Dear shareholders,

Deutsche Telekom stands for stability and reliability in troubled times. While the financial and economic crisis left many companies and industries facing considerable volatility, our shareholders can still count on predictable, solid business results. We increased our revenue slightly in 2010 to EUR 62.4 billion – after adjustment for our UK operations, which were transferred to a joint venture “Everything Everywhere” in April 2010. At EUR 6.5 billion, free cash flow was higher than the EUR 6.2 billion we had forecasted. With regard to adjusted EBITDA, we reached our target for the year of EUR 19.5 billion.

And all this in spite of the fact that the general conditions were often less than optimal. Our business continues to be marked by intense pressure with regard to competition and prices. Also, regulatory decisions lead to shrinking revenues in many of Deutsche Telekom’s core countries. Finally, unforeseen special taxes put a strain on results in some countries in Eastern Europe. We will have to continue to live with such outside influences. This is why a disciplined cost management will remain without alternative. Therefore we are continuing our successful Save for Service efficiency enhancement program.

To continue to be successful in the future, we must not only keep costs under control, but we also have to successfully develop growth initiatives and innovations. “Fix – Transform – Innovate” is our strategy for the next years. It is our response to the decisive trends in our industry: Data will flow in ever-increasing volumes and speeds through the networks. The Internet is becoming increasingly mobile.

For us, this means two different things. The operation of infrastructure and IT will remain the bedrock of our business. At the same time, we are focusing on new growth areas: the mobile Internet and the connected home, ICT solutions for corporate customers, our own online services, and intelligent network solutions for other industries, such as the health sector. We aim to increase our revenue from all of these growth areas by 2015 to approximately EUR 29 billion. In the long term, Deutsche Telekom shall again be on the level of the general economic growth. In view of the plunge in the former monopoly business, this will not be an easy effort. Therefore, a major transformation of our company is required. For that, we are concentrating on five strategic action areas: