DT Revises Outlook

BONN, Germany --

Deutsche Telekom sees itself confirmed by the operational development in the fourth quarter in terms of the alignment of the German business. The market position, achieved by the new tariffs, will be strengthened and expanded beyond 2007 by additional measures in service and marketing.

Therefore Deutsche Telekom has adjusted its expectation for group revenue and adjusted EBITDA for 2007 in accordance with the extremely tough domestic competitive environment and the recent development in foreign exchange rates. In terms of adjusted EBITDA the expectation is now 19.0 billion Euros, compared to the previous expectation of 19.7 to 20.2 billion Euros. In terms of group revenue, a moderate increase is expected for 2007. Free cash flow is expected to be at the same level as reached in 2006.

For 2006, based on a preliminary assessment, the Board of Management expects to meet the expectations for group adjusted EBITDA and free cash flow. In terms of adjusted EBITDA, an expectation of 19.2 to 19.7 billion Euros has been communicated. With at least 5.5 billion Euros free cash flow (prior to spectrum capex in the U.S.) is expected to exceed the guidance of 5 billion Euros. Group revenue of 61.3 billion according to preliminary results is slightly below the low end of the guidance of 61.5 to 62.1 billion Euros. On the basis of this assessment the Board of Management continues to plan to recommend to the Supervisory Board the payment of a dividend of at least the prior year’s level of 72 Eurocents per share.

With regard to the domestic business in 2007 Deutsche Telekom assumes a significantly changed assessment of the market in terms of competitive and pricing development in the fixed network business in particular in the strategic business area Broadband/Fixed Network. In 2007 T-Com will continue to play an active role in the expected continued tough pricing competition, as already shown with the 3x3 tariffs introduced in September 2006. In addition T-Com’s position in terms of new customer acquisition and customer loyalty with be strengthened with significantly increased expenditures for service and marketing.

Deutsche Telekom AG (NYSE: DT)