T-Mobile Group with strong growth in 2005

  • Major increase in EBITDA, revenue and customers
  • T-Mobile with strong customer growth in core countries Germany, USA and UK
  • T-Mobile Germany defends market leadership and makes its mark in a tough market environment
  • T-Mobile USA: Most successful year in company history

The T-Mobile Group can look back on a highly successful financial year in 2005. T-Mobile reported major growth in net revenue, EBITDA and in its customer base. As per end of 2005, T-Mobile had 86.6 million customers, around 11 percent up on the 2004 financial year. Contract customers remained stable at 49 percent. T-Mobile USA layed a key role in customer growth, winning 4.4 million new customers to raise its customer base to a total of 21.7 million, equivalent to growth of 25 percent.

The T-Mobile Group reported double-digit growth in revenue and EBITDA in 2005 (revenue up 11 percent, EBITDA up 16 percent). End-of-year revenue amounted to EUR 29.5 billion, EBITDA to EUR 9.8 billion. Results from ordinary business activities totaled EUR 5.2 billion in 2005 (3.8 billion in 2004). The EBITDA margin increased 1.5 percentage points to its current level of 33.2 percent. T-Mobile recorded a 17-percent rise (EUR 6.2 billion) in cash contribution (EBITDA minus cash capex). Details on the national companies:

Germany
T-Mobile Germany defended its market leadership successfully in 2005 and made its mark in a tough market environment. 29.5 million customers (plus 2.1 million) at year-end translated into growth of 7.5 percent (2004: 4.3 percent), with the share of contract customers at 48.4 percent. Despite strong price pressure and regulatory influences, the EBITDA margin (41.8 percent) was sustained and actually increased slightly. This backs up the success of the "Save for Growth" strategy, which was initiated at the beginning of 2005. The minor decline in revenue (from EUR 8.7 to 8.6 billion) is attributable, above all, to a stronger focus on high-value customers and the resulting changes in policy for terminal equipment subsidies. This led to a drop in low-margin revenue from terminal equipment.
ARPU revenues were therefore more meaningful and increased by 1.3 percent to EUR 7.8 billion.

United States
T-Mobile USA succeeded in winning a record-breaking 4.4 million new customers (plus 25.3 percent), 1.4 million of them in the fourth quarter alone, taking its total up to 21.7 million customers. The company also reported major growth in revenue and EBITDA: revenue rose by 28 percent to EUR 11.9 billion while EBITDA increased by a massive 60 percent to EUR 3.3 billion. Cash contribution amounted to EUR 1.5 billion (not including the acquisition of the networks in California and Nevada).

United Kingdom
The financial year at T-Mobile UK featured strong growth in contract customers (plus 14.7 percent). The major efforts made by the company towards greater efficiency and value-based growth are now proving successful: with its current customer base at 17.2 million, T-Mobile UK grew by 9 percent. Whereas net growth in contract customers totaled 441,000 or 40 percent, net additions in the prepaid segment fell by 44 percent with growth at 1 million.
The tough market caused both revenue and EBITDA to drop slightly: from 4.3 to 4.2 billion and from1.4 to 1.3 billion.

The takeover of the mobile communications company O2 by Telefonica generated an indicator of the market price of T-Mobile UK for the impairment test. According to applicable accounting standards, this indication of market price must be given priority in the calculation of goodwill - and led to a non-cash impairment of EUR 1.9 billion of the goodwill of T-Mobile UK.

Other T-Mobile countries:
Despite the very tough competitive environment in Austria, T-Mobile Austria succeeded in asserting its position in 2005. Its customer base grew slightly by 2.3 percent to 2.1 million. As in all other T-Mobile countries, the focus here was again on high-income, high-value customers. EBITDA decreased by 6.3 percent to EUR 225 million. Revenue increased slightly from EUR 882 to 885 million. The far more meaningful ratio of service revenues rose by 1.7 percent to EUR 834 million.

T-Mobile Netherlands
In the Netherlands revenue increased by 1.7 percent to EUR 1.1 billion and EBITDA was up by 22.2 percent to EUR 176 million. The total number of customers increased 2.5 percent on 2004 to 2.3 million customers.

In the other T-Mobile countries, business also developed encouragingly. T-Mobile Czech Republic, for example, showed an increase in customer numbers by 6.3 percent to 4.6 million at year-end. T-Mobile Czech Republic reported double-digit growth in revenue, EBITDA and service revenue (revenue: plus 13.4 percent, now EUR 938 million; EBITDA: plus 12.6 percent, EUR 410 million; service revenue: plus 12.3 percent, EUR 868 million).

The T-Mobile subsidiaries in central and eastern Europe excelled with significant growth in service revenue and EBITDA: T-Mobile Croatia, service revenue: plus 17 percent; EBITDA: plus 23.3 percent; T-Mobile Slovakia, service revenue: plus 14.4 percent; EBITDA: plus 29.4 percent; T-Mobile Hungary, service revenue: plus 4.4 percent; EBITDA: plus 4.6 percent.

Key figures for the T-Mobile Group (incl. consolidated subsidiaries)
(Financial figures of T-Mobile including consolidation effect, unaudited)

Customers (million) 2005 financial year 2004 financial year Change in %6)
T-Mobile International1) 86.6 77.6 11.6
T-Mobile Germany 29.5 27.5 7.5
T-Mobile UK1) 17.2 15.7 9.1
T-Mobile Austria 2.1 2.0 2.3
T-Mobile  Czech Republic 4.6 4.4 6.3
T-Mobile Netherlands 2.3 2.3 2.5
T-Mobile USA 21.7 17.3 25.3
T-Mobile Hungary 4.2 4.0 4.0
T-Mobile Slovakia 2.0 1.9 5.6
T-Mobile Croatia 1.9 1.5 24.1
Other (Macedonia/Montenegro) 1.1 0.8 44.3

Net Revenues (euro million) 2005 financial year 2004 financial year Change in %
T-Mobile International 29,452 26,527 11.0
T-Mobile Germany5) 8,621 8,745 -1.4
T-Mobile UK5) 4,153 4,344 -4.4
T-Mobile Austria5) 885 882 0.3
T-Mobile  Czech Republic5) 938 827 13.4
T-Mobile Netherlands5) 1,064 1,046 1.7
T-Mobile USA5) 11,887 9,278 28.1
T-Mobile Hungary 1,090 1,049 3.9
T-Mobile Slovakia (04 PF) 378 332 13.8
T-Mobile Croatia 512 436 17.4
Other (Macedonia/Montenegro) 174 135 28.9

ARPU Revenues (euro million) 2005 financial year 2004 financial year Change in %
T-Mobile International 25,244 22,928 10.1
T-Mobile Germany5) 7,757 7,656 1.3
T-Mobile UK5) 3,538 3,709 -4.6
T-Mobile Austria5) 834 820 1.7
T-Mobile  Czech Republic5) 868 773 12.3
T-Mobile Netherlands5) 992 948 4.6
T-Mobile USA5) 9,524 7,765 22.7
T-Mobile Hungary 982 941 4.4
T-Mobile Slovakia 347 303 14.4
T-Mobile Croatia 475 406 17.0
Other (Macedonia/Montenegro) 164 121 35.5

Adjusted EBITDA (euro million)2,4) 2005 financial year 2004 financial year Change in %
T-Mobile International 9,772 8,399 16.3
T-Mobile Germany5) 3,602 3,640 -1.0
T-Mobile UK5) 1,303 1,380 -5.6
T-Mobile Austria5) 225 240 -6.3
T-Mobile  Czech Republic5) 410 364 12.6
T-Mobile Netherlands5) 176 144 22.2
T-Mobile USA5) 3,290 2,056 60.0
T-Mobile Hungary 432 413 4.6
T-Mobile Slovakia 159 123 29.4
T-Mobile Croatia 238 193 23.3
Other (Macedonia/Montenegro) 86 71 21.1

Adj.  EBITDA margin on net revenues in % 2005 full year 2004 full year Change in % pt
T-Mobile International 33.2 31.6 1.6
T-Mobile Germany5) 41.8 41.6 0.2
T-Mobile UK5) 31.4 31.8 -0.4
T-Mobile Austria5) 25.4 27.2 -1.8
T-Mobile  Czech Republic5) 43.7 44.0 -0.3
T-Mobile Netherlands5) 16.5 13.8 2.8
T-Mobile USA5) 27.7 22.2 5.5
T-Mobile Hungary 39.6 39.4 0.3
T-Mobile Slovakia 42.1 37.0 5.1
T-Mobile Croatia 46.5 44.3 2.2
Other (Macedonia/Montenegro) 49.4 52.6 -3.2

Blended ARPU (euro)3) 2005 financial year 2004 financial year
T-Mobile Germany 23 24
T-Mobile UK 28 29
T-Mobile Austria 34 34
T-Mobile Czech Republic 16 16
T-Mobile Netherlands 37 36
T-Mobile USA 41 42
T-Mobile Hungary 20 20
T-Mobile Slovakia 15 14
T-Mobile Croatia 24 24

SACs per gross add (euro) 2005 financial year 2004 financial year
T-Mobile Germany 93 101
T-Mobile UK 115 122
T-Mobile Austria 141 133
T-Mobile Czech Republic 30 25
T-Mobile Netherlands 164 180
T-Mobile USA 131 160
T-Mobile Hungary 31 42
T-Mobile Slovakia 1535 34
T-Mobile Croatia 60 72

Blended Churn (%) 2005 financial year 2004 financial year
T-Mobile Germany 1.5 1.5
T-Mobile UK 3.1 2.2
T-Mobile Austria 1.8 1.8
T-Mobile Czech Republic 1.1 1.0
T-Mobile Netherlands 3.1 2.4
T-Mobile USA 2.8 3.0
T-Mobile Hungary 1.5 1.3
T-Mobile Slovakia 1.9 1.4
T-Mobile Croatia 1.0 1.1

Notes:
1) Including Virgin Mobile
2) EBITDA: Results from ordinary business activities before net financial income/expense including income related to
subsidiaries, associated and related companies, amortization and depreciation, and before other taxes.
3) ARPU contains monthly service fee, as well as voice, non-voice and roaming revenues. In contrast to the reporting of some
competitors, visitor revenues are not included.
4) EBITDA adjusted for special factors.
5) These amounts relate to the companies' respective unconsolidated financial statements (single-entity financial statements
adjusted for uniform group accounting policies and reporting currency) without taking into consideration consolidation
effects.

Disclaimer
This document contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They include statements as to market potential and the planned T-Online merger, and the "Outlook 2006" statements at the end of this document. Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control, including those described in the sections "Forward-Looking Statements" and "Risk Factors" of the company's Form 20-F report filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom's workforce reduction initiative and the impact of other significant strategic or business initiatives, including acquisitions, dispositions and business combinations. In addition, stronger than expected competition, technological change, litigation and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom's actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its estimates or targets will be achieved. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information future events into account or otherwise. In addition to figures prepared in accordance with IAS/IFRS, Deutsche Telekom presents so-called non-GAAP financial performance measures, e.g., EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBT, adjusted net income, special influences, free cash flow, free cash flow (before purchase of network assets and spectrum in the US), leverage, net debt, net debt/adj. EBITDA, and the adjusted figures on the page titled "FY 2005 - Net Income". These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IAS/IFRS. Non-GAAP financial performance measures are not subject to IAS/IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For an explanation of some of these terms, please refer to "Reconciliation to pro-forma figures" under the "Publications' heading on Deutsche Telekom"s Investor Relations webpage at www.deutschetelekom.com.


 
About the Company

T-Mobile Czech Republic, a member of the international telecommunications group Deutsche Telekom, has almost 6.2 million customers, the number-one operator in the Czech market. T-Mobile is an integrated operator: in addition to telecommunications services, it offers comprehensive ICT solutions not only for companies, but also for other organizations and individuals. It provides outstanding services in the high-speed network, which was proved repeatedly by benchmark testing performed by umlaut (former P3) with Best-in-Test seal.

T-Mobile Czech Republic places emphasis on taking a responsible approach to the environment and society. It adheres to fair business practices, helps beneficial applications and services to see the light of day, supports non-profit organizations, small businesses and individuals, and lends a helping hand whenever crisis situations arise. The company’s employees serve as volunteers in many places across the entire Czech Republic.

More information about the company is available at www.t-mobile.cz, www.t-press.cz (the portal for journalists) and www.t-mobile.cz/pomahame (information on the company’s CSR activities).

Contact details of the press unit: press@t-press.cz.