Prospectus-Final (clean) - Malta Financial Services Authority

Reconciliation of Net Debt31 Dec. 2011 31 Dec. 2010(millions of €)Financial liabilities (current) 10,219 11,689Financial liabilities (non-current) 38,099 38,857Financial liabilities 48,318 50,546Accrued interest (966) (1,195)Liabilities from corporate transactions - (1,566)Other (615) (467)Gross debt 46,737 47,318Cash and cash equivalents 3,749 2,808Available-for-sale/held-for-trading financial assets 402 75Derivative financial assets 1,533 835Other financial assets 932 1,331Net debt 40,121 42,269In 2011, net debt decreased due primarily to an increase in cash and cash equivalents resulting fromthe break-up fee from AT&T. Dividend payments of EUR 3.5 billion, the acquisition of the remainingshares in PTC (EUR 1.4 billion) and an additional 10% of the shares in OTE (EUR 0.4 billion),payments to external pension funds (EUR 0.3 billion) and currency and other effects totaling EUR 0.8billion had an offsetting effect.In 2010, Deutsche Telekom's net debt increased by EUR 1.4 billion compared to 2009 primarily as aresult of dividend payments of EUR 4.0 billion, the acquisition of spectrum for EUR 1.3 billion, theeffects of corporate transactions totaling EUR 0.8 billion, exchange rate effects of EUR 0.8 billion andthe share buy-back amounting to EUR 0.4 billion.Off-Balance Sheet Assets and Financial InstrumentsIn addition to the assets recognised in the statement of financial position, Deutsche Telekom carriesassets off balance-sheet, primarily relating to leased property. Off-balance-sheet financial instrumentsmainly relate to the sale of receivables by means of factoring. Total receivables sold as of 31December 2011 amounted to EUR 1.1 billion, which was consistent with the level sold as of 31December 2010.Finance PolicyThe fundamentals of Deutsche Telekom's finance policy are established each year by the Board ofManagement and overseen by the Supervisory Board. Group Treasury is responsible for implementingthe finance policy and for ongoing risk management.Condensed Consolidated Statement of Cash Flows and Reconciliation of Free Cash Flow2011 2010(millions of €)Net cash from operating activities 16,214 14,731Break-up fee received from AT&T (2,289)Cash outflow as part of the PTC transaction 400Cash outflow for investments in intangible assets (1,837) (2,978)77