Deutsche Telekom considerably increased operational earning power in the first half year 2001

Group revenue increased by 17 per cent to EUR 22.5 billion- Adjusted EBITDA increased by 12 per cent to EUR 7.2 billion- EBITDA from mobile communications more than doubled- Five-Point Program for more growth and greater profitability- Acquisition of VoiceStream and Powertel successfully completed- Sale of Sprint shares generates high one-time proceeds- Strong growth in T-DSL, ISDN and T-Online- T-D1 market leader in Germany Deutsche Telekom continued its successful growth trend in the first half of 2001 and achieved a marked increase in its operational earning power. Group revenue increased by around 17 per cent to EUR 22.5 billion. Taking into account the companies consolidated for the first time since the first half of 2000, such as the US companies VoiceStream and Powertel (for the month June 2001) and debis Systemhaus, organic growth was about 6 per cent. "We managed to achieve these already substantial growth rates against the trend in what is currently a rather weak economic environment, with growth forecasts for the German economy being continuously corrected downward in the first six months of the year," said Dr. Ron Sommer, Chairman of Deutsche Telekom's Board of Management. "In other words, Deutsche Telekom is growing many times more strongly than the rest of the German economy."

As well as increasing its revenue, Deutsche Telekom also considerably increased its operational earning power. EBITDA adjusted for special influences increased by just under 12 per cent or EUR 772 million to approximately EUR 7.2 billion. The improvement in results was even more impressive when comparing the first and second quarters with the corres-ponding periods in the previous year: Whereas in the first quarter of 2001, EBITDA increased by 6.6 per cent or EUR 225 million compared with the first quarter of 2000, the improvement in EBITDA in the second quarter of 2001 compared with the second quarter of 2000 was 17.8 per cent or EUR 547 million. "From 2002 onwards we will see properly what a growth engine this acquisition represents, in particular for our EBITDA" stated Chief Financial Officer Dr. Karl-Gerhard Eick.

*) Adjusted for special effects H1/01: net income effect from sale of shares in Sprint FON (EUR 956 million) H1/00: net income effect from sale of Global One (EUR 2,864 million) Dilution effect from T-Online IPO (EUR 2,657 million) Losses on the disposition of noncurrent assets and increased transfers to accruals (EUR 824 million)

**) Including purchase price payment for Wind (EUR 2.3 billion)

The segment report submitted for the first time based on the Group's four-pillar structure makes clear that it is in particular the T-Mobile pillar which considerably increased its result: EBITDA was more than doubled from EUR 597 million to EUR 1.375 billion and thus, by the middle of this year, had almost reached the level of the entire 2000 financial year. The number of mobile communications subscribers increased by around 90 per cent to 43.9 million at June 30, 2001. If the figures of the previous year are adjusted to include the companies VoiceStream and Powertel as well as RadioMobil which were consolidated for the first time in the first half of 2001, the growth rate was about 60 per cent. In Germany, T-D1 took over market leadership. VoiceStream and Powertel had approximately 6 million customers at June 30, 2001, thus expanding the customer base of both companies by about 70 per cent compared with June 30, 2000. This represents the highest growth rate of all US mobile communications companies. Revenue from the T-Mobile pillar increased by 31 per cent to EUR 5.97 billion; excluding newly consolidated companies, this growth rate was just under 20 per cent.

The strong growth in the number of new ISDN and T-DSL lines in the T-COM pillar continued. The number of ISDN channels sold has now passed the 20-million mark, the number of channels installed increased by around 4 million to 19.3 million at June 30, 2001. The demand for T-DSL also continued to grow unabated: 750,000 lines had already been installed by the end of June 2001, and since then this figure has increased to around 1 million, with approximately 1.2 million lines already sold. Revenue from the T-COM pillar decreased slightly by 3.4 per cent to EUR 13.1 billion. This development was mainly influenced by the sale of the majority stake in the regional cable companies in North-Rhine Westphalia and Hesse. At EUR 3.9 billion, T-COM's EBITDA was at approximately the same level as last year.

Revenue of the T-Online International AG group increased by almost 53 per cent in the first six months of 2001 to EUR 539 million. Positive develop-ments included the number of customers - up 46 per cent to 9.2 million - and the portal business. Despite the very difficult situation in this area, revenues increased by approximately 17 per cent in the second quarter compared with the first three months of 2001. EBITDA in the second quarter increased by approximately 14 per cent compared with the first quarter of 2001. EBITDA in the T-Online pillar (including DeTeMedien) amounted to EUR -52 million at June 30, 2001. This figure cannot be compared directly with EBITDA at June 30, 2000 of EUR 2.7 billion, because last year's figure included the special influence from the proceeds of the T-Online International IPO amounting to EUR 2.66 billion. The consolidation for the first time of the debis Systemhaus joint venture resulted in a leap in the revenue of the T-Systems pillar of 46 per cent to EUR 6.7 billion. Even excluding this consolidation effect, T-Systems' revenue increased by about 10 per cent. Numerous major contracts contributed to this increase. EBITDA decreased by EUR 2.97 billion as compared to the first six months of 2000 to EUR 354 million. This decrease is primarily due to the fact that EBITDA in the first half of 2000 included the special proceeds of EUR 2.86 billion resulting from the sale of shares in Global One.

In order to further intensify the Group's growth and profitability, Deutsche Telekom has launched and begun implementing a Five-Point Program. The main elements are:

• A group-wide program of systematic quality improvement, the aims of which include shortening installation and fault-clearance times, and reducing the number of complaints about invoices.
• In the course of the program for improving the operating result, operational methods are to be consistently optimized using e-business processes. Furthermore, staff restructuring in the Group will continue and financing expenses will be reduced as part of an active debt management program.
• The program for reducing liabilities aims to cut debt by more than EUR 15 billion by the end of 2002. Measures to achieve this include, for example, the sale of non-core activities, such as the completed sale of shares in the US company SPRINT which generated proceeds of about EUR 3.5 billion.
• The aim of the integration initiative is the consistent realization of synergies in the Group's new structure, in particular in conjunction with the newly consolidated companies. This includes the seamless assignment of Deutsche Telekom's eastern European subsidiaries and affiliated companies to the individual pillars, the introduction of group-wide products, such as in mobile communications, and the accelerated development of global brands.
• As part of the product and innovation campaign, Deutsche Telekom is taking IFA 2001 in Berlin as the platform to showcase a whole host of new products that are derived from the growing convergence between fixed-network telephony, mobile communications, and the Internet. In this context, UMTS is a vital source of innovation: Deutsche Telekom's UMTS timetable is absolutely on target in terms of implementation. The commercial market launch of the first UMTS services will take place in 2003.