Shareholders' Letter

Available-for-sale financial assets
All other financial assets are classified as available-for-sale financial assets. Available-for-sale
financial assets are accounted for at fair value and all unrealised changes in fair value are recorded
in equity. Foreign exchange gains and losses on available-for-sale debt instruments are recognised
in the income statement. When available-for-sale financial assets are sold, impaired or otherwise
disposed of, the cumulative gains and losses that had been recognised in equity are reclassified
from equity and recorded as financial income or expense. If the fair value of an unlisted equity
instrument cannot be reliably determined, the instruments are accounted for at cost less provisions
for impairment.
3.6 Inventories
Inventories are valued at the lower of purchase or production cost and net realisable value. The
purchase or production cost of inventories includes all costs of acquisition and manufacture as
well as other costs incurred in order to bring the inventories to their present location and condition
as intended by management. The purchase or production cost of inventories is determined by
using the weighted average cost formula. Write-downs are raised for inventories that are difficult
to sell. Unsalable inventories are fully written off.
3.7 Property, plant and equipment
Property, plant and equipment is recorded at cost less accumulated depreciation and amortisation.
In addition to the purchase cost and the costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by management,
purchase or manufacturing cost also includes the estimated costs for dismantling and
restoration of the site. The manufacturing costs of self-constructed assets include directly attributable
costs as well as indirect costs of material, manufacture and administration. Borrowing costs
are capitalised insofar as they can be allocated directly to the acquisition or production of a qualifying
asset. Costs of replacement, renewal or renovation of property, plant and equipment are
capitalised as replacement investments if a future inflow of economic benefits is probable and
the purchase or manufacturing costs can be measured reliably. The carrying amount of the parts
replaced is de-recognised. Maintenance costs and repairs which are not capable of being capitalised
are expensed. Depreciation and amortisation is calculated using the straight-line method
with the exception of land, which is not depreciated.
The estimated useful lives for the main categories of property, plant and equipment are:
Category Years
Buildings and leasehold improvements 10 to 40
Cables 1 20 to 30
Ducts 1 40
Transmission and switching equipment 1 4 to 15
Other technical installations 3 to 15
Other installations 3 to 15
1 Technical installations
When significant parts of an item of property, plant and equipment comprise individual components
with differing useful lives, each component is depreciated or amortised separately. The estimated
useful lives and residual values are reviewed at least annually as of the balance sheet date
and, if necessary, adjusted. Leasehold improvements and installations in leased premises are amortised
on a straight-line basis over the shorter of their estimated useful lives and the remaining
minimum lease term. The carrying amount of an item of property, plant and equipment is written
off on disposal or whenever no future economic benefits are expected from its use. Gains and
losses arising on the disposal of property, plant and equipment are calculated as the difference
between the disposal proceeds and the carrying amount of the item of property, plant and equipment.
They are taken to income and recorded as other income or other operating expenses.