2017 tranche; the figure in the column for 2019 relates to the payment of the 2016
tranche (please also refer to the previous section “Variable II”).
c The Share Matching Plan relates to the non-cash benefit arising from the inflow of the matching shares, with the corresponding personal investment having
been made in 2015 or 2016.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 148

€
Claudia Nemat Dr. Dirk Wössner
Function: Technology and Innovation Function: Germany
since Oct. 1, 2011 until Oct. 31, 2020
2019 2020 2019 2020
Fixed remuneration 900,000 900,000 700,000 583,333
Fringe benefits 78,586 78,882 23,466 20,637
Total fixed annual remuneration 978,586 978,882 723,466 603,970
One-year variable remuneration 845,775 907,200 696,850 622,875
Multi-year variable remuneration 973,641 1,044,480 0 138,270
Of which: Variable II (4-year term) a 722,250 769,500 0 0
Of which: Share Matching Plan
(4-year term) b 251,391 274,980 0 138,270
Of which: bonus for extraordinary
performance 0 0 0 0
Other 0 0 0 0
Total 2,798,002 2,930,562 1,420,316 1,365,115
Service cost 281,885 289,561 289,418 297,545
Total compensation 3,079,887 3,220,123 1,709,734 1,662,660

a Variable II as shown in the column for 2020 relates to the payment of the 2017 tranche; the figure in the column for 2019 relates to the payment of the 2016
tranche (please also refer to the previous section “Variable II”).
b The Share Matching Plan relates to the non-cash benefit arising from the inflow of the matching shares, with the corresponding personal investment having
been made in 2015 or 2016.

New compensation system from 2021

A detailed presentation of the new compensation system, the key features of which were adopted by the Supervisory Board of
Deutsche Telekom AG on December 16, 2020 and which will be submitted for vote at the shareholders’ meeting on April 1, 2021,
is included with the invitation to the 2021 shareholders’ meeting. The planned changes to the compensation system highlighted
in this “Compensation report” do not constitute comprehensive information and merely serve to illustrate the areas in which
the Supervisory Board has modified the current compensation system.

Compensation of the Supervisory Board

The compensation received by the members of the Supervisory Board is specified under § 13 of the Articles of Incorporation
of Deutsche Telekom AG. Under the compensation system applicable for the 2020 financial year, members of the Supervisory
Board receive fixed annual compensation of EUR 70,000.00.

The Chairman of the Supervisory Board receives a further EUR 70,000.00 and the Deputy Chairman EUR 35,000.00. Members
of the Supervisory Board also receive compensation as follows for activities on Supervisory Board committees:

a. The Chairperson of the Audit Committee receives EUR 80,000.00, ordinary members of the Audit Committee EUR
40,000.00.
b. The Chairperson of the General Committee receives EUR 70,000.00, ordinary members of the General Committee EUR
30,000.00.
c. The Chairperson of the Nomination Committee receives EUR 25,000.00, ordinary members of the Nomination Committee
EUR 12,500.00.
d. The Chairperson of any other committee receives EUR 40,000.00, ordinary members of any other committee EUR
25,000.00.
Chairpersonship and membership of the Mediation Committee are not remunerated.

Members of the Supervisory Board receive an attendance fee amounting to EUR 1,000.00 for each meeting of the Supervisory
Board or its committees that they have attended. The Company reimburses value-added tax payable on remuneration and
expenses.

The total compensation of the members of the Supervisory Board in 2020 amounted to EUR 3,043,250.00 (plus VAT).

The Company has not granted any advances or loans to current or former Supervisory Board members, nor were any other
financial obligations to the benefit of this group of people entered into.

Deutsche Telekom. The 2020 financial year.

= p q Combined management report 149

The compensation of the individual members of the Supervisory Board for 2020 is as follows:

€
Meeting attendance
Member of the Supervisory Board Fixed remuneration fee Total
Bednarski, Josefa (until April 30, 2020) 55,000.00 5,000.00 60,000.00
Dr. Bösinger, Rolf 152,500.00 35,000.00 187,500.00
Dr. Bräunig, Günther 120,000.00 17,000.00 137,000.00
Chatzidis, Odysseus D. 99,166.67 17,000.00 116,166.67
Greve, Constantin 115,833.33 17,000.00 132,833.33
Hinrichs, Lars 95,000.00 16,000.00 111,000.00
Dr. Jung, Helga 95,000.00 14,000.00 109,000.00
Prof. Dr. Kaschke, Michael 110,000.00 17,000.00 127,000.00
Koch, Nicoleb 95,000.00 16,000.00 111,000.00
Kollmann, Dagmar P. 187,500.00 25,000.00 212,500.00
Kreusel, Petra Steffic 110,000.00 18,000.00 128,000.00
Krüger, Harald 74,166.67 14,000.00 88,166.67
Prof. Dr. Lehner, Ulrichd (Chairman) 300,000.00 36,000.00 336,000.00
Kerstin Marxe (since May 1, 2020) 110,000.00 31,000.00 141,000.00
Sauerland, Frankf (Deputy Chairman since March 27, 2020) 163,750.00 28,000.00 191,750.00
Schröder, Lotharg (Deputy Chairman until March 26, 2020) 142,500.00 19,000.00 161,500.00
Seelemann-Wandtke, Nicole 115,833.33 19,000.00 134,833.33
Spoo, Sibylle 135,000.00 17,000.00 152,000.00
Streibich, Karl-Heinz 135,000.00 19,000.00 154,000.00
Suckale, Margret 120,000.00 21,000.00 141,000.00
Topel, Karin 95,000.00 16,000.00 111,000.00
2,626,250.00 417,000.00 3,043,250.00

a In addition to remuneration for his activities as a member of the Supervisory Board of Deutsche Telekom AG, Josef Bednarski also received other
remuneration amounting to EUR 3,000.00 in the 2020 financial year (member of the Data Privacy Advisory Board).
b In addition to remuneration for her activities as a member of the Supervisory Board of Deutsche Telekom AG, Nicole Koch also received other remuneration
amounting to EUR 4,500.00 (including meeting attendance fees) in the 2020 financial year (for her mandate as member of the supervisory board of
Deutsche Telekom Privatkunden-Vertrieb GmbH).
c In addition to remuneration for her activities as a member of the Supervisory Board of Deutsche Telekom AG, Petra Steffi Kreusel also received other
remuneration amounting to EUR 8,833.33 (including meeting attendance fees) in the 2020 financial year (EUR 7,500.00 for her mandate as member of the
supervisory board of T‑Systems International GmbH until June 30, 2020 and EUR 1,333.33 for her mandate as member of the supervisory board of
Deutsche Telekom Business Solutions GmbH since July 1, 2020).
d In addition to remuneration for his activities as a member of the Supervisory Board of Deutsche Telekom AG, Prof. Ulrich Lehner also received other
remuneration amounting to EUR 9,000.00 in the 2020 financial year (member of the Data Privacy Advisory Board).
e In addition to remuneration for her activities as a member of the Supervisory Board of Deutsche Telekom AG, Kerstin Marx also received other remuneration
amounting to EUR 7,083.33 (including meeting attendance fees) in the 2020 financial year (EUR 6,000.00 for her mandate as member of the supervisory
board of T‑Systems International GmbH until June 30, 2020 and EUR 1,083.33 for her mandate as member of the supervisory board of Deutsche Telekom
Business Solutions GmbH since July 1, 2020).
f In addition to remuneration for his activities as a member of the Supervisory Board of Deutsche Telekom AG, Frank Sauerland also received other
remuneration amounting to EUR 19.000,00 (including meeting attendance fees) in the 2020 financial year (for his mandate as member of the supervisory
board of Telekom Deutschland GmbH).
g In addition to remuneration for his activities as a member of the Supervisory Board of Deutsche Telekom AG, Lothar Schröder also received other
remuneration amounting to EUR 32,230.00 (including meeting attendance fees) in the 2020 financial year (EUR 20,230.00 for his mandate as member of
the supervisory board of Deutsche Telekom Services Europe SE and EUR 12,000.00 as Chairman of the Data Privacy Advisory Board).

Share ownership by members of the Board of Management and the Supervisory Board
Members of the Board of Management and Supervisory Board of Deutsche Telekom AG were reported to have purchased and
transferred 353,569 shares (2019: 278,574) and sold 90,215 shares (2019: 68.930) under the Share Matching Plan in the course
of 2020. Total direct or indirect holdings in the Company or associated financial instruments by members of the Board of
Management and the Supervisory Board do not exceed 1 % of the shares issued by the Company.

Deutsche Telekom. The 2020 financial year.

 Annual Financial Statements 94
Contacts –

Deutsche Telekom AG
Friedrich-Ebert-Allee 140
53113 Bonn, Germany

www.telekom.com