DT Reports Q4, Full YearDT Reports Q4, Full Year

BONN, Germany --

Two contrasting developments shaped Deutsche Telekom's operations in the 2006 financial year: intense competition together with a major drop in prices on the domestic market and further growth in international business. Overall, net revenue increased by 2.9 percent year-on-year to EUR 61.3 billion. Based on adjusted net profit of EUR 3.9 billion and free cash flow (excluding the investment in Mobile Communications spectrum in the United States) of EUR 5.7 billion, the Board of Management and the Supervisory Board will propose a dividend of EUR 0.72 per share to the shareholders' meeting on May 3, 2007.

While domestic revenue declined by around EUR 1.7 billion or 5.0 percent year-on-year to EUR 32.5 billion in 2006, revenue generated outside Germany increased by EUR 3.5 billion or 13.6 percent to EUR 28.9 billion. International business therefore generated 47.1 percent of the Group's net revenue, compared with 42.7 percent in 2005.

The positive development of revenue is attributable to the continued customer growth in the U.S. mobile business, where T-Mobile USA passed the 25 million customer mark at the end of the year, and to the first-time consolidation of the revenues of tele.ring (from April 28, 2006), PTC (from November 1, 2006), and gedas (from March 31, 2006). Companies, which were consolidated for the first time, contributed EUR 1.2 billion to revenue in 2006.

EBITDA adjusted for special factors decreased from EUR 20.7 billion in the prior year to EUR 19.4 billion in 2006, in line with guidance. This decline was primarily a result of the weaker development of revenue in Germany and of higher customer acquisition costs.

The Group's reported EBITDA decreased by around EUR 3.8 billion year-on-year, mainly as the result of special factors, to EUR 16.3 billion. Special factors had a negative impact of around EUR 3.1 billion on EBITDA. Expenses for staff-related measures accounted for approximately EUR 2.8 billion of the special factors.

Net profit adjusted for special factors amounted to EUR 3.9 billion compared with EUR 4.7 billion in the previous year. Unadjusted net profit decreased from EUR 5.6 billion to EUR 3.2 billion as a consequence of the decline in EBITDA and the year-on-year increase in the loss from financial activities.

Free cash flow amounted to EUR 2.4 billion above all due to capital expenditure in the United States. Excluding the acquisition of spectrum in the United States (FCC licenses) that led to a cash outflow of EUR 3.3 billion, free cash flow totaled EUR 5.7 billion and was therefore higher than the guidance of around EUR 5 billion.

Deutsche Telekom AG (NYSE: DT)