Deutsche Telekom was notified by the tax authorities that the company will receive a tax refund amounting to approx. EUR 1.4 billion for tax prepayments made in the year 2000 and the current year to date. Moreover, the tax authorities have now decided that additional prepayments planned for the current year amounting to approx. EUR 0.2 billion will not be due. This tax relates to Deutsche Telekom's corporate income tax payments. The amounts are fully included in cash flows and will be used to further reduce debt.
This decision was based on a valuation adjustment in Deutsche Telekom AG's 2000 financial statements of approx. EUR 6.6 billion for the NAB Beteiligungs GmbH, which held the shares in Sprint Corporation. This write-down was necessary, amongst other things, as a result of the general fall in the stock market value of shares held by Deutsche Telekom after the shareholding had been reported at EUR 9.8 billion at the end of 1999. The amount realized on the market from the sale of Sprint FON and PCS shares in the second and third quarters amounting to EUR 3.4 billion confirm the net carrying amount that remains after the write-down.
Following a close examination of the facts, the valuation adjustment has now been largely recognized for tax purposes by the tax authorities.