Board of Management position on the counter-motions.
On Item 2 on the agenda: Resolution on the appropriation of net income.
We are aiming to pursue an attractive and shareholder-friendly dividend policy. When determining the dividend proposal to the shareholders' meeting, we base our considerations on the development of the Group, measured against the following parameters:
- Operating performance, measured in terms of the Group's adjusted EBITDA
- The free cash flow generated within the Group
- The Group's balance sheet ratios
- The net profit.
Based on the Group's sound balance sheet ratios and the above-budget free cash flow generated in 2007, together with the amounts achieved for the remaining KPIs, the management is submitting an attractive dividend proposal to the shareholders' meeting.
Deutsche Telekom has its Telekom Training unit in Germany as the unit that coordinates and structures qualification measures for experts and executives. Of the 148,938 employees in Germany, 108,943 participated in 17,071 seminars on a total of 459,124 training days in 2007. Additional qualification measures include e-learning platforms and training on the job. Specific, demand-oriented qualification and HR development are a clear focus of Deutsche Telekom's HR activities. We consider our commitment to employee training to date to be appropriate and balanced, particularly in view of the level of the dividend.
Due to the current legal situation, it is not possible for Deutsche Telekom to pay a bonus dividend.
On Items 3 and 4 on the agenda – Resolutions regarding approval of the actions of the Board of Management and of the Supervisory Board for the financial year 2007.
The German Securities Prospectus Act (WpPG) that came into effect in 2005 sets out new requirements for publications by listed companies. It requires the creation once a year of a document for the public that contains or refers to all information published in compliance with particular national and international capital market regulations in the course of the prior financial year. Information that must be listed in accordance with § 10 WpPG is available within the "Annual Document" on the Deutsche Telekom AG homepage at www.telekom.com/investorrelations.
Under German law, the conversion ratio for the merger of T-Online International AG (T-Online) into Deutsche Telekom AG is calculated based on the ratio of the values of the two companies. To calculate these values, the earning power of both Deutsche Telekom and T-Online was determined with professional assistance according to the assessment guidelines (IDW ES1 as amended) of the German Institute of Chartered Accountants (Institut der Wirtschaftsprüfer e.V. – IDW). The court-selected and court-appointed Merger Auditor found the discounted earnings methodology applied and the derivation of the exchange ratios to be reasonable. Irrespective of this, T-Online shareholders legally became Deutsche Telekom AG shareholders when the merger took effect. As Deutsche Telekom shareholders, the T-Online shareholders thus benefit from the further development of business at T-Online. In addition, T-Online's growth potential has been fully taken into consideration in the company valuation taken as the basis for the merger exchange ratio. Now that several T-Online shareholders have initiated so-called appraisal rights proceedings against Deutsche Telekom, this exchange ratio is being reviewed by the courts once again.
Deutsche Telekom has established a contractual basis for telesales activities. Rules for sales partners have been defined and laid out in a code of conduct. The introduction of the code of conduct for telesales activities is intended to improve the quality of our dealings with customers by setting out uniform quality standards and intensifying the monitoring of our sales partners. The quality standards that we have defined are above the industry norm. We want satisfied end customers who have received qualified advice. For this reason, we only work with certified sales partners in line with the code of conduct and our quality standards. Any abuse originating internally or with partners is systematically identified and any violations are addressed.
We offer excellent network infrastructure in top quality at attractive prices.Deutsche Telekom took first place in "connect" reader surveys several times in succession.The magazine's readers voted Deutsche Telekom number one in nine categories last year, including top quality in the fixed network, Internet and DSL services (May 2007 issue).
In addition, a market share of 43 % in 2007 for new DSL lines in Germany is clear evidence that our products and services are well received on the market and that we are competitive. Some of our competitors' products and services on the other hand include other service and support components or may be based on other technical solutions, meaning they cannot always be directly compared.
The supplementary charge for calls to other networks is based on a regulatory decision against Deutsche Telekom, designed to strengthen our competitors. Most, hough not all competitors charge Deutsche Telekom additional fees to connect to their networks. We have fought vigorously against this regulatory decision on numerous occasions, but without success to date. The supplementary charges have been initially approved by the Federal Networks Agency until November 30, 2008. Only those supplementary charges imposed by our competitors are passed on by T-Home. This therefore excludes calls to competitor networks, for which T-Home is not subject to a supplementary charge.
On Item 6 on the agenda: Resolution authorizing the Company to purchase and use treasury shares.
From the Board of Management’s point of view, authorization to repurchase treasury shares is expedient in order to enable the Company to respond to changed circumstances or new market situations even at short notice. In the context of the authorization granted by the Shareholders' Meeting, the Board of Management continually monitors whether repurchasing of shares is expedient from Deutsche Telekom's point of view for one of the purposes mentioned in the authorization. Authorization for the issuing of stock options for employees is not contained in the proposed resolution.
The Board of Management stands by its motions for resolution on the agenda.
Bonn, May 2008
Deutsche Telekom AG
Board of Management