Statement by the Board of Management on the expected development of the Group

We successfully continued our growth course again in 2018. We already set ourselves apart by having the best and most modern networks and we want to continue building on this technology leadership. Over the coming years, we will also focus more on convergent offers, in line with the expectations of our customers. This goes hand in hand with our Leading European Telco strategy – with the aim of becoming Europe’s leading telecommunications provider. This is closely related to our financial targets for the period up to 2021: As communicated at our Capital Markets Day in May 2018, we are aiming for the following compound annual growth rates (CAGR) for the period from 2017 to 2021:

• Revenue: 1 to 2 percent
• Adjusted EBITDA: 2 to 4 percent
• Free cash flow: approx. 10 percent

For 2019, we expect to post the following year-on-year growth trends, assuming a comparable consolidated group and constant exchange rates:

• Revenue is likely to increase again slightly in 2019.
• For 2019, we expect adjusted EBITDA AL (after leases) of around EUR 23.9 billion. Adjusted EBITDA in the reporting year came in at EUR 23.3 billion; on a like-for-like basis, i.e., adjusted for comparability with the EBITDA AL forecast for 2019, adjusted EBITDA stood at EUR 23.2 billion.
• Free cash flow AL (after leases) is expected to grow to around EUR 6.7 billion in 2019. Free cash flow in 2018 was EUR 6.2 billion; on a like-for-like basis, i.e., adjusted for comparability with the free cash flow AL forecast for 2019, free cash flow stood at EUR 6.0 billion.

Application of the IFRS 16 “Leases” accounting standard became mandatory for the first time as of January 1, 2019. This will impact in particular on EBITDA and free cash flow in the future. The planning for the coming years, and thus the forecast statements made in this section, already take this new financial reporting standard into account. However, the figures for the 2018 financial year have still been prepared in accordance with accounting standard IAS 17. To enable approximate comparability between the figures for the 2018 financial year and the forecasts for 2019 and beyond, the pro-forma figures and forecasts for EBITDA and free cash flow are based on the new “after leases” indicators. For further information on the new performance indicators, please refer to the section “Management of the Group”; for more details on the financial reporting standards, please refer to the section “Summary of accounting policies” in the notes to the consolidated financial statements.

¹ The forecasts contain forward-looking statements that reflect management’s current views with respect to future events. Words such as “assume,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “plan,” “project,” “should,” “want,” and similar expressions identify forward-looking statements. These forward-looking statements include statements on the expected development of revenue, EBIT, EBITDA after leases, adjusted EBITDA after leases, ROCE, cash capex, and free cash flow after leases. Such statements are subject to risks and uncertainties, such as an economic downturn in Europe or North America, changes in exchange and interest rates, the outcome of disputes in which Deutsche Telekom is involved, and competitive and regulatory developments. Some uncertainties or other imponderabilities that might influence Deutsche Telekom’s ability to achieve its objectives are described in the section “Risk and opportunity management,” of the combined management report, and the “Disclaimer,” at the end of the Annual Report. Should these or other uncertainties and imponderabilities materialize or the assumptions underlying any of these statements prove incorrect, the actual results may be materially different from those expressed or implied by such statements. We do not guarantee that our forward-looking statements will prove correct. The forward-looking statements presented here are based on the future structure of the Group, without regard to significant acquisitions, disposals, business combinations, or joint ventures that may arise at a later date. These statements are made with respect to conditions as of the date of this document’s publication. Without prejudice to existing obligations under capital market law, we do not intend or assume any obligation to update forward-looking statements.