Deutsche Telekom generates EBITDA of more than EUR 10 billion in the first half of 2005

Deutsche Telekom increased its profitability further in the first half of 2005. While the net revenue of the Group increased by 3.0 percent year-on-year to EUR 29.1 billion in the first half of 2005, adjusted EBITDA improved by 5.7 percent to EUR 10.1 billion, taking adjusted EBITDA at the end of the half-year past the EUR 10 billion mark for the first time. Revenue in the first half of 2004 amounted to EUR 28.3 billion and adjusted EBITDA to EUR 9.6 billion. Adjusted EBITDA in the Mobile Communications strategic business area increased by 16.2 percent year-on-year, thus making a significant contribution to boosting the Group's profitability.

The Excellence Program had a positive impact. "This program helps us gear all our structures and processes consistently to the needs and requirements of our customers and at the same time also creates the conditions for improved efficiency and profitability. It is already generating good results." These were the words of Kai-Uwe Ricke, Chairman of the Board of Management of Deutsche Telekom AG.

Profit before income taxes almost doubled from EUR 1.8 billion in the first half of 2004 to EUR 3.4 billion, and tripled from EUR 0.6 billion to EUR 1.8 billion in a year-on-year comparison of the second quarters. This positive development reflects the improvement in net financial expense in particular and the non-recurrence of the impairment of mobile communications licenses in the United States, which had had a negative effect of EUR 1.4 billion on profit before income taxes in the first half of 2004. Net profit improved by 61.5 percent year-on-year from EUR 1.2 billion to EUR 2.0 billion. Adjusted for special factors, net profit increased by 2.0 percent to almost EUR 2 billion in the first half of the year.

The growth in the net revenue of the Group was driven by the positive development of the Mobile Communications business area in particular. Net revenue from mobile communications increased by 9.4 percent year-on-year in the first half of 2005. Besides the first-time consolidation of T-Mobile Slovensko, this development was attributable in particular to continued growth in customer numbers at T-Mobile USA. Net revenue in the Broadband/Fixed Network strategic business area, by contrast, decreased by 2.6 percent. Revenue from Business Customers stabilized. The proportion of revenue generated outside Germany increased further: Deutsche Telekom generated 41.2 percent of its revenues abroad in the first half of 2005, compared with 39.2 percent in the first half of 2004. Net revenue generated outside Germany increased from EUR 11.1 billion to EUR 12.0 billion; domestic revenue remained almost stable at EUR 17.2 billion compared with EUR 17.1 billion in the prior-year period.

Total revenue in the Broadband/Fixed Network business area decreased by 4.5 percent in the first half of the year to EUR 13.1 billion mainly as a result of falling call revenues and lower revenues from business with other Group units. The losses of market share were reduced by the newly introduced rates, but the overall increase in substitution by mobile communications and price effects resulting from the higher number of calling plans, which contribute to customer retention, had a negative impact on revenue. This decline in revenues was partly compensated by growing revenues from broadband lines.

The increase of EUR 545 million or 5.7 percent in the Group's adjusted EBITDA to EUR 10.1 billion in the first half of the year was primarily attributable to positive developments in mobile communications and at Group Headquarters & Shared Services. EBITDA from mobile communications improved thanks to the focus on generating high-margin revenues and rising customer numbers. The "Save for Growth" program implemented as part of the Group-wide Excellence Program is now producing initial results. The EBITDA margin in Germany in the first quarter of the year was around 40 percent, for example, which increased to 42.5 percent in the second quarter. The reduced number of personnel at Vivento led to higher EBITDA at Group Headquarters & Shared Services in the second quarter. Thus compensating for the year-on-year decrease in EBITDA of 5.6 percent at Broadband/Fixed Network. As a result, the Group's adjusted EBITDA improved by 6.1 percent in the second quarter from EUR 4.9 billion to EUR 5.2 billion.

Free cash flow before dividend payments increased by around EUR 500 million year-on-year in the second quarter of 2005 to EUR 1.8 billion. This is primarily the result of higher cash generated from operations and reduced interest payments. In a year-on-year comparison of the first half year, free cash flow decreased by EUR 3.4 billion to EUR 0.9 billion. This development is attributable to tax payments amounting to EUR 0.7 billion in the first half of 2005, as opposed to a tax refund of around EUR 0.5 billion in the first half of 2004, and increased levels of investment in the United States.

Net debt fell from EUR 47.1 billion in the first half of 2004 to EUR 44.5 billion at the end of the first half of 2005, but increased by EUR 5.0 billion compared with December 31, 2004. Of this increase, EUR 3.1 billion relates to the first quarter of 2005 and EUR 1.9 billion to the second. The development in the first quarter of 2005 is primarily attributable to payments made for the acquisition of network infrastructure and frequency spectrum in the United States. In the second quarter, dividend payments for the 2004 financial year totaling around EUR 2.7 billion were the main contributors to a further increase.

Mobile Communications

1. Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, and the adjusted EBITDA margin, please refer to "Reconciliation of pro forma figures," at "www.telekom.de/investor-relations" 2. For detailed information, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations." 3. Average number of employees.

The total revenue of the Mobile Communications business area increased by 7.9 percent or EUR 1.02 billion year-on-year to EUR 13.9 billion in the first half of 2005. It also increased by more than 8 percent to almost EUR 7.2 billion in the second quarter of 2005. Aside from the first-time consolidation of T-Mobile Slovensko, this growth was driven once again by T-Mobile USA, with a revenue increase of almost 25 percent (31 percent in dollars terms) or EUR 1.09 billion to EUR 5.5 billion. Revenue in Germany amounted to EUR 4.2 billion, 2.3 percent lower than in the first half of 2004, mainly as a result of the decline in revenues from terminal equipment business. The measures initiated as part of the "Save for Growth" program, on the other hand, are starting to take effect on ARPU. ARPU in Germany increased by 3.7 percent in comparison with the first quarter of 2005; in the United Kingdom, this figure rose quarter-on-quarter by around 10 percent. T-Mobile UK nevertheless recorded an overall decrease in revenue in the first half-year of around 10 percent to EUR 2.0 billion that was mainly a consequence of the cut in termination charges. The number of mobile communications customers served by fully consolidated companies increased by 7.4 million year-on-year to almost 81 million. In the second quarter of 2005 alone, the T-Mobile group gained 1.9 million net additions, of which more than 70 percent were contract customers. T-Mobile USA continued its particularly strong performance, with a net increase of 972,000 customers in the second quarter, bringing its total number of customers to 19.2 million, a year-on-year increase of 3.8 million or 25.0 percent. T-Mobile Deutschland attracted 623,000 new customers in the second quarter, of which around half were contract customers, thus outstripping customer growth both in the second quarter of 2004 and in the first quarter of 2005. In the United Kingdom, T-Mobile UK lost 63,000 customers net in the second quarter as a result of the increase in the churn rate to 3.8 percent, which is attributable to the prepay segment in particular. The number of gross additions remained high as compared with the first quarter. The number of contract customers in the United Kingdom rose by 12,000 in the second quarter. The growth in T-Mobile's EBITDA and adjusted EBITDA exceeded that of T-Mobile's revenue. EBITDA amounted to around EUR 4.5 billion in the first half of 2005, an increase of 12.8 percent year-on-year. Exceptional expenses of EUR 47 million - mainly for staff adjustments as part of the "Save for Growth" program in Germany and Austria – had a negative impact on EBITDA. Adjusted EBITDA amounted to around EUR 4.6 billion, an increase of 16.2 percent. T-Mobile Deutschland again made the largest contribution to EBITDA with EUR 1.7 billion in the first half of 2005, followed by T-Mobile USA with EUR 1.5 billion and T-Mobile UK with EUR 0.6 billion. The adjusted EBITDA margin in the Mobile Communications business area increased by 2.4 percentage points in the first half of 2005 to almost 33 percent. The EBITDA margin was 41 percent in Germany – with an increase to 42.5 percent in the second quarter alone. A margin of 27 percent was generated in the United States in the first half of the year; here, too, the figure for the second quarter was considerably higher, at 30 percent. In the United Kingdom, the margin for the half-year was 30 percent, 32.3 percent in the second quarter. There are clear signs at both T-Mobile Deutschland and T-Mobile UK that the "Save for Growth" program is producing initial results. In Europe, T-Mobile has successfully driven the marketing of the Relax calling plans. Across Europe, the number of customers with a Relax contract rose by 25 percent as compared with the first quarter of 2005, to approximately 3.9 million customers; this represents 17 percent of all European contract customers. In addition, with the launch of Web n’ Walk in Germany, T-Mobile Deutschland now also offers mobile phone users access to an Internet experience they could once only find on the PC. T-Mobile USA has been very successful in marketing BlackBerry devices. Almost 600,000 T-Mobile USA customers now use this terminal device for mobile data communications. Eastern European subsidiaries generated consistently strong revenue and EBITDA growth of over 33 percent year-on-year in the first half of 2005. These companies had a customer base of 8.6 million customers at June 30, 2005, an increase of more than 10 percent year-on-year. The cumulative EBITDA margin of all companies was 43 percent. All companies have a market share of at least 45 percent and are therefore all number 1 or number 2 in their respective markets. Broadband/Fixed Network

1) Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, adjusted EBITDA margin as well as detailed information and calculations of the figures for 2004, please refer to "Reconciliation of pro forma figures" and/or the reconciliation report "Historical figures according to IFRS. New Group organization." at "www.telekom.de/investor-relations". 2) Average number of employees.

Total revenue in the Broadband/Fixed Network business area, combining the two business units T-Com and T-Online, decreased by 4.5 percent or EUR 623 million year-on-year to EUR 13.1 billion in the first half of 2005. Revenue at T-Com declined by 4.9 percent to EUR 12.4 billion. This decrease is mainly attributable to lower call revenues and revenues generated with other Group units (decrease of EUR 316 million) at T-Com that were only partially compensated by growth in broadband business. Data revenues in particular fell due to the transfer of parts of the value chain to T-Systems. T-Com's net revenue, on the other hand, decreased by only 3.2 percent or EUR 330 million to EUR 10.0 billion. This decrease can be attributed primarily to lower call revenues caused by increasing substitution by mobile communications, price effects as a consequence of a growing number of rate options, and losses of market share. Revenues were also negatively impacted by price cuts and market share losses in the international carrier business. The introduction of the "Wünsch Dir Was" (make a wish) calling plan slowed the loss of market share for call minutes, but the in the price cuts this entailed also had a negative impact on revenue. At the end of the first half of 2005, the customer base for the "Wünsch Dir was" calling plan had already grown to more than 8.8 million customers. Customers have been especially pleased with the ability to add optional features such as the international rate option "CountrySelect." T-Online recorded a positive revenue development, with a year-on-year increase of 4.4 percent in the second quarter of 2005 to EUR 1,031 million. In broadband business, the number of lines operated within and outside Germany increased by 427,000 in the second quarter of 2005 to 7.1 million. In its marketing of DSL lines, T-Com generated an increase of just under 45 percent over the prior-year quarter. Around 6.7 million DSL lines were in operation in T-Com's network in Germany at the end of June 2005; that represents an increase of 367,000 within three months. This net growth was lower than in the first quarter of 2005 due to seasonal factors, but higher than the corresponding rate in the prior-year quarter. The Broadband/Fixed Network business area generated adjusted EBITDA of around EUR 5.0 billion in the first half of 2005. This figure is 4.1 percent lower than in the first half of 2004. Adjusted EBITDA for the second quarter decreased by 5.3 percent to EUR 2.4 billion. Adjusted EBITDA at T-Com in the first half of 2005 amounted to EUR 4.8 billion. As such, adjusted EBITDA decreased to a lesser extent (EUR 118 million or 2.4 percent) than revenue. This effect can be credited to a number of positive factors, including savings from revenue-related costs, such as raw materials and supplies, and reduced costs for logistics, IT, procurement and rentals. T-Com's adjusted EBITDA margin increased from 37.7 percent in the first half of 2004 to 38.7 percent in the first half of 2005 as a result of cost reductions. Revenue growth at T-Online was contrasted by a decline in adjusted EBITDA from EUR 247 million to EUR 172 million. This was a result of higher marketing and sales expenses for the combined DSL and entertainment packages as well as the costs of the aggressive market expansion activities abroad. Business Customers

The Toll Collect joint venture has been managed by and reported under the T-Systems segment since April 1, 2004. For segment reporting purposes, the effects on the income statement are no longer shown under T-Com, but under T-Systems. The prior-year comparatives have been restated. 1) Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, and the adjusted EBITDA margin, please refer to "Reconciliation of pro forma figures," at "www.telekom.de/investor-relations" 2) For detailed information, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations." 3) Average number of employees.

Total revenue in the Business Customers business units remained almost constant year-on-year at EUR 6.3 billion in the first half of 2005. The Enterprise Services business unit increased its revenue by 2.9 percent over the first half of 2004, offsetting the year-on-year decrease of 5.8 percent at Business Services. Particularly worthy of note is the high level of new orders received, 12.5 percent higher than in the first half of the prior year. In the second quarter, this growth reached 19 percent. Net revenue also remained at the same level as in the prior year, at EUR 4.5 billion in the first half of 2005. This is mainly attributable to two factors: First, customer demand for computing & desktop services increased in this period. Second, the sale of IT services to small and medium-sized enterprises progressed well. The operation of applications for customers (hosting) and the sale of IT solutions tailored to small and medium-sized businesses developed positively. EBITDA in the second quarter amounted to EUR 405 million, an increase of 5.7 percent compared with the prior-year quarter. EBITDA increased by 3.4 percent to EUR 0.8 billion in the first half of the year. This development was due to EBITDA growth of 4.5 percent at T-Systems Enterprise Services, which more than offset the decrease at T-Systems Business Services. These figures reflect the success of cost reduction and efficiency enhancement measures in the financial year, as well as the first positive effects of the "Focus on Growth" program, which T-Systems is pressing ahead with as part of the Group-wide Excellence Program. Adjusted EBITDA in the first half of 2005 was 1.7 percent lower than in the prior-year period due to the low level of special factors recorded in the first half of 2004. Group Headquarters & Shared Services

1) Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, and the adjusted EBITDA margin, please refer to "Reconciliation of pro forma figures," at "www.telekom.de/investor-relations" 2) For detailed information, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations." 3) Average number of employees.

Total revenue of Group Headquarters & Shared Services decreased slightly by 0.7 percent compared with the first half of 2004 to EUR 1.7 billion. This development is attributable primarily to the decline in revenue generated by Real Estate Services – mainly because of the lower volumes of orders being placed as a result of the conversion to new market-based lease models with the strategic business areas. This decline is partially offset by the revenues generated by the Vivento business lines and by a slight increase in revenues at DeTeFleetServices GmbH. In a year-on-year comparison of the second quarters, revenue remained at the same level as in the prior year at EUR 883 million. EBITDA improved considerably by 57.4 percent year-on-year to minus EUR 103 million. The reduction in Vivento's workforce in the first half of 2005 compared with the first half of the previous year had a positive effect in particular. The costs of trainees and social security expenses for civil servants, which had been previously reported under Headquarters' costs but are now allocated more fairly based on actual cost generation, reduced costs substantially at Group Headquarters. This more than offset the EBITDA decrease attributable to Real Estate Services. EBITDA benefited from the positive development of special factors. These amounted to EUR 35 million in the first half of 2005 and consisted of transfer payments to Vivento, income from insurance refunds and expenses for voluntary redundancy payments. Vivento continued to develop positively in the first half of 2005. Almost 3,700 employees left Vivento in this period and approximately 16,500 employees have found jobs outside Vivento since its formation. Vivento took over around 1,200 employees from the Group in the first six months of the year. This increased the number of transferred staff to 33,000 since the company was established. Approximately 750 of the around 16,500-strong workforce are Vivento's own employees/members of management, around 6,350 work in either of the two Vivento business lines, and around 9,400 are transferees. Approximately 6,350 of these transferees were engaged on a contract or temporary basis within and outside the Group in the first half of 2005. Vivento managed to maintain the placement and qualification rate at a high level of around 82 percent. Vivento created new placement opportunities during the reporting period with the "Security" project, for example. Vivento staff are deployed as receptionists and security guards at Deutsche Telekom sites all over Germany. At the end of the first six months, some 200 Vivento employees were engaged by Security Services. Outlook "Overall our financial results are in line with our expectations. We are very satisfied with our EBITDA growth and the improvement in our margins in particular. We can therefore reiterate our targets for the year," said Ricke. Deutsche Telekom thus confirms its expectations for the current year: an adjusted EBITDA of between EUR 20.7 billion and EUR 21.0 billion. The Deutsche Telekom Group expects investments in property, plant, and equipment, and intangible assets to amount to EUR 7.5 billion to EUR 8.0 billion (before the additional cash outflows already announced) and free cash flow at a similar level. Including these cash outflows, we do not expect the ratio of net debt to adjusted EBITDA to change significantly for the full year. Future dividends will be determined by the development of the profit generated by Deutsche Telekom's activities. Development of customer numbers

1) Telephone lines of the Group (incl. ISDN channels), including for internal use. 2) Broadband lines, excluding for internal use. Prior-year comparatives have been restated. As of January 31, 2005, broadband lines based on DSL technology for consumers have also been marketed by T-Online. 3) Definition of resale: sale of broadband lines based on DSL technology to alternative providers outside the Deutsche Telekom Group. 4) Central and Eastern Europe includes the fixed-network business of MATÀV (incl. Maktel and, since the second quarter of 2005, Telekom Montenegro), Slovak Telecom (ST) and T-Hrvatski Telecom (T-HT). 5) For the first time, the number of narrowband lines rather than channels are reported. Prior-year comparatives have been restated. 6) Telephone lines excluding internal use and public telecommunications, including wholesale services. Prior-year comparatives have been restated. 7) Subscriber-line figures are recorded including MATÁV's subsidiary Maktel and Telekom Montenegro. Re-branding of MATÁV as Magyar Telekom as of the beginning of May 2005. Prior-year figures have not been restated. 8) Total calculated on the basis of customers (broadband and narrowband rates) with a billing relationship and Pay as you go < 30 days and Pay as you go > 30 days. Western Europe includes: Ya.com and Club Internet. 9) Including Virgin Mobile. 10) Rebranding as T-Mobile Slovensko at the beginning of May 2005; customers were included for the first time in the fourth quarter of 2004. Prior-year figures have been restated. 11) Changes calculated on the basis of figures shown. This release contains forward-looking statements that reflect the current views of the Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed on them. 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 Form 20-F submitted to the U.S. Securities and Exchange Commission. 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 does not assume any obligation to update forward-looking statements to take new information or future events into account. In addition to the figures shown in accordance with IFRS, Deutsche Telekom also shows so-called pro forma figures, e.g., EBITDA, adjusted EBITDA, net debt, and free cash flow. These pro forma financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFS. For a definition of these pro forma figures, please refer to the explanations under "Reconciliation to pro forma figures" on Deutsche Telekom's Investor Relations website at http://www.deutschetelekom.com. This release contains financial information that has been prepared in accordance with International Financial Reporting Standards, or "IFRS," and on the basis of the new strategic business areas. The IFRS financial information contained in this report was prepared on the basis of the assumption that, with the exceptions of IAS 39 "Financial Instruments: Recognition and Measurement" and IFRIC 3 "Emission Rights," all existing standards and interpretations that have been issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) will be fully endorsed by the EU. The accounting policy for financial instruments takes into account the proposed EU revisions to IAS 39 and complies with the amended IAS 39. IFRIC 3 is not relevant for Deutsche Telekom. Subject to EU endorsement of outstanding standards and no further changes from the IASB, the information presented here is expected to form the basis for reporting Deutsche Telekom’s financial results for 2005, and for subsequent reporting periods. However, Deutsche Telekom cannot assure you that there will not be material changes in IFRS between the date of this Interim Report and the first date on which Deutsche Telekom is required to publish financial statements for 2005, 2004 or 2003 under IFRS.