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New strategy: Deutsche Telekom restructures its business

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Deutsche Telekom intends to restructure its business in the coming years - with investments in intelligent networks as well as IT solutions and Internet services. This was announced by René Obermann as he presented the new Group strategy "Fix - Transform - Innovate."

Deutsche Telekom intends to expand its revenue mix by 2015, by focusing on new pockets of growth. With this evolved strategy, the Group intends to more effectively leverage its investments in broadband infrastructure. "The industry is changing and through an emphasis on innovation we are evolving Deutsche Telekom," said Obermann. "Our goal is to expand our important core business of providing fast network access by adding a broad portfolio of IT and Internet services. This will ensure our long-term growth."

In Germany, the company intends to invest approximately ten billion euros in the next three years in fiber optics, new mobile communications technologies and IT processes, so it can offer customers faster connections and more products. Investments are also planned in other European markets. In the USA, T-Mobile is pushing ahead with its network drive by rolling out high speed HSPA+ coverage to a population of 185 million by the end of 2010.

To achieve its targets, Deutsche Telekom has defined five strategic building blocks:

1. Improve the performance of mobile-centric assets. In the United Kingdom, the Group intends to lead its joint venture with France Telecom to success. In the United States, the goal is to regain an attractive market position. For example, the company is pushing ahead with its HSPA+ network drive to cover a population of 185 million with high-speed broadband by end of 2010.

2. Leverage One Company in integrated assets. The integration of fixed network and mobile communications in Germany and Europe will stabilize revenues, enhance service, and cross-selling opportunities will open up additional revenue potential. New, innovative services and rates will further differentiate our offerings from the competition.

3. Build networks and processes for the Gigabit Society. Up to 10 percent of households in Germany are to be connected with fiber optic by 2012. Deutsche Telekom also wants to roll out LTE to close the gaps in broadband coverage. In Germany, the company plans to invest around 10 billion euros in infrastructure in the next three years.

4. Connected Life across all screens. By 2015, the Group aims to have 5 million IPTV customers in Germany and replace Sky as market leader in the Pay TV business. In the SEE region, the company aims to serve more than 3 million TV customers by 2012.

5. Connected Work with unique ICT solutions. T-Systems intends to boost external revenues from a current six billion to eight billion euros in 2015, primarily outside of Germany. Revenues expectations from providing intelligent ICT solutions for the energy, healthcare, media distribution and the ‘Connected car’ sectors are set at around one billion euros by 2015.

"With our strategic approach we want to expand the activities of Deutsche Telekom across the entire value-chain and position the company as an open partner for other sectors such as energy, healthcare, media distribution and the ‘Connected car’," says Obermann.

He left no doubt that the traditional business of providing fixed line and mobile network access will continue to play an important role. Revenues in this business in markets where Deutsche Telekom operates networks are estimated at more than 200 billion euros. In this core business, the Group intends to defend market share and maintain high-margin business models. "The challenge here is to reconcile the demands of the various interest groups: high investments in modern networks and services for our customers, appropriate returns on in-vestment and good employment prospects," said Obermann.

The company's Supervisory Board supports the Board of Management's plans without reservation. "The new strategy is convincing. In the last three years, Deutsche Telekom - under the leadership of René Obermann - has got the basics right in its core business and is now able to expand its business model," said Ulrich Lehner, Chairman of the Supervisory Board. "With these investments, the Board of Management is paving the way toward a Gigabit Society in Germany and other countries, and at the same time is creating new employment opportunities," adds Supervisory Board Deputy Chairman Lothar Schröder. "As such, Deutsche Telekom is responding to its social obligation."

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