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Deutsche Telekom plans to return around EUR 10 billion to its shareholders from 2010 through 2012

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  • Board of Management and Supervisory Board of Deutsche Telekom decided on a new shareholder remuneration policy
  • Unchanged total payment of EUR 3.4 billion per year consisting of a dividend of at least EUR 0.70 per share and share buy-backs for the remainder
  • Proposed dividend of EUR 0.78 per share for 2009

Deutsche Telekom is planning to return around EUR 10 billion to its shareholders over the next three years until 2012 which means EUR 3.4 billion per year. This makes Deutsche Telekom the first DAX company to communicate a minimum dividend per share for 3 years in conjunction with a share buy-back also over 3 years. The Board of Management and Supervisory Board are underscoring their faith in the positive development of Deutsche Telekom, in particular future free cash flow and sound balance sheet figures. In addition, the Group intends to continue investing substantially in its infrastructure in 2010.

"We want to offer our shareholders and potential investors certainty and predictability at a time of global uncertainty,” said Prof. Dr. Ulrich Lehner, Chairman of the Supervisory Board. “We are combining the interests of all stakeholders with a clear future strategy for the Group.”

“78 cents and a current dividend yield of over eight percent for 2009 make the T-Share an interesting choice. Our new shareholder remuneration policy makes us even more attractive and we now feel that we are strong enough to take this step. We are convinced that we can earn good money for our customers with modern networks and internet services“, said CEO René Obermann. “We are also taking our stakeholders’ interests into account. Today, we are focusing particularly on our shareholders, our owners. We will continue investing strongly, reshaping the Group in a socially responsible manner for the employees, and offering debt capital providers clear guidance on the financial stability of the company.”

The policy is to pay a dividend of at least EUR 0.70 per share in each financial year from 2010 to 2012. Share buy-backs are also to be carried out within the same period. In total, dividend payments and share buy-backs should lead to an unchanged total payment of EUR 3.4 billion a year to shareholders. “We are thus already setting a bottom limit for the dividends in 2010, 2011 and 2012,” underlined Obermann.

The Board of Management and Supervisory Board will propose a dividend of EUR 0.78 per share for the 2009 financial year to the shareholders’ meeting on May 3, 2010. Based on the current 4.34 billion shares carrying dividend rights, this represents a total payment of around EUR 3.4 billion, i.e., the planned amount for the coming three years. “We can pay the same dividend as in 2008 – in spite of the crisis,” said Obermann.

Profit distribution consisting of a dividend payment and share buy-backs is aimed at positively supporting the performance of the share price in addition to providing cash remuneration for shareholders through dividends. The share buy-back will improve KPIs, such as earnings per share and free cash flow per share, that have a major effect on the share rating. Based on the minimum dividend stated and the average total payment planned, the share buy-backs would result in around 130 million shares at the current share price. This would improve earnings per share and free cash flow per share by around 3.3 percent each.

Implementation of this policy is subject to the requisite unappropriated net income being posted in the single-entity financial statements of Deutsche Telekom AG for the financial year in question and the ability to establish the necessary reserves for the share buy-back. It is also contingent upon the executive bodies adopting resolutions to this effect taking account of the company’s situation at the time.

The final purchase price for the share buy-back depends on the timing of the buy-back, the buy-back price and the number of dividend rights-bearing shares. The current share price was taken as a basis for this press release.

This press release contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These also include statements on market potential, statements on finance guidance, as well as on the dividend outlook. They are generally identified by the terms "expect," "anticipate," "believe," "intend," "estimate," "aim for," "goal," "plan," "will," "strive for," "outlook," or similar expressions and often include information that relates to net revenue expectations or targets for adjusted EBITDA, profit or loss, earnings performance and other indicators, as well as personnel-related measures and workforce adjustments. Forward-looking statements are based on current plans, estimates, and projections. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control, including those described in the sections "Forward-Looking Statements" and "Risk Factors" of the Company's Form 20-F annual report filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom’s workforce reduction initiative, the restructuring of operating activities in Germany, and the impact of other significant strategic or business initiatives, including acquisitions, dispositions, business combinations, and cost reduction measures. In addition, regulatory decisions, stronger-than-expected competition, technological change, litigation and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. Furthermore, changes in the economic and business environments – for example, the current economic slump – in markets where we, our subsidiaries and affiliates operate, the enduring instability and volatility on the global financial markets, as well as exchange rate and interest rate fluctuations can also adversely affect our business development and the availability of capital at favorable terms. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom's actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be met. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. Deutsche Telekom does not reconcile its adjusted EBITDA guidance to a GAAP measure because it would require unreasonable effort to do so. As a rule, Deutsche Telekom does not predict the net effect of future special factors due to their uncertainty. Special factors and interest, taxes, depreciation and amortization (including impairment losses) can have a significant effect on Deutsche Telekom's results.

In addition to figures prepared in accordance with IFRS, Deutsche Telekom presents non-GAAP financial performance measures, including EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBT, adjusted net profit, free cash flow, gross debt, and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter “Reconciliation of pro forma figures” posted on Deutsche Telekom’s website (www.telekom.com) under the link "Investor Relations."

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