Prospectus-Final (clean) - Malta Financial Services Authority

downs of the value of spectrum or other licenses or other network-related investments.Should Deutsche Telekom face a continuously deteriorating economic climate, Deutsche Telekommay decide, or be required, to scale back capital expenditures. Deutsche Telekom believes that theyhave flexibility in terms of the amount and timing of its capital expenditure program, but a lastingreduction in capital expenditure levels below certain thresholds could affect Deutsche Telekom's futuregrowth, in particular in its mobile operations.Failure to achieve the planned reduction and restructuring of personnel or the humanresources-related cost-savings goals could negatively affect the reputation and achievement ofDeutsche Telekom's financial objectives and profitability.Staff restructuring within the Group in Germany continued in a socially responsible manner in 2011. Itwas implemented essentially by means of voluntary redundancies, partial and early retirement, andemployment opportunities for civil servants and employees offered by Vivento, especially in the publicsector. Deutsche Telekom intends to continue to restructure its workforce as required. If it is notpossible to implement the corresponding measures to the extent planned or at all, this may havenegative effects on its financial targets and profitability as well as Deutsche Telekom's reputation.The successful realisation of any staff reduction program depends on a range of factors that arebeyond Deutsche Telekom's control, such as general developments in the labor market, the demandfor Deutsche Telekom's retrained labor force and the level of acceptance of the various severanceoffers and other voluntary reduction measures. If planned staff reduction targets are not achieved, thiswould have a negative effect on Deutsche Telekom's operating expenses and profitability.As a result of dispositions of certain non-core businesses in Germany, there is an increasedrisk of return of civil servants transferred out of Deutsche Telekom Group, which could have anegative impact on the staff and cost reduction objectives.Deutsche Telekom's employees who have civil servant status can, based on German civil service law,only be completely transferred to the buyer of a business from Deutsche Telekom in exceptionalcases. Therefore, as a general matter, such transferred civil servants are placed on leave of absencewhile employed with the transferred business unit. Accordingly, in the event of termination ofemployment with the transferred business unit, there is a risk that such civil servants will return to theGroup. There are currently around 2,850 civil servants that can avail themselves of this right of returnto the Group. If all of these civil servants were to return to Deutsche Telekom in 2012, the additionalpersonnel costs would be approximately EUR 0.2 billion per year. This risk of return can be reducedby an agreement on compensation payments, but it cannot be completely eliminated.If further Group units employing civil servants are disposed of, the risk of additional civil servantsreturning after the end of their temporary leave may again increase.Alleged health risks of wireless communications devices have led to litigation affectingmarkets with Deutsche Telekom's mobile telecommunications operations subsidiaries, andcould lead to decreased wireless communications usage or increased difficulty in obtainingsites for base stations and, as a result, adversely affect the financial condition and results ofoperations of Deutsche Telekom's wireless services business.Media reports have suggested that radio frequency emissions from wireless mobile devices and cellsites may raise various health concerns, including cancer, and may interfere with various electronicmedical devices, including hearing aids and pacemakers. Research and studies are ongoing. TheWorld Health Organisation has declared that, on the basis of current scientific knowledge, there are noknown adverse effects on health from emissions at levels below internationally recognised health andsafety standards. However, Deutsche Telekom cannot provide assurance that research in the futurewill not establish links between radio frequency emissions and health risks.Whether or not such research or studies conclude there is a link between radio frequency emissionsand health, popular concerns about radio frequency emissions may discourage the use of wirelessdevices and may result in significant restrictions on the location and operation of cell sites byDeutsche Telekom's mobile telecommunications subsidiaries and the usage of T-Home's wirelessdevices, telephones or products using wireless technology. Such restrictions on use could havematerial adverse effects on Deutsche Telekom's results of operations.Together with wireless telephone manufacturers, T-Mobile USA and other wireless service operators36