Prospectus-Final (clean) - Malta Financial Services Authority

• Other operating expenses increased by EUR 1.4 billion, mainly due to impairment lossesrecognised on goodwill amounting to EUR 3.1 billion, primarily as a result of a goodwill impairmentloss of EUR 2.3 billion relating to Deutsche Telekom's United States cash generating unit, and onproperty, plant and equipment amounting to EUR 0.2 billion as part of Deutsche Telekom's annualimpairment tests. Other operating expenses in 2010 included expenses in connection with theagreement on the remaining stake in PTC (EUR 0.4 billion) and from the deconsolidation of T-Mobile UK (EUR 0.4 billion).In 2010, profit from operations was influenced by the revenue decline of EUR 2.2 billion and a smallertotal decline in net operating expenses of EUR 1.7 billion that is described below.• Cost of sales declined by EUR 0.5 billion, primarily as a result of the deconsolidation of T-MobileUK amounting to EUR 1.5 billion, which was partially offset by exchange rate effects totalingEUR 0.7 billion.• Selling expenses declined by EUR 1.2 billion, due to changes in the structure of the Group and areduction in customer acquisition and retention costs in the Germany operating segment. Thedecline was partially offset by exchange rate effects totaling EUR 0.3 billion, primarily from thetranslation of U.S. dollars.• The increase of EUR 0.6 billion in general and administrative expenses related mainly toEUR 0.2 billion higher expenses for early retirement programs. In addition, a provision ofEUR 0.2 billion for the Civil Service Health Insurance Fund was reversed in 2009.• Other operating expenses decreased by EUR 0.5 billion in 2010, due in part to lower depreciation,amortisation and impairment losses posted in connection with the impairment tests. In 2009, theGroup sustained goodwill impairment losses of EUR 2.3 billion, primarily as a result of animpairment loss of EUR 1.8 billion that had been recognised on the goodwill of the cash-generatingunit T-Mobile UK. In 2010, the annual impairment tests resulted in impairment losses ofEUR 0.7 billion to be recognised on goodwill and property, plant and equipment at year-end. Thedecrease in other operating expenses was partially offset by expenses of EUR 0.4 billion incurredin connection with the agreement concerning the stake in PTC, and of EUR 0.4 billion from thedeconsolidation of T-Mobile UK recognised in the second quarter of 2010 due to the establishmentof the Everything Everywhere joint venture.Reconciliation of EBITDA and Adjusted EBITDA2011 2010(millions of €)Profit from operations 5,586 5,505Depreciation, amortisation and impairmentlosses 14,436 11,808EBITDA 20,022 17,313Special factors – Germany (707) (509)Staff-related measures (604) (401)Non-staff-related restructuring (4) (11)Effects of deconsolidations, disposals andacquisitions 0 0Other (99) 1 (97) 2Special factors – Europe (246) (606)69