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Mergers - Acquisitions - Takeovers / Deutsche Telekom and T-Online Agree On Exchange Ratio

Disclosure announcement transmitted by euro adhoc.
  The issuer is responsible for the content of this announcement.
08.03.2005
Ad hoc Release of Deutsche Telekom AG according to § 15 WpHG
Bonn, March 8, 2005
Deutsche Telekom and T-Online Agree On Exchange Ratio
Deutsche Telekom and T-Online have today reached a definitive 
agreement regarding the exchange ratio in connection with the 
planned merger of T-Online International AG into Deutsche 
Telekom AG. Accordingly, T-Online shareholders will receive 
0.52 Deutsche Telekom shares for one T-Online share, i.e. 
13 Deutsche Telekom shares for 25 T-Online shares.
The exchange ratio was determined on the basis of the company 
valuations conducted by Deutsche Telekom and T-Online, with the
assistance of KPMG and Warth & Klein, who were mandated by 
Deutsche Telekom and T-Online, respectively, to support the 
preparation of the company valuations on the basis of the 
applicable discounted earnings methodology (Ertragswertverfahren).
The equity value (Unternehmenswert), as determined in accordance 
with the draft of the new version of the valuation standards 
issued by the Institut der Wirtschaftspruefer in Deutschland e.V.
(IDW ES1 neue Fassung), amounts to EUR 28.31 per share for Deutsche
Telekom, and to EUR 14.71 per share for T-Online.
The equity values of both Deutsche Telekom and T-Online are based
on the most recent medium- and long-term business plans, as 
prepared by Deutsche Telekom's and T-Online's Management Boards,
as well as on the audited consolidated group balance sheets for 
Deutsche Telekom and T-Online as of 31 December 2004. The 
following table sets forth some of the key valuation parameters
and planning assumptions used to establish the equity values of 
Deutsche Telekom and T-Online.
Overview of Key Assumptions for the Analysis
Key Assumptions
Deutsche Telekom         T-Online
                             Group                    Group
Annual discount rates used 
(after typified share-
holder income tax, before 
growth rate deduction)         7.57 - 8.55 %      9.35 - 9.42 %
Risk-free rate before 
typified shareholder 
income tax                       5.0 %                 5.0 %
Beta factor unlevered            0.72                  1.10
Market risk premium 
after typified share-
holder income tax                5.5 %                 5.5 %
Typified shareholder income 
tax rate                         35%                    35%
Key figures forecast period 2005-2014E
Sales 2005E / 2014E in 
billion EUR                       61.1 / 84.8          2.5 / 10.3
EBITDA 2005E / 2014E in 
billion EUR                       20.8 / 29.7           0.3 / 2.4
EBT 2005E / 2014E in 
billion EUR                        7.6 / 19.7           0.2 / 2.4
Group net income 2005E / 2014E 
in billion EUR                     4.9 / 11.5           0.1 / 1.5
Dividend payout ratio 
2005E / 2014E                     53 % / 50 %          39 % / 37 %
Typified shareholder income
tax rate for dividend 
payments                              17.5 %               17.5 %
Debt to equity ratio used 
2005E / 2014E                     44 % / 13 %           1 % / 1 %
Terminal value assumptions 2015 onwards             
EBITDA in billion EUR                30.5                  2.5
EBT in billion EUR                   19.3                  2.5
Group net income in 
billion EUR                          11.2                  1.5
Debt to equity ratio                 12 %                  1 %
Perpetuity growth rate                2.0 %                3.5 %
End of Ad hoc Release
The parties expect that the merger agreement will be notarized in 
the course of today. The merger agreement and the joint merger 
report of the Management Boards of Deutsche Telekom and of 
T-Online, including the detailed planning assumptions and company
valuations of both Deutsche Telekom and T-Online, will be 
available online at www.deutschetelekom.com/mergerdocuments
shortly.
The shareholders of T-Online and, if required, Deutsche Telekom 
will vote on the merger agreement at the annual general meetings 
at the end of April 2005. As of the calling of the annual general 
meetings to vote on the merger, the merger agreement, the joint
merger report and the merger audit report of 
Ebner, Stolz & Partner, the independent court-appointed auditor, 
as well as other documents as required by law will be available 
for inspection and copies will be sent to the shareholders of 
Deutsche Telekom and T-Online upon their request.
Important disclaimer
The calculation of a company valuation on the basis of the 
discounted earnings methodology (Ertragswertmethode) is a highly
complex process and is not necessarily susceptible to partial 
analysis or summary description. The analyses performed by the 
management boards with the assistance of KPMG and Warth & Klein 
are not necessarily indicative of future results or actual values
derived in accordance with other valuation methodologies, which
may be significantly more or less favorable than those expressed 
in this ad hoc release. These analyses involved numerous 
judgments and assumptions with regard to industry performance, 
general business, economic, competitive, market and financial 
conditions, many of which are beyond the control of the companies,
as well as judgments and assumptions regarding "risk-free rates",
"beta factors", "market risk premia" and "typified shareholder 
income tax rates", "dividend payout rates", "debt to equity 
ratios" and "terminal values",  all of which involved the exercise 
of discretion on the part of management. Further information 
regarding the calculation of the company valuations will be 
provided in the merger report and merger auditor's report described
above.
This ad hoc release contains forward-looking statements within 
the meaning of the U.S. Private Securities Litigation Reform Act 
of 1995. It is important to note that Deutsche Telekom's or 
T-Online's actual results could differ materially from the 
results anticipated or projected in any such forward-looking 
statements, based on a number of important factors. Deutsche 
Telekom's filings with the U.S. Securities and Exchange Commission
 contain cautionary statements identifying important factors 
affecting such forward-looking statements, including certain 
risks and uncertainties that could cause actual results to differ
 materially from projections contained in any forward-looking 
statements made by the company. Neither Deutsche Telekom nor 
T-Online undertakes any responsibility to update such 
forward-looking statements in light of future events or 
developments.
The statements on the company valuations on the basis of the 
discounted earnings methodology (IDW ES 1 new version) do not 
constitute a forecast or assumption of the future development 
of the market prices of shares of Deutsche Telekom or T-Online.
You are advised to also read the U.S. prospectus regarding the 
business combination transaction referenced in these materials, 
when it becomes available, because it will contain important 
information. Deutsche Telekom has filed a preliminary prospectus
with the Securities and Exchange Commission. You may obtain a 
free copy of the preliminary prospectus or the final prospectus
(when available) and other related documents filed by Deutsche 
Telekom AG at the Commission's website at www.sec.gov , at the 
SEC's public reference room located at 450 Fifth Street, NW, 
Washington D.C. 20549 or at one of the SEC's other public 
reference rooms in New York, New York and Chicago, Illinois. 
Please call the SEC at 1-800-SEC-0330 for further information 
on the public reference rooms. The preliminary prospectus, the 
final prospectus (when available) and the other related 
documents may also be obtained by contacting Deutsche 
Telekom AG, Attention: Investor Relations, 
140 Friedrich-Ebert-Allee, 53113 Bonn, Germany.
end of announcement                    euro adhoc 08.03.2005 14:01:00 

Further inquiry note:

Hans Ehnert
Leiter Auslandspresse
Tel.: +49(0)228-181-94310
E-Mail: hans.ehnert@teleom.de

Branche: Telecommunications Services
ISIN: DE0005557508
WKN: 555750
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