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Deutsche Telekom AG

euro adhoc: Deutsche Telekom AG
Quarterly or Semiannual Financial Statements
1. Quarter 2005: Deutsche Telekom pushes ahead with profitable growth

Disclosure announcement transmitted by euro adhoc.
  The issuer is responsible for the content of this announcement.
12.05.2005
1. Quarter 2005: Deutsche Telekom pushes ahead with profitable growth
- Net revenue increased by 3.5 percent year-on-year, from EUR 13.9 
   billion to EUR 14.4 billion.
 - Group EBITDA up 6.3 percent, from EUR 4.6 billion to EUR 4.9
   billion compared with prior-year quarter; adjusted for special 
   factors, the increase was 5.2 percent, from EUR 4.7 billion to 
   EUR 4.9 billion.
 - Profit before income taxes up 35.8 percent, from EUR 1.2 billion 
   to EUR 1.6 billion year-on-year; adjusted for special factors, 
   the increase was 28.3 percent, from EUR 1.3 billion to 
   EUR 1.6 billion.
 - Net profit grew by around 60 percent, from EUR 0.6 billion to
   EUR 1.0 billion; adjusted for special factors, the increase 
   was approximately 45 percent, from EUR 0.7 billion to 
   EUR 1.0 billion.
 - Number of mobile subscribers rose by a further 1.5 million since
   the end of last year, around 1.0 million recorded at T-Mobile USA.
 - Strong growth in broadband lines: 0.6 million new additions since 
   the end of last year, total number of DSL subscribers to 
   6.7 million.
Group Deutsche Telekom (According to IFRS, comparatives restated) 
                               Q1 2005    Q1 2004    Change     FY
                                                       in %    2004
in mio. EUR
Net revenue                     14,376    13,890       3.5    57,360
- Domestic                       8,599     8,511       1.0    34,748
- International                  5,777     5,379       7.4    22,612
Profit before  
income taxes                     1,619     1,192       35.8    3,518
Adjusted profit 
before income taxes              1,618     1,261       28.3    6,225
Net profit                       1,010       632       59.8    1,564
EBITDA excluding
special factors                  4,918     4,675        5.2    19,617
EBITDA                           4,898     4,606        6.3    19,398
Net cash from 
operating activities             2,176     4,304      (49.4)   16,720
Free Cash-Flow 
before dividend paym.            (915)     2,952       n.a.    10,311
Investments in 
property, plant and 
equipment and 
intangible assets  
(excluding Goodwill)             3,091     1,352       n.a.    6,410 
Net debt at
balance sheet date               42,635     48,664     (12.4)  39,543
Number of  employees
at balance sheet date          243,784     248,153    (0.4)   244,645
Deutsche Telekom continued to grow in the first quarter of 2005, 
Mainly as a result of the positive development of international 
business and the continued high dynamics of broadband business. 
Net revenue in the Group increased by 3.5 percent, from 
EUR 13.9 billion in the prior-year quarter to EUR 14.4 billion. 
While revenue in Germany was slightly above the level of the previous
year at EUR 8.6 billion, revenue generated outside Germany
rose considerably by 7.4 percent to EUR 5.8 billion. As a result,
Deutsche Telekom generated around 40 percent of its revenue in the 
first quarter of 2005 abroad. Adjusted Group EBITDA improved 
by 5.2 percent to EUR 4.9 billion. Adjusted profit before income 
taxes increased by 28.3 percent to EUR 1.6 billion. Adjusted net 
profit rose by 45 percent to EUR 1.0 billion; in the first quarter 
of the previous financial year, it was just EUR 691 million.
Revenue growth outside Germany was driven primarily by T-Mobile USA.
The number of mobile customers in the United States increased 
by 957,000 net since the end of 2004 to a total of 18.3 million 
at the end of March. Revenue in the Broadband/Fixed Network segment
decreased; however, the decline in the loss of market share in the 
local and national long-distance markets slowed down. Marked growth 
was recorded in this strategic business area in terms of broadband 
lines in Germany: The number of broadband lines in operation 
increased by 581,000 to 6.4 million in the first quarter. The 
Business Customers segment recorded an increase in revenues from 
internationally operating key account customers and public 
institutions served by T-Systems Enterprise Services.
The EUR 243 million improvement in adjusted EBITDA, from 
EUR 4.7 billion to EUR 4.9 billion in the first quarter of 2005, 
was mainly generated by the Mobile Communications business area. 
Adjusted EBITDA from Mobile Communications increased by 15.6 percent 
to EUR 2.1 billion as a result of efficiency increases and economies
of scale created by the growing customer base. This also compensated 
for the 2.9-percent decrease in adjusted EBITDA in Broadband/Fixed 
Network to EUR 2.5 billion, which was caused primarily by 
competition-driven revenue losses in the traditional fixed-network 
business that could not be fully offset by cost savings. Adjusted 
EBITDA in the Business Customers segment increased from 
EUR 394 million in the prior-year quarter to EUR 396 million. The 
Group's EBITDA in the first quarter of 2005 was impacted by special
factors of EUR 20 million relating to severance and voluntary 
redundancy payments and restructuring expenses.
Profit before income taxes increased by 35.8 percent from 
EUR 1.2 billion to EUR 1.6 billion. This improvement was mainly 
driven by a decrease of EUR 503 million in net financial expense 
in the first quarter of 2005 to EUR 721 million. This, in turn, was 
mainly the result of lower interest expenses. Net debt decreased 
by EUR 6.0 billion year-on-year to EUR 42.6 billion. Compared with 
the end of 2004, however, net debt rose by EUR 3.1 billion due to 
payments for network infrastructure in the United States
and for measures relating to the planned merger of T-Online 
International AG into Deutsche Telekom.
Net profit increased to EUR 1.0 billion in the first quarter of 
2005, representing a year-on-year improvement of around 60 percent 
in Deutsche Telekom's net profit. This considerable growth is mainly 
attributable to the positive development of profit before income
taxes. Net profit in the first quarter of 2005 was impacted by
special factors of EUR 8 million compared with EUR -59 million in the
same period last year. Adjusted net profit increased by 45.0 percent
to EUR 1.0 billion.
Outlook
In 2005, Deutsche Telekom continues to expect adjusted EBITDA to be 
between EUR 20.7billion and EUR 21.0 billion. The Group plans capital
expenditures between EUR 7.5 billion and EUR 8.0 billion and expects 
free cash flow to be in the same order of magnitude. Based on these 
and already communicated additional cash outflows planned for 2005 
Deutsche Telekom does not expect the ratio of net debt to adjusted 
EBITDA to change significantly for the full year.
The future development of dividends will be based on the following 
Key factors: 
- The dividend for 2004 is the guideline for future dividends.
- Deutsche Telekom wants be able to continue offering its 
  shareholders an attractive dividend in the future.
- Future dividends will be determined by the development of the 
  profit generated by Deutsche Telekom's activities.
This release contains forward-looking statements that reflect the
current views of the Deutsche Telekom management with respect
to future events. Forward-looking statements are based on current 
plans, estimates and projections, and therefore too much reliance 
should not be placed on them. 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 Form 20-F submitted to the U.S. Securities and 
Exchange Commission. 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 does not assume any obligation to 
update forward-looking statements to take new information 
or future events into account. In addition to the figures shown
in accordance with IFRS, Deutsche Telekom also shows so-called 
pro forma figures, e.g., EBITDA, adjusted EBITDA, net debt, and 
free cash flow. These pro forma financial measures should be 
considered in addition to, but not as a substitute for, the 
information prepared in accordance with IFS. For a definition of 
these pro forma figures, please refer to the explanations under 
"Reconciliation to pro forma figures" on Deutsche Telekom's Investor
Relations website at www.deutschetelekom.com.
This release contains financial information that has been prepared 
In accordance with International Financial Reporting Standards, or 
"IFRS," and on the basis of the new strategic business areas. The 
IFRS financial information contained in this report was prepared 
on the basis of the assumption that, with the exceptions of IAS 39 
"Financial Instruments: Recognition and Measurement" and IFRIC 3 
"Emission Rights," all existing standards and interpretations that 
have been issued by the International Accounting Standards Board 
(IASB) and the International Financial Reporting Interpretations 
Committee (IFRIC) will be fully endorsed by the EU. The accounting 
policy for financial instruments takes into account the proposed EU 
revisions to IAS 39 and complies with the amended IAS 39. IFRIC 3 
is not relevant for Deutsche Telekom. Subject to EU endorsement of 
outstanding standards and no further changes from the IASB, the 
information presented here is expected to form the basis for
reporting Deutsche Telekom's financial results for 2005, and for
subsequent reporting periods. However, Deutsche Telekom cannot assure
you that there will not be material changes in IFRS between the date
of this Interim Report and the first date on which Deutsche Telekom
is required to publish financial statements for 2005, 2004 or 2003
under IFRS.
end of announcement                    euro adhoc 12.05.2005 06:33:00 

Further inquiry note:

Andreas Leigers
Leiter Finanzkommunikation
Tel.: +49(0)228-181-94340
E-Mail: andreas.leigers@telekom.de

Branche: Telecommunications Services
ISIN: DE0005557508
WKN: 555750
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