Prospectus-Final (clean) - Malta Financial Services Authority

combinations of businesses where Deutsche Telekom perceives opportunity for profitable growth, costsavings or other benefits for its Group. Transactions may be conducted using newly issued shares ofDeutsche Telekom or its affiliates, cash or a combination of cash and shares, and may individually orin the aggregate be material to Deutsche Telekom's financial and business condition or results ofoperations. As a result, they may affect the trading prices of Deutsche Telekom's securities. As in thepast, discussions with third parties in this regard may be commenced, on-going or discontinued at anytime and from time to time.DEVELOPMENT OF DEUTSCHE TELEKOM'S BUSINESSPotential Investors should read the following discussion in conjunction with Deutsche Telekom'sannual consolidated financial statements for the years ended 31 December 2010 and 31 December2011, including the notes to those consolidated financial statements, which are incorporated byreference into this Prospectus. Deutsche Telekom's consolidated financial statements prepared inaccordance with IFRS are dependent upon and sensitive to accounting methods, assumptions andestimates that Deutsche Telekom uses as bases for the preparation of its consolidated financialstatements. The strategies and expectations referred to in the following discussions are consideredforward-looking statements and may be strongly influenced or changed by shifts in market conditions,new initiatives Deutsche Telekom implements and other factors. Deutsche Telekom cannot provideassurance that the strategies and expectations referred to in these discussions will come to fruition.Forward-looking statements are based on current plans, estimates and projections, and therefore,potential investors should not place too much reliance on them. Forward-looking statements speakonly as of the date they are made, and Deutsche Telekom undertakes no obligation to update anyforward-looking statements in light of new information or future events. Forward-looking statementsinvolve inherent risks and uncertainties, most of which are difficult to predict and are generally beyondDeutsche Telekom's control. Deutsche Telekom cautions you that a number of important factors couldcause actual results or outcomes to differ materially from those expressed in, or implied by, theforward-looking statements. Please refer to "Forward-Looking Statements" and "Risk Factors" fordescriptions of some of the factors relevant to these discussions and other forward-looking statementsin this Prospectus.Consolidated Results of OperationsThe following table presents information concerning Deutsche Telekom's consolidated incomestatements for the periods indicated.For the years ended 31 December2011 2010 2011/2010(millions of €)(% change)Net revenues 58,653 62,421 (6.0)Cost of sales (33,885) (35,725) 5.2Gross profit 24,768 26,696 (7.2)Selling expenses (14,060) (14,620) 3.8General and administrativeexpenses (5,284) (5,252) (0.6)Other operating income 4,362 1,498 n.m.Other operating expenses (4,200) (2,817) (49.1)Profit from operations 5,586 5,505 1.5Finance costs (2,325) (2,500) 7.0Share of profit (loss) ofassociates and jointventures accounted forusing the equity method (73) (57) (28.1)Other financial income (169) (253) 33.265