Obligation Telekom International Finance B.V. 2.25% ( US25156PAQ63 ) en USD

Telekom International Finance B.V.

100 % ▼

Allemagne

US25156PAQ63 ( en USD )

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05/03/2017 - Obligation échue

Prospectus brochure de l'obligation Deutsche Telekom International Finance B.V US25156PAQ63 en USD 2.25%, échue

Deutsche Telekom International Finance B.V. est une filiale de Deutsche Telekom AG, basée aux Pays-Bas, qui gère les activités de financement et de trésorerie du groupe à l'échelle internationale.

L'Obligation émise par Telekom International Finance B.V. ( Allemagne ) , en USD, avec le code ISIN US25156PAQ63, paye un coupon de 2.25% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 05/03/2017

PROSPECTUS

Deutsche Telekom International Finance B.V. ("Finance")

$1,000,000,000 2.250% Notes issued 6 March 2012 and due 6 March 2017
$1,000,000,000 4.875% Notes issued 6 March 2012 and due 6 March 2042

Guaranteed as to Payment of Principal and Interest by
Deutsche Telekom AG ("Deutsche Telekom")

Finance's $1,000,000,000 2.250% Notes due 6 March 2017 (the "2017 Notes") and $1,000,000,000
4.875% Notes due 6 March 2042 (the "2042 Notes" and, together with the 2017 Notes, the "Notes") were
offered for sale in the United States, Europe and elsewhere where it is lawful to make sure offers. Application
has been made to the Luxembourg Stock Exchange for the Notes to be admitted to trading on the
Luxembourg Stock Exchange's Regulated Market and to be listed on the official list of the Luxembourg Stock
Exchange. This Prospectus constitutes a prospectus for the purposes of Article 5.3 of the Prospectus
Directive and the Luxembourg law on prospectuses for securities on 10 July 2005 implementing the
Prospectus Directive in Luxembourg.This prospectus as well as the documents incorporated by reference will
be published on the website of the Luxembourg Stock Exchange (http://www.bourse.lu).

Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its
capacity as competent authority under the Luxembourg Act dated 10 July 2005 on prospectuses for securities
to approve this document as a Prospectus. By approving this Prospectus, the CSSF gives no undertaking as
to the economic and financial soundness of the operation or the quality or solvency of the Issuer.

Finance will pay interest on the Notes on 6 March and 6 September of each year, beginning on 6
September 2012 at an annual rate of 2.250% in the case of the 2017 Notes and 4.875% in the case of the
2042 Notes. Finance may redeem the Notes on the terms described in this prospectus under "Description of
the Notes and Guarantees--Optional Redemption". Finance may also redeem the Notes at 100% of their
principal amount plus accrued interest if certain tax events occur as described under "Description of the Notes
and Guarantees--Optional Tax Redemption".

Investing in the Notes involves risks. See "Risk Factors".

The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended
(the "Securities Act") or any state or other securities laws. The Notes may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons, except to qualified institutional buyers
("QIBs") in reliance on the exemption from registration provided by Rule 144A under the Securities Act ("Rule
144A") and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the
Securities Act ("Regulation S"). Prospective purchasers are hereby notified that sellers of the Notes may be
relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. The
Notes are not transferable except in accordance with the restrictions described under "Transfer Restrictions".

Underwriting
Proceeds to

Price to Public(1)
Discounts and Commissions
Finance
Per 2017 Note
99.437%
0.25%
99.187%
Per 2042 Note
98.604%
0.45%
98.154%
Total
$1,980,410,000
$7,000,000
$1,973,410,000
_________________________________________________________________________________________
(1) The settlement occurred on 6 March 2012.

The Notes are represented by one or more global notes registered in the name of The Depository
Trust Company ("DTC"), as depositary, or a nominee of DTC. Beneficial interests in the Notes will be shown
on, and transfers thereof, will be effected through, records maintained by DTC, Clearstream Banking, société
anonyme ("Clearstream") and Euroclear Bank SA/NV ("Euroclear"), and their respective participants.

Joint Bookrunning Managers
Credit Suisse
Morgan Stanley
SOCIETE GENERALE

Co-Managers
Banca IMI
COMMERZBANK
Lloyds Securities
Mitsubishi UFJ Securities
RBS

5 April 2012

TABLE OF CONTENTS

RESPONSIBILITY STATEMENT.................................................................................................... 1

RISK FACTORS......................................................................................................................... 1

SELECTED FINANCIAL DATA ................................................................................................... 14

NOTICES................................................................................................................................. 15

BASIC INFORMATION ABOUT THE NOTES TO BE LISTED AND ADMITTED TO TRADING ............... 16

THE ISSUER AND THE GUARANTOR.......................................................................................... 19

DOCUMENTS INCORPORATED BY REFERENCE.......................................................................... 22

DOCUMENTS ON DISPLAY ....................................................................................................... 24

DESCRIPTION OF THE NOTES AND GUARANTEES ...................................................................... 25

TRANSFER RESTRICTIONS ....................................................................................................... 34

FORWARD-LOOKING STATEMENTS.......................................................................................... 37

MARKET, RANKING AND OTHER MATTERS................................................................................ 38

LEGAL MATTERS..................................................................................................................... 38

AUDITORS.............................................................................................................................. 38

GENERAL INFORMATION.......................................................................................................... 39

You should rely on the information contained or incorporated by reference in this prospectus.
We have not, and the underwriters have not, authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information, you should not rely on
it. You should assume that the information appearing in this prospectus, as well as information
incorporated by reference, is accurate as of the date on the front cover of this prospectus only. Our
business, financial condition, results of operations and prospects may have changed since that date.

RESPONSIBILITY STATEMENT
Deutsche Telekom with its registered office in Bonn and Finance with its registered office in
Amsterdam are solely responsible for the information given in this Prospectus, provided that Finance is not
responsible for the description of Deutsche Telekom. Each of Deutsche Telekom and Finance hereby
declares that, having taken all reasonable care to ensure that such is the case, the information contained in
this Prospectus for which it is responsible is, to the best of its knowledge, in accordance with the facts and
contains no omission likely to affect its import.

RISK FACTORS
The discussion below is a disclosure of risk factors that are material to Deutsche Telekom and
Finance and that may affect Finance's ability to fulfill its obligations under the Notes or Deutsche Telekom's
obligation under the guarantee. When we refer to ourselves, we are referring to both Deutsche Telekom and
Finance. Prospective investors should carefully consider the following information in conjunction with the other
information contained or incorporated by reference in this prospectus.
Relating to Deutsche Telekom
The risk related to Deutsche Telekom's ability to fulfill its obligations as Issuer of debt securities is
described by reference to the ratings assigned to Deutsche Telekom. Deutsche Telekom is rated by Fitch14
(as defined herein), Moody's24 (as defined herein) and S&P34 (as defined herein).

As of the publication date of the Prospectus, the ratings assigned to Deutsche Telekom by the Rating
Agencies were as follows:

by Fitch:
long-term rating:
BBB+
short-term rating:
F2
by Moody's:
long-term rating:
Baa1
short-term rating:
P-2
by S&P:
long-term rating:
BBB+
short-term rating:
A-2

A continuation or intensification of the economic downturn, a further intensification of the
European debt crisis, or an ongoing slowdown in consumer spending could adversely affect our

1 Fitch is established in the European Community and has been registered in accordance with Regulation (EC) No
1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, amended by
Regulation (EC) No 513/2011 of the European Parliament and of the Council of 11 March 2011 (the "CRA Regulation").
2 Moody's is established in the European Community and has been registered in accordance with Regulation (EC) No
1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, amended by
Regulation (EC) No 513/2011 of the European Parliament and of the Council of 11 March 2011 (the "CRA Regulation").
3 S&P is established in the European Community and has been registered in accordance with Regulation (EC) No
1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, amended by
Regulation (EC) No 513/2011 of the European Parliament and of the Council of 11 March 2011 (the "CRA Regulation").
4 The European Securities and Markets Authority publishes on its website (www.esma.europa.eu) a list of credit rating
agencies registered in accordance with the CRA Regulation. That list is updated within five working days of the adoption of
a registration or certification decision. The European Commission republishes the list in the Official Journal of the
European Union within 30 days of any update.

1

customers' purchases of our products and services in each of our operating segments, which could
have a negative impact on our operating results and financial condition.
Our business is influenced by general economic conditions in Germany, Europe and the United
States. Continued exchange rate and financial market volatility, pressure on private consumption owing to
high unemployment in some countries and the dangers arising from high levels of national debt in many
countries present risks to the economy that could result in long periods of stagnation or economic contraction.
During 2011, global financial markets and economies experienced increasing stress, as reflected by
high levels of volatility and market uncertainty. The ongoing European sovereign debt crisis has evolved into a
banking crisis and crisis of confidence, constituting a significant risk to economic development in Europe and
around the world, and is having an increasing impact on our operations and businesses. A possible failure of
negotiations between private-sector creditors and Greece, increased market pressure on the public finances
of Greece, Portugal, Ireland, Italy or Spain, or in an extreme case the departure of one more countries from
the Eurozone could lead to depressed economic activity and increased currency and exchange risks, all of
which would have an unpredictable effect on our businesses and operations. We have a limited ability to
effectively plan for or respond to the potential adverse effects from these risks.
In particular, this situation poses risks to our operations in some of our core countries. For example,
consumers and business customers could increasingly curtail their consumption of our services in an
atmosphere of continued economic distress and continued or increasing uncertainty. National austerity
measures could also have further negative effects on telecommunications consumption, caused by both
reduced government demand and declines in disposable income in the private sector. Our operating business
also faces the risks of unannounced tax increases or special taxes, particularly in our Southern and Eastern
European markets. These developments could, in turn, negatively impact our revenue development, including
in the future growth areas on which we plan to focus, and jeopardize the attainment of our growth targets,
such as those relating to data services in mobile telecommunications, or those relating to broadband products
and services.
Macroeconomic conditions in Greece and the fiscal position of the Republic of Greece have
deteriorated markedly, and this has had and could continue to have an adverse effect on our
business, results of operations, financial condition and prospects.
The economy of Greece, where we have substantial operations through our subsidiary Hellenic
Telecommunications Organization S.A., or OTE, has deteriorated markedly mainly as a result of the
deteriorating fiscal position of the Republic of Greece and the fiscal austerity measures being adopted in
response to the crisis. In addition, Greece has experienced economic contraction since 2010 and
unemployment has increased significantly. This situation has resulted in a material reduction of disposable
income across major parts of the Greek population, leading to a decline in demand for our services, and our
revenues from the broad public sector have decreased as well. OTE contributed EUR 3.5 billion or 6.0% of
our net revenue in 2011, down from EUR 3.9 billion, or 6.2%, in 2010. The impact of deteriorating
macroeconomic conditions in Greece, reductions in disposable income and the recent and potential future
developments with respect to the fiscal position of the Republic of Greece may continue to have an adverse
effect on our business and results of operations.
Because we operate in heavily regulated business environments, decisions that regulatory
authorities impose on us restrict flexibility in managing our business and may force us to offer
services to competitors, or reduce the prices we charge for our products and services, either of which
could have a material negative impact on our revenues, profits and market shares.
We are subject to strict regulation in all of our fixed-line and mobile markets in Europe and the United
States. Government agencies regularly intervene in the offerings and in the pricing of our fixed-line and mobile
products and services. Regulation can impede our ability to grow and to react to the initiatives of competitors
and technological change.
The 2009 reform package for the Regulatory Framework for Electronic Communications in the
European Union ("EU Framework") is currently being implemented by Member States. While the new rules
had to be transposed into the national laws of the 27 Member States by May 2011, the majority of the Member
States have failed to do so. Whether the revised regulatory framework will increase or decrease the regulatory
burden on us will depend on the manner in which revised directives are subsequently implemented in the EU
Member States, and how the revised regulatory framework will be applied by the respective National
Regulatory Authorities ("NRAs"). For example, the German Telecommunications Act
(Telekommunikationsgesetz) is being revised primarily to reflect the EU framework, revised to encourage

2

operators to invest in new high-speed networks and to include additional consumer protection regulations. The
legislative process is almost complete and the revised German Telecommunications Act is expected to be
effective by April 2012.
On September 20, 2010, the European Commission issued its Recommendation on regulated access
to Next-Generation Access Networks ("NGAs"), consisting of guidelines which NRAs must take into upmost
account when requiring market-dominant undertakings to grant network access. The aim is to harmonize
regulatory requirements throughout the European Union. The recommendation generally provides for
remedies to be imposed on operators with significant market power as well as obligations to provide access to
physical infrastructure including on a wholesale basis. Furthermore, in October 2011, the European
Commission launched two public consultations related to access for alternative operators to the fixed
telephone and broadband networks of established operators. One consultation concerns non-discriminatory
access for alternative operators to the infrastructure and services of dominant telecom operators. The second
concerns the way national regulators calculate prices that operators have to pay for this wholesale access
(cost-orientation remedies). Depending on further developments, access regulations that apply to copper
networks may also be applied to new fiber networks, possibly affecting the extent and timing of our NGA build-
out and causing a decrease in our revenues.
The German telecommunications regulatory framework implemented by the Federal Network Agency
(Bundesnetzagentur) has a particularly significant impact on our domestic business. So far, we have been
exempted from regulation on the basis of a loss of significant market power in markets of relatively minor
importance only, such as the market for fixed-line international calls.
Additionally, since we are offering mobile and fixed-line triple-play services (triple-play includes high-
speed Internet access, communications services and entertainment offerings), media regulation may become
increasingly important to our business. This regulation might restrict our ability to provide media services,
including the delivery of content, and could also result in additional costs for technical implementation
measures needed to comply with increased regulation.
Mobile Telecommunications Operations
Regulatory authorities supervise our mobile telecommunications operations in the countries in which
we operate. We expect a tightening of regulatory control in the area of mobile telecommunications, with a
further negative effect on pricing and revenues, for example as a result of further reductions in international
roaming charges for the wholesale and retail voice market, international data and SMS roaming charges, call
termination charges and possible access regulation in some markets. In Europe, NRAs and various EU bodies
have the power to regulate based on market investigations or reviews.
With respect to international roaming charges, an EU-wide regulation, valid until June 2012, is
presently in place and accompanied by transparency measures sets price ceilings for retail voice, retail
SMS and wholesale voice, SMS and data tariffs. The European Commission is currently planning new
measures to be implemented beyond 2012 with lower price ceilings supported by the slogan "roam like home",
an inclusion of retail data and structural measures to foster competition. This expansion of existing regulation
has an additional negative effect on our roaming revenues.
The regulation of mobile call termination charges in countries where we have mobile operations can
have a negative effect on revenues. Various reviews of call termination rates and court proceedings relating to
regulatory measures are pending in several of those markets. The European Commission intends to further
reduce termination rates significantly and has therefore issued a recommendation that defines details for the
calculation of termination rates by the NRAs. The recommendation was adopted in May 2009 and has to be
fully applied from 2013 at the latest. Any reductions in termination rates may have an adverse effect on the
profitability of our mobile telecommunications operations in Europe.
The Federal Network Agency began a 900/1800 MHz consultation on November 22, 2011. The
agency asked all interested companies for their future spectrum needs in these two bands, which are currently
part of the GSM licenses of the four German mobile network operators. The Federal Network Agency intends
to develop an overview by the end of 2013 of market needs in order to decide on the next steps for the future
use of the 900/1800 MHz spectrum. The new assignments will be effective from January 1, 2017. We
submitted our reply prior to the deadline for responses.
Our operations in the United States are regulated primarily by the Federal Communications
Commission ("FCC") and by various other federal, state and local governmental agencies. These
governmental agencies may also exercise jurisdiction over mobile telecommunications operators. The FCC is

3

continually considering whether to establish new rules and policies, many of which, if implemented, could
impose significant costs and burdens on our business. The most significant areas of concern include whether
the FCC makes available additional spectrum for next generation wireless offerings in a reasonable timeframe
and ensures that existing spectrum holdings remain free and clear of any radio interference.
The FCC passed a regulatory order for mobile and fixed-network broadband access for Internet
services on December 21, 2010. It is focused on ensuring transparency regarding network management
practices, performance and the commercial terms of broadband Internet access services, prohibiting the
blocking of access to lawful content by mobile and fixed-network broadband Internet access providers, and
prohibiting unreasonable content discrimination by providers of fixed-network broadband Internet access. In
addition, the regulator is allowing use-dependent pricing and requires that every provider of broadband
Internet access manages its network sensibly in the future and protects it against overloads and abuse.
In addition, many state and local governments regulate various aspects of wireless operations,
affecting our business practices and the carrier-customer relationship. In particular, consumer regulation at the
federal or state level can impact a variety of carrier practices in this area including, for example, early
termination fees, trial periods, billing practices and marketing. Any state or federal regulation could have a
potentially adverse effect on our mobile telecommunications business in the United States, as would any
failure to comply with applicable regulations. Some U.S. states have taken actions to regulate various aspects
of wireless operations including customer billing, termination of service arrangements and advertising. Any of
those agencies could adopt regulations or take other actions that could adversely affect our business. If we fail
to comply with applicable regulations, we may be subject to sanctions, which may have an adverse effect on
our mobile telecommunications business in the United States.
Fixed-Network Operations
We believe that, for the foreseeable future, the Federal Network Agency is likely to consider us a
provider with significant market power in various German markets for public voice telephony services in the
fixed-line network and in other markets, including most of those in which we held monopoly rights in the past.
Access and price regulation apply primarily to telecommunications services that are considered to involve an
operator with "significant market power". As a result, we expect that the strict regulatory provisions of the
German Telecommunications Act relating to providers with significant market power will continue to be applied
to our activities in those markets. Considering that in many markets our competitors are unlikely to gain
significant market power in the near future, we expect that we will have to compete in important markets with
providers not subject to these regulatory obligations. Therefore, these competitors may be expected to have
more flexibility than we have in terms of the types of services offered and customers served, pricing and the
granting of network access.
The Federal Network Agency has issued two decisions concerning the regulation of NGAs. On
September 17, 2010, the Federal Network Agency decided that very high-speed digital subscriber line
("VDSL") and fiber to the home ("FTTH") access forms part of the regulated wholesale regime for digital
subscriber lines ("DSL"). Ethernet based bitstream access will also be subject to regulation. In order to
implement the decision, we must submit an amended reference offer. Related tariffs will be subject to ex-post
price controls. In September 2010, the Federal Network Agency also published a draft decision concerning
access to the local loop. This draft confirms the existing scope of our obligations but in addition foresees the
expansion of regulation to include pure fiber-optic access to unbundled local loops ("ULLs"). FTTH wholesale
products will be subject to ex-post price controls. On October 3, 2011, the European Commission launched a
consultation on cost methodologies for access networks. The concept favored by the Commission is that the
regulated wholesale prices based on copper networks should be reduced if the regulated company does not
invest in FTTH. The extension of the scope of our obligations will make it easier for competitors to offer
products at our expense, which could have a negative impact on our revenue and results of operations. The
final decision will be published after this consultation is completed.
The Federal Network Agency approves rates for ULL lines for a duration of two years. The current
rates are valid until June 30, 2013. The level of the ULL rate is a decisive factor in the profitability of our
nationwide infrastructure in Germany. It also generates incentives and disincentives for the further expansion
of broadband, particularly the roll-out of new fiber-optic networks.
We are involved in a number of pending legal proceedings regarding decisions of the Federal Network
Agency that concern access charges relating to the local loop. The Federal Network Agency's rulings on the
ULL monthly charges from 1999 and on the ULL one-time charges from 2001 and 2002 have been revoked
with final and binding effect. The Federal Network Agency must now decide again on these charges. The
Federal Administrative Court has not formally stipulated preliminary rates with which the Federal Network

4

Agency has to agree, so it is generally not clear whether and to what extent rates will be changed. On
November 23, 2011, the Federal Administrative Court decided that the Federal Network Agency should have
some scope for discretion in determining the cost basis and may continue to set ULL rates on the basis of
current costs. The Federal Network Agency approved new one-time ULL rates for the period April 2002
through June 2003 in its decision dated January 19, 2011. Compared with the decision in 2002, the rates were
reduced by between 3% and 8% for the most important rates, which relate to the provision of customer data to
providers of telephone directory inquiry services and takeovers of existing lines, and between 11% and 15%
for termination rates. The rates decision applied only for plaintiffs who prevailed in the court case. This is
because, under the German Telecommunications Act in its 2002 version, the rates only applied to individual
agreements.
Our fixed-line subsidiaries in Southern and Eastern Europe are subject to regulatory provisions and
risks that are similar to those affecting our fixed-line operations in Germany. For example, we are designated
an operator with significant market power in most fixed-line markets in which we operate, including in
Hungary, Slovakia, Croatia and Greece. The business impact of increased regulation on our subsidiaries in
Southern and Eastern Europe will depend on the way in which NRAs use their powers, and the extent to
which our competitors take advantage of regulatory decisions designed to foster increased competition.
In Greece, risk exists in the area of infrastructure roll-out, including VDSL and FTTX (a broadband
network architecture that uses optical fiber as all or part of the local loop). The Greek government announced
an initiative to support a passive optical network across Greece that would provide open access to all fixed-
network providers and, as a result, increase competition. The impact of this development on OTE and the
related financial risk to us cannot be quantified at this point.
The revised Telecommunications Act includes a new article (§ 41a para. 1 of the German
Telecommunications Act, "TKG") that applies to all telecommunications-network providers and grants the
Federal Network Agency the authority to impose an ordinance specifying general requirements for non-
discriminatory data traffic and non-discriminatory access to content and applications. The German
government has discretion to issue such an ordinance, which will depend on ongoing public discussions on
net neutrality as well as the actual developments in the market. The Federal Network Agency has not to date
promulgated any regulations regarding net neutrality issued by the Federal Network Agency. However, new
regulations (§ 41a para. 2 TKG) allow the Federal Network Agency to define a minimum requirement of
service quality through technical guidelines, which might hinder the introduction of new services. The Federal
Network Agency has discretion to issue such technical guidelines.
We face intense competition in all areas of our business, which could lead to reduced prices
for our products and services and a decrease in market share in certain service areas, thereby
adversely affecting our revenues and net profit.
Germany
In Germany, fixed-line network voice telephony service revenues and prices have continued to
decline, primarily due to intense competition and adverse decisions imposed by the NRAs, and also due to
customers' ongoing substitution of mobile telecommunications and Voice over Internet Protocol ("VoIP")
services for fixed-line usage.
Due to competitive pressures from cable operators and fixed-line carriers, we continued to lose
market share in 2011. We expect a further increase in competition from cable operators, which are able to
provide telecommunications services without having to build out their own network or lease access to our
network. In the fixed-network broadband market, we have observed increasing shares of cable network
operators among new customers. These operators are, unlike us, able to provide private homes and smaller
companies throughout Germany with telecommunications products that require them neither to build out their
own networks nor to lease unbundled local loop lines from us.
Competitive pressure is also increasing from competitors that have traditionally operated outside the
telecommunications sector, such as major consumer electronics companies and Internet service providers.
Furthermore, the switch of mobile operators' focus from pure mobile services towards fixed-line offerings,
regulatory actions by the Federal Network Agency and the increasing quality and acceptance of VoIP services
will increase pressure on our market shares, revenues and margins.
Additional local and regional network operators are expanding their presence to include other major
cities and regions. In the future, we could face even fiercer competition and lose further market share if our
competitors were to combine their businesses.

5

Existing mobile substitution effects are intensified by the proliferation of Mobile Virtual Network
Operators ("MVNOs"). Reduced prices for mobile telecommunications services (e.g., on the basis of lower flat
rates without call-based charges and regulatory decisions regarding mobile telephony termination rates) could
further increase pricing pressure on our fixed-line services. Furthermore, mobile operators are increasingly
engaging in reselling DSL product bundles provided by other fixed-line operators, and this continues to have
an adverse effect on our fixed-line network revenues.
The German markets for Internet access and portal services, especially within the broadband market,
have been, and will continue to be, highly competitive and are increasingly saturated. Prices for broadband flat
rates have been steadily declining. Our future competitive position in the broadband/fixed-network business in
Germany will be affected by pricing, network speed and reliability, services offered, customer support and our
ability to be technologically adept and innovative. The regulatory environment can also exert a significant
influence on the level of competition. We expect that our competitors will continue to pursue new broadband
customers aggressively. In the market for portal services and content, competition is also intense due to low
barriers to entry. In addition, a weaker economy may increase pressure on our revenues and margins in these
markets. Furthermore, regulatory decisions have required us to offer to our competitors an IP bitstream
access product, which enables our competitors to expand their operations throughout Germany without
building their own infrastructure.
Part of the challenge in the fixed-network business in Germany continues to be the improvement of
our reputation for customer service while implementing cost-saving measures. If we do not continue to
improve our customer service sustainably, there is a risk that we might not stop our overall continuing loss of
fixed-network customers in the German market.
Competition in the German mobile telecommunications segment with established players such as
Vodafone, E-Plus and O2 is intense and can be expected to increase further in the future. Growing
competition is also fostered by resellers and "no-frills" operators, offering discount rates without significant
minimum-contract term obligations. With our "Congstar" brand, we also participate in this market.
In terms of the mobile share of "total telecommunications minutes", Germany consistently lags behind
the European average. Although the number of "mobile minutes" is still growing in Germany, the respective
growth rates have declined constantly since 2008. This makes it more difficult to compensate for price
declines by higher usage.
As the German market for mobile telecommunications has become increasingly saturated, the focus
of competition has been shifting from customer acquisition to customer retention, and increasing the quality
and value of existing customers. Accordingly, if we are unable to offer increased quality and better value to
our customers, our market share and revenues may not grow as we have anticipated in our plans.
Europe
Competition in the European mobile telecommunications markets run by our Europe operating
segment is intense and can be expected to increase in the future. In addition to facing intense competition, our
Southern and Eastern European companies face difficult economic conditions. Growing competition results, to
a different extent in each regional market, from the market entry of alternative carriers (such as cable TV
operators) or low cost carriers (such as MVNOs), technology shifts (such as IP-based telecommunications
networks) and from market consolidation.
If prices for mobile telecommunications services continue to decline through competition and/or
regulation more than anticipated and this decline is not compensated for by higher usage, planned objectives
may not be achieved. In addition, mobile network operators' expansion of product offerings into the fixed-line
sector may result in a competitive disadvantage for our mobile telecommunications operations in countries in
which we offer only mobile communications services. Moreover, technologies such as W-LAN, WiMax and
VoIP, which can be used with existing hardware and platforms, could drive voice and data traffic from mobile
networks, which could lead to significant price and revenue reductions.
Demand for telecommunications services is still being affected by unemployment, government
austerity packages and tax increases. In particular, as a result of the European sovereign debt crisis, the
economies of the Eurozone face the potential of continued economic stagnation and contraction. The
economic prospects of the countries most affected by the crisis, particularly Greece, are highly uncertain. In
addition, European countries outside the Eurozone, such as Croatia, Hungary and Romania, continue to be
affected by the crisis and face economic uncertainty. Any public fiscal measures taken in response to the
situation may have an adverse effect on our results. For example, in Hungary, the government approved an

6

act imposing a special telecommunications tax, levied on annual net sales based on electronic
telecommunications services.
As European markets have become increasingly saturated, the focus of competition has been shifting
from customer acquisition to customer retention, and increasing the quality and value of existing customers.
Accordingly, if we are unable to offer increased quality and better value to our customers, our market share
and revenues may not grow as we have anticipated in our plans.
United States
In the United States, each of T-Mobile USA's three main national competitors AT&T, Verizon
Wireless and Sprint/Nextel is significantly larger than T-Mobile USA. Their scale could afford them
significant structural and competitive advantages in this market. This situation presents T-Mobile USA with a
long-term challenge to compete effectively in terms of pricing, products, coverage and the introduction of new
technologies and services. For example, in 2011, all three of T-Mobile USA's major competitors introduced the
iPhone 4S, which is not currently offered by T-Mobile USA. Also, AT&T and Verizon continue to be better
positioned to leverage economies of scale with regard to capital investments and marketing messages.
Intense competition from various regional and other small national operators also exists in T-Mobile USA's
markets. Some of these competitors operate using alternative business models that have the potential to
negatively affect T-Mobile USA's ability to attract and retain customers, such as low-cost unlimited prepaid
offerings from regional carriers Leap Wireless, MetroPCS and Boost Mobile.
In addition to traditional competitors, the entrance and influence of manufacturers, service providers,
cable providers and other new market participants, could put further pressure on the wireless industry in
general and T-Mobile USA in particular.
The incumbent wireless industry is experiencing disruptive innovation on many fronts. For example,
Apple transformed the device market with the launch of the iPhone, Clearwire hopes to transform the market
with fixed mobile convergence and Google introduced its open-source Android operating system in 2008.
While smartphone use is expected to continue to grow, tablet sales have gained traction. Rapid penetration of
smartphones and tablets will require carriers to invest in device subsidization and network improvements.
Despite the continued difficult economic context, the wireless industry is faring better than many
industries (wireless spending is becoming less discretionary in the U.S.), but the industry is not immune from
the cost-reduction efforts of consumers and changes in consumer creditworthiness. As the overall drop in
customer growth intensifies, and price competition for contract customers becomes greater, comprehensive
coverage and quality as well as attractive "smartphone" offerings will be key to T-Mobile USA's sustained
commercial success. Further, adequate access to additional spectrum is essential for sustaining the 4G
deployment as well as to service the projected exponential growth in data consumption. For T-Mobile USA
and the market as a whole, there will continue to be considerable pressure toward consolidation.
Since T-Mobile USA is a significant contributor to our overall revenues, a further slowdown or decline
in the business of T-Mobile USA could have a material adverse effect on the attainment of the growth targets
and profitability of our Group as a whole in 2012.
Systems Solutions
Our Systems Solutions business is subject to risks associated with the general and regional
economies of its customers and the willingness and ability of its customers to invest in information and
communications technology services and products. The Information and Communications Technology ("ICT")
market is shaped by long sales cycles, severe competition and declining prices. The result is downward
pressure on revenues and margins, which has been exacerbated by the global economic crisis.
The ICT market in our Systems Solutions operating segment is also experiencing intense competition,
falling prices, restraint in the awarding of projects, and long sales cycles. Intense cost pressure in the private
sector and particularly in the public sector means that the balance between differentiation (softening of price
competition) and standardization (cost cutting) remains critical. This creates a potential risk of revenue losses
and declining margins for T-Systems.
Depending on the economic development and their impact on our customers in 2012, T-Systems will
continue to be affected. For example, cost-cutting programs and postponement or cancellation of investments
of our customers can have a negative impact on T-Systems' revenues and margins. In this business

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environment, further cost reductions will force T-Systems to rely on the development of lower cost near- and
off shore capacities in both IT Outsourcing and the System Integration business.
In addition, the international growth potential of T-Systems may be constrained by its limited brand
recognition in some national markets, at least compared to that of competitors who may be more established
there, particularly as this relates to maintaining and increasing business with multinational companies outside
of Germany. Additionally the relatively small size of some international T-Systems units may require
expensive additional management resources from Germany.
If T-Systems' focus on multinational customers and its service offerings, such as dynamic services or
cloud computing are not successful, T-Systems may lose market share to its competitors, suffer reduced
revenues and incur losses.
We may realize neither the expected level of demand for our products and services, nor the
expected level or timing of revenues generated by those products and services, as a result of lack of
market acceptance, technological change or delays from suppliers, which could adversely affect our
cash flows.
There is a risk that we will not succeed in making customers sufficiently aware of existing and future
value-added services or in creating customer acceptance of these services at the prices we would want to
charge. In addition, market acceptance for these new products and services could be negatively affected by
an unwillingness to pay for additional features. There is also a risk that we will not identify trends correctly, or
that we will not be able to bring new services to market as quickly or price-competitively as our competitors.
These risks exist, in particular, with respect to our anticipated future growth drivers in the mobile
telecommunications area, such as mobile data services or other advanced technologies (which are supported
by advanced "smartphone" products), and in the fixed-line telecommunications area, such as triple-play
services, which include telephone, Internet and television services. Ever-shorter innovation cycles in these
advanced technologies confront the telecommunications sector with the challenge of introducing new products
at increasingly shorter intervals.
Further, as a result of rapid technological progress, and the trend towards technological convergence,
there is a danger that new and established information and telecommunications technologies or products may
not only fail to complement one another, but in some cases may even substitute for one another. An example
of this is VoIP, a technology that is already established in the business customer market. VoIP has now
reached the consumer market as well and, as a technology that competes directly with traditional fixed-line
telephony services, VoIP has the potential to reduce further our market share and revenues in our fixed-line
business. The introduction of mobile handsets with VoIP functionality may also adversely affect our pricing
structures and market share in our mobile voice telephony business. If we do not appropriately anticipate the
demand for new technologies, and adapt our strategies and cost structures accordingly, we may be unable to
compete effectively, with the result that our business activities, financial condition and results may suffer.
Some of our investments (such as in new spectrum licenses) to develop future products and
services may involve substantial cash outlays with no certainty of market acceptance or regulatory
non-interference with license requirements.
There is a risk that the return on our investments, in particular in new spectrum licenses and network
infrastructure (e.g., for 4G services), may negatively deviate from our plans. In addition to the negative impact
on our cash flows, this could result in significant write-downs of the value of spectrum or other licenses or
other network-related investments.
Should we face a continuously deteriorating economic climate, we may decide, or be required, to
scale back capital expenditures. We believe that we have flexibility in terms of the amount and timing of our
capital expenditure program, but a lasting reduction in capital expenditure levels below certain thresholds
could affect our future growth, in particular in our mobile operations.
Failure to achieve our planned reduction and restructuring of personnel or our human
resources-related cost-savings goals could negatively affect our reputation and the achievement of
our financial objectives and profitability.
Staff restructuring within the Group in Germany continued in a socially responsible manner in 2011. It
was implemented essentially by means of voluntary redundancies, partial and early retirement, and
employment opportunities for civil servants and employees offered by Vivento, especially in the public sector.
We intend to continue to restructure our workforce as required. If it is not possible to implement the

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