Financial Results 2002

"Focused" - that's the motto of Deutsche Telekom's annual report for 2002.

The "focus" of the Group: to secure the future through consistent debt reduction and earnings-focused growth. With its four divisions T-Com, T-Mobile, T-Systems and T-Online, Deutsche Telekom is positioning itself as a leader in broadband and innovation in the convergence market of information technology and telecommunications.

• Kai-Uwe Ricke appointed new Chairman of the Board of Management of Deutsche Telekom AG.
• Strategic review completed; resulting special influencesa of EUR -19.3 billionafter taxes.
• Program of measures to further debt reduction established.
• Board of Management and Supervisory Board will propose not to pay adividend for the 2002 financial year.
• Group revenue, including changes to the composition of the Deutsche TelekomGroup, increased by 12.0 % to EUR 39.2 billion.
• Adjusted Group EBITDAb increase (excluding special influences) of 5.6 %compared with same period last year to around EUR 12.0 billion.
• Net loss of EUR 24.5 billion, mainly attributable to non-scheduled write-downsof goodwill and licenses in mobile communications; excluding specialinfluences, adjusted net loss of EUR 4.2 billion.
• Reduction of net debtc by 1.8% to EUR 64.0 billion, compared withEUR 65.2 billion at September 30, 2001.
• Free cash flowd increased from EUR 6 million to around EUR 4.7 billion.

a See Reconciliation of special influences and strategic review
b See Reconciliation of adjusted EBITDA.
c Debt excluding liquid assets (Sept. 30, 2002: EUR 1.9 billion; Sept. 30,2001: EUR 1.3 billion), marketable securities and other investments in noncurrentsecurities (Sept. 30, 2002: EUR 0.7 billion; Sept. 30, 2001:EUR 1.5 billion) and interest rate and currency swaps (Sept. 30, 2002:EUR 0.1 billion; Sept. 30, 2001: EUR 0.2 billion).
d See Reconciliation of free cash flow.

• Group revenue increased by 14.6 % to EUR 25.8 billion.
• Group EBITDAa increase (excluding special influences) of 7.2 % approximately to EUR 7.8 billion.
• Net loss of EUR 3.9 billion, mainly attributable to depreciation and amortization relating to newly consolidated companies; excluding special influences, net loss of EUR 3.1 billion.
• Net debt reduced by 9.6 % to EUR 64.2 billion by the end of the first half of 2002 from EUR 71.0 billion at June 30, 2001.
• Capital expenditure reduced by around 17.6 % to EUR 3.1 billion.
• Net cash provided by operating activitiesb increased by 40.8 % to EUR 6.6 billion.
• EBITDAa at T-Com at EUR 5.0 billion, the same level as in the previous year.
• T-Systems increased its EBITDAa compared with the same period in the previous year by 42.6 % to EUR 509 million.
• EBITDAa at T-Mobile increased by approximately EUR 1.2 billion, or 86 %, to around EUR 2.6 billion.
• T-Online division generated positive EBITDAa of EUR 82 million from EUR -52 million in the first half of 2001.
• With more than 525,000 net new subscribers in the second quarter, VoiceStream/Powertel recorded one of the highest net subscriber increases of all mobile communications operators in the U.S.

a There were no special influences included in the EBITDA of the T-Com, T-Systems, T-Mobile and T-Online divisions in the first half of 2001 or the first half of 2002.
b See the notes to the consolidated statement of cash flows.

• Group revenue increased by 15% to EUR 12.8 billion.
• Group EBITDA grew by 4.4% to EUR 3.8 billion.
• Cash generated from operations increased by 14% to EUR 2.9 billion.
• Proposed dividend of EUR 0.37 per share.
• EBITDA margin of T-Systems increased significantly to approximately 10 %.
• EBITDA of T-Mobile more than doubled, increasing by EUR 621 million to approximately EUR 1.2 billion.
• EBITDA of T-Online division positive.
• Number of proportionate mobile communications subscribers increased by more than 20 % to 52.4 million.
• T-Com further promotes migration to advanced lines through the growth of T-DSL and ISDN; number of T-DSL lines sold increased 170 % to 2.3 million customers; 13.4 % growth recorded for ISDN with 21.1 million channels now in operation.
• Number of T-Online subscribers increased by 28% to 11.2 million.
• Increase in net loss from EUR -0.4 billion to EUR -1.8 billion, mainly attributable to amortization of newly consolidated companies.