Prospectus-Final (clean) - Malta Financial Services Authority

(fixed-network), Greece (mobile), Bulgaria, Macedonia, and Romania (fixed-network), whileimpairment losses on property, plant and equipment were recognised in Romania (fixed-network).In 2010, the increase in profit from operations was primarily a result of the EUR 2.3 billion goodwillimpairment loss recognised in 2009, of which EUR 1.8 billion related to the cash-generating unit T-Mobile UK. This contrasted with impairment losses of EUR 0.7 billion recognised in 2010 on goodwilland property, plant and equipment in the fixed-network businesses of Greece and Romania and themobile communications businesses of Romania and Albania. In 2010, profit from operations was alsopositively affected by the fact that, between September 2009 and March 2010, T-Mobile UK wasclassified as held for sale, and, as a result, depreciation and amortisation were not recognised.- Cash CapexIn 2011, the decrease in cash capex was mainly attributable to the deconsolidation of T-Mobile UK. Inaddition, investment activity in most countries within Deutsche Telekom's Europe operating segmentwas restrained owing to the difficult market situation, decisions by regulatory authorities, andadditional financial burdens, such as the special tax in Hungary and the real estate tax in Greece. Atthe same time, Deutsche Telekom's cash capex increased, for example, in connection with extendingexisting or obtaining new mobile communications licenses. In Greece, Deutsche Telekom purchasedspectrum in the 0.9 GHz and 1.8 GHz frequency ranges for EUR 119 million. As well as the acquisitionof additional frequencies, the purchase price also covers the extension of the existing mobilecommunications license. Deutsche Telekom acquired mobile communications licenses in the 0.9 GHzfrequency range in Albania for a price of EUR 17 million. In Slovakia Deutsche Telekom spent EUR 48million to extend its mobile communications licenses by another ten years.In 2010, the decline in cash capex, despite the effects of the first full-year consolidation of OTE, wasprimarily a result of the deconsolidation of T-Mobile UK. Furthermore, the difficult market situationcombined with the special tax in Hungary and the tax on mobile communications in Croatia led torestraint in investment in these countries.In 2012, Deutsche Telekom plans to focus its capital expenditure on upgrading the networkinfrastructure. In mobile communications, Deutsche Telekom plans to concentrate its efforts onintroducing LTE as the fourth-generation mobile technology in Hungary and Croatia. At the same timeDeutsche Telekom intends to invest in building out the UMTS networks and making them ready forHSPA plus in most of the countries in this operating segment. In 2012, Deutsche Telekom again plansto take part in spectrum auctions. Deutsche Telekom plans to make additional investments in the fixednetwork to increase broadband coverage and in improving customer service.United StatesCustomer DevelopmentThe following table provides information on Deutsche Telekom's mobile operations in the UnitedStates.1Customers 1For the years ended 31December2011 2010(in millions)Total 33.2 33.7Contract 24.8 26.4Prepaid 8.4 7.3Deutsche Telekom counts its mobile communications customers by the number of SIM cards activated and not churned.Deutsche Telekom's customer figures include the SIM cards with which machines can communicate with one another.Deutsche Telekom counts contract customers as customers for the length of their contracts and count prepaid customers ascustomers as long as they continue to use Deutsche Telekom's services, and then for a prescribed period thereafter, whichdiffers by country. Generally, at the end of this period, or in the case of payment default or voluntary disconnection, thecustomers are cancelled or "churned".92