Ad-hoc | 10 March 2004 06:27

Ad hoc notification of Deutsche Telekom English part 1

Ad-hoc-announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Ad hoc notification of Deutsche Telekom AG, part 1 Deutsche Telekom achieves turnaround – Net revenue increased in 2003 by EUR 2.1 billion year-on-year to EUR 55.8 billion – Net debt reduced by EUR 14.5 billion to EUR 46.6 billion – Adjusted Group EBITDA increased to EUR 18.3 billion, EUR 2 billion higher than in previous year – Free cash flow before dividend increased by over EUR 3.5 billion to EUR 8.3 billion – Net income of EUR 1.3 billion after a net loss of EUR 24.6 billion in 2002 – T-Com increases adjusted EBITDA from EUR 10.3 billion to EUR 10.4 billion – T-Mobile continues its strong profitable growth trend – T-Systems improves EBITDA despite negative economic influences – T-Online triples EBITDA Overview of selected key figures millions of EUR FY/03 FY/02 change % Net revenue 55,838 53,689 4.0 Net income/loss 1,253 -24,587 n.a. EBITDA 18,475 16,116 14.6 EBITDA adjusted to 18,288 16,314 12.1 exclude special factors Free cash flow before dividend 8,285 4,838 71.2 Investments in property, plant, and 6,234 7,928 -21.4 equipment and intangible assets Net debt 46,576 61,106 -23.8 Fourth quarter of 2003 millions of EUR Q4 2003 Q4 2002 change % Net revenue 14,550 14,512 0.3 Net income/loss -364 -77 n.a. EBITDA 4,178 4,734 -11.7 EBITDA adjusted to exclude 4,503 4,354 3.4 special factors Deutsche Telekom increased its net revenue – according to preliminary figures for the 2003 fiscal year – by 4 percent year-on-year to EUR 55.8 billion. With adjusted EBITDA of EUR 18.3 billion, Deutsche Telekom exceeded its target by far. This represents growth of 12.1 percent and reflects the efficiency improvements the Group has made on its path towards profitable growth. Group EBITDA for the full 2003 financial year amounted to EUR 18.5 billion. Special factors impacting EBITDA in the fourth quarter of 2003 amounting to negative EUR 0.3 billion relate mainly to personnel accruals. The Group’s adjusted EBITDA margin improved to 32.8 percent compared with 30.4 percent for the full 2002 financial year. All divisions contributed to this increase. Deutsche Telekom achieved the turnaround with net income of EUR 1.3 billion, after recording a net loss of EUR 24.6 billion in 2002. Adjusted net income totaled EUR 0.2 billion compared with a loss of EUR 4.8 billion in 2002. Net income decreased in the fourth quarter of the year, mainly due to the burden of the Toll Collect project, amounting to EUR 442 million. The provision for risks included in this figure means that, from the current perspective, all foreseeable risks are covered. Despite these negative effects, Deutsche Telekom achieved its net income target for the full financial year, both in absolute and adjusted figures. Net debt was reduced further in the fourth quarter of 2003 by EUR 2.6 billion to EUR 46.6 billion at the end of the year. This means net debt has decreased by a total of EUR 17.7 billion since the strategic review in 2002. This achievement is attributable to the sale of noncore assets totaling EUR 6.7 billion, as well as to the continued progress made in increasing profitability and sustained growth in key areas of the Group. With free cash flow before dividend of EUR 8.3 billion in 2003 and EUR 8.5 billion since the strategic review in the third quarter of 2002, Deutsche Telekom exceeded its target of generating free cash flow of more than EUR 6 billion by the end of 2003 by a clear margin of over EUR 2 billion. The focus in the 2004 financial year is on profitable growth. Deutsche Telekom is aiming to generate adjusted Group EBITDA of at least EUR 19.2 billion. The use of free cash flow will depend on the opportunities that arise: to further reduce debt and to increase investments. The possibility of selective acquisitions has not been ruled out, provided they offer an opportunity to further increase the value of the Group. The Board of Management and the Supervisory Board will propose to this year’s shareholders’ meeting that no dividend be paid. The Board of Management plans, however, to generate a dividend in 2004 for payment in 2005. End of part 1 of the ad hoc notification of Deutsche Telekom, part 2 follows end of ad-hoc-announcement (c)DGAP 10.03.2004 ——————————————————————————– WKN: 555750; ISIN: DE0005557508; Index: DAX, EURO STOXX 50 Listed: Amtlicher Markt in Berlin-Bremen, Düsseldorf, Frankfurt (Prime Standard), Hamburg, Hannover, München und Stuttgart; EUREX; London; Amsterdam; NASDAQ Europe; Virtex; New York (ADR); Tokio 100627 Mär 04