Germany For information on changes resulting from the first-time application of the IFRS 16 “Leases” accounting standard, please refer to the section “Group organization, strategy, and management.” Customer Development (XLS:) Download thousands Mar. 31, 2019 Dec. 31, 2018 ChangeMar. 31, 2019/Dec. 31, 2018% Mar. 31, 2018 ChangeMar. 31, 2019/Mar. 31, 2018% Mobile customers 44,657 44,202 1.0 42,730 4.5 Contract customers 25,195 25,435 (0.9) 25,102 0.4 Prepay customers 19,462 18,767 3.7 17,628 10.4 Fixed-network lines 18,414 18,625 (1.1) 19,149 (3.8) Of which: retail IP-based 16,065 15,356 4.6 12,843 25.1 Retail broadband lines 13,608 13,561 0.3 13,357 1.9 Of which: optical fiber 7,609 7,236 5.2 6,232 22.1 Television (IPTV, satellite) 3,419 3,353 2.0 3,193 7.1 Unbundled local loop lines (ULLs) 5,050 5,236 (3.6) 5,846 (13.6) Wholesale broadband lines 6,975 6,722 3.8 5,993 16.4 Of which: optical fiber 5,285 4,970 6.3 4,135 27.8 Total In Germany we continue to be market leader both in terms of fixed-network and mobile revenues. This success is attributable to our high-performance networks. We offer best customer experience with multi-award-winning network quality – in the fixed network as in mobile communications and service – and with a broad product portfolio. Thanks to the sustained popularity of our convergent MagentaEINS offering, our MagentaEINS customer base totaled 4.4 million at the end of the first quarter of 2019. High demand for mobile rate plans with included data volumes resulted in an increase in the number of branded contract customers under the Telekom and congstar brands. Our initiatives in the automotive sector drove growth in the number of prepay customers. We made further headway with our IP transformation program, and by the end of the first quarter of 2019 had migrated 22.9 million retail and wholesale lines to IP, bringing the total migration level to 90 percent of all lines. We continued to see strong demand for our fiber-optic products. As of the end of the first quarter of 2019, the number of lines had increased to 12.9 million overall. In other words, we connected 688 thousand lines to our fiber-optic network in Germany in the first three months of 2019. With the progress made in fiber-optic rollout and vectoring technology, we also drove the marketing of higher bandwidths. Mobile communications We won a further 455 thousand mobile customers in the first quarter of 2019 compared with year-end 2018. Of these, a total of 132 thousand were contract customers under our Telekom and congstar brands. The number of mobile contract customers with resellers (service providers) decreased, primarily due to the volatile developments at some of our service providers. The number of prepay customers increased by 695 thousand. Fixed network Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of competitors, we are pursuing new paths in marketing. Our focus is on convergent offerings and their further development – for instance, MagentaTV with exclusive access to a wide range of additional content – as well as TV lines and fiber-optic lines. As a result, since the start of the year the number of broadband lines has grown by 47 thousand and the number of TV customers by 66 thousand. In the traditional fixed network, the number of lines decreased by 211 thousand. Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on IP technology and rate plan-specific bandwidths. MagentaZuhause Hybrid bundles fixed-network and mobile technology in a single router. To date, 490 thousand customers, primarily based in rural areas, have selected this innovative product. Wholesale At the end of the first quarter of 2019, fiber-optic lines accounted for 44.0 percent of all lines – 2.4 percentage points higher than at the end of 2018. This accelerated growth was driven largely by high demand for our contingent model. The number of unbundled local loop lines decreased by 186 thousand or 3.6 percent compared with the end of the prior year. This is due first to the move to higher-quality fiber-optic lines, and second to retail customers switching to cable operators. In addition, wholesale customers are migrating their retail customers to their own fiber-optic lines. In wholesale, the number of lines stood at 12 million at the end of the first quarter of 2019. Development of operations (XLS:) Download millions of € Q1 2019 Q1 2018 Change Change % FY 2018 a Prior-year comparatives were calculated on a pro-forma basis for the redefined key performance indicators resulting from the introduction of the IFRS 16 accounting standard. TOTAL REVENUE 5,357 5,325 32 0.6 21,700 Consumers 2,833 2,813 20 0.7 11,543 Business Customers 1,510 1,491 19 1.3 6,082 Wholesale 931 932 (1) (0.1) 3,720 Other 83 90 (7) (7.8) 355 Profit from operations (EBIT) 863 935 (72) (7.7) 3,969 EBIT margin % 16.1 17.6 18.3 Depreciation, amortization and impairment losses (1,083) (980) (103) (10.5) (4,042) EBITDA 1,946 1,915 31 1.6 8,012 EBITDA ALa 1,940 1,891 49 2.6 7,918 Special factors affecting EBITDA (168) (167) (1) (0.6) (598) EBITDA (adjusted for special factors) 2,114 2,082 32 1.5 8,610 EBITDA AL (ADJUSTED FOR SPECIAL FACTORS)a 2,108 2,058 50 2.4 8,516 EBITDA AL margin (adjusted for special factors)a % 39.4 38.6 39.2 CASH CAPEX (1,216) (1,145) (71) (6.2) (4,240) Total revenue Total revenue was up slightly year-on-year by 0.6 percent. In mobile business, revenue increased by 2.4 percent. Higher IT and broadband revenues had a positive effect on fixed-network business. This was sufficient to almost completely offset the year-on-year decrease in fixed-network revenue (primarily from voice components). Revenue from Consumers grew by 0.7 percent year-on-year. Volume- driven declines in revenue from voice components continue to strongly impact on traditional fixed-network business. By contrast, revenue from broadband business increased. Revenue from Business Customers increased by 1.3 percent. Mobile revenue increased by 1.5 percent and IT revenue by 36.9 percent compared with the prior-year quarter. In the fixed network, by contrast, a decline was recorded in traditional voice telephony, due largely to the increasing number of customers moving to flat-rate plans in connection with the migration to IP. Wholesale revenue in the first quarter of 2019 remained on a par with the prior-year quarter due to the revenue contributions from our contingent model. EBITDA AL, adjusted EBITDA AL EBITDA AL amounted to EUR 1,940 million in the first quarter of 2019, an increase of 2.6 percent against the prior-year quarter. This was attributable largely to reduced personnel costs – mainly as a result of the lower headcount – and the successful implementation of further efficiency and digitalization initiatives. EBITDA AL adjusted for special factors increased by 2.4 percent to EUR 2,108 million year-on-year due to the reasons mentioned. Our adjusted EBITDA AL margin increased to 39.4 percent, up from 38.6 percent in the prior-year quarter. EBIT Profit from operations decreased by 7.7 percent year-on-year to EUR 863 million due to higher depreciation, amortization and impairment losses on account of sustained high investments in our network infrastructure. Cash capex Cash capex increased by 6.2 percent compared with the first quarter of 2018. As part of our integrated network strategy, we again made significant investments in the broadband and fiber-optic rollout, our IP transformation, and our mobile infrastructure. schließen Prepay/prepaid In contrast to postpay contracts, prepay communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations. schließen IP - Internet Protocol Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications. schließen Retail The sale of goods and services to end users, as opposed to resale or wholesale. schließen Vectoring Vectoring is a noise-canceling technology that removes the electro-magnetic interference between lines, enabling higher bit rates. However, in order to cancel noise, the operator must have control over all lines. This means that other operators cannot install their own technology at the cable distribution boxes. schließen Mobile customers In the combined management report, one mobile communications card corresponds to one customer. The totals were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown (see also SIM card). schließen Fiber-optic lines Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH). schließen Router A coupling element that connects two or more sub-networks. Routers can also extend the boundaries of a network, monitor data traffic, and block any faulty data packets. schließen Contingent model Contract concluded over a long period of time with defined advance payment and minimum purchase requirement. In return, the resellers pay a reduced monthly charge for VDSL. This allows them to put together interesting offers for their own consumers without having to invest in fiber-optic lines of their own. This improves the utilization of Telekom Deutschland GmbH’s existing VDSL network. The current “contingent model” is being developed further to reflect the network build-out in terms of availability and bandwidth. schließen ULL - Unbundled Local Loop Competitors whose own networks do not reach into customers’ premises can rent unbundled local loop lines from Deutsche Telekom. Their networks end at the local exchanges. The ULL bridges the distance between the local exchange and the termination point on the customer’s premises or in their home, so it is also known as the “last mile.” schließen Fiber-optic lines Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH). schließen IP - Internet Protocol Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.