THE 2015 FINANCIAL YEAR

Answers for the
digital future

This Report
 Provides
  nswers
   For the Digital
    Future.

Answers for the digital future

We need to talk. We want to talk. Communicating with others is part of our nature. Conversations give rise to new ideas and allow us to develop, discard, celebrate, or refine them. This is how we, as individuals and as a society, move forward. With our digital networks, we create one of the essential conditions for functioning ­communication between people at all times and across even the largest distances. However, we don’t just make the infrastructure available – we also take part in the discussion about the digital future. Digitization has an impact on everyone: It changes the way we work, communicate, and live our life. This ­development raises ­important questions for both consumers and companies, to which there is no one right answer. That’s why, in the present ­Annual Report, we gave various people the chance to voice their opinion – from Board members, through employees, and all the way to the end customer. All of them have provided different ­“Answers for the digital future."

Read more about:
Digital responsibility
Strategy

Social change and customer needs
Can I please know
everything about you?
Will there be
equal speed
for all on the web?
How much internet
is good for children?
How is 
digitization changing work?
Will digitization
makes our lives
faster - or better?
What if there
were no more internet
tomorrow?
"digitization is changing business, and deutsche telekom in the process.“
Timotheus Höttges

Chief Executive Officer,
Deutsche Telekom

We are becoming more and more mobile, and we want to stay connected when we’re on the move.

We will communicate with one another more and more. We will not just talk about our experiences – our friends, relatives, and significant other will be able to share them with us live. It will also become a matter of course for us to be online at all times, regardless of where we are.

The boundaries between people’s work and personal lives will blur. New work models will emerge, which will make it easier to combine work and family life. Technology will also help people react more flexibly to the requirements of new work environments. In many jobs, the place of work and the location of colleagues will matter less and less.

Where is our data secure?

We all produce large quantities of data on a daily basis. Many people are concerned about this:
Where is this personal data being stored? Who has access to it? Are secret services reading our correspondence? How can we protect ourselves against data theft?

A groundbreaking verdict of the European Court of Justice has made these questions even more relevant. The latter found that the data of European citizens is not sufficiently protected in the USA, and subsequently declared the data privacy agreement with the USA to be void. Our solution for data privacy:

Encrypt, store in germany, transfer securely
In Germany, we have particularly high data privacy standards. We are leveraging this advantage to offer high-security data centers to our customers. In addition, we are dedicated to providing comprehensive, end-to-end encryption to ensure that nobody can access any contents without permission. Finally, we make sure that data is sent from the sender to the recipient over the most direct route so as to avoid detours through other areas of legal jurisdiction. We explain how Internet users can additionally protect themselves at www.sicherdigital.de (German only).

Read more about:
Data protection
Security

Industry 4.0

is still an abstract notion for many people, but it holds the potential for a new industrial revolution: The Internet is increasingly connecting the physical world. Connecting machines, material, and people makes it possible for upstream and downstream production processes to happen in real time, which increases efficiency levels. In addition, the newly acquired data – when analyzed correctly – provides insights that support product improvements and the development of completely new services. Instead of car tires, for example, customers can purchase a complete tire service. All of this leads to unsuspected collaborations between companies across entire value-creation chains, and requires a new conception of cooperation.

Read more about:
Industry 4.0.

Innovations to mobile terminals are coming thick and fast. Even the good old book is benefiting from them. In its electronic e-book form, it makes reading even more fun than before, so it’s no wonder that e-readers are becoming ever more popular.

The tolino e-reader weighs less than 180 grams, is handier than a pocket book, has space for over 2,000 e-books, and includes a the summer holidays.

In fact, the digi­tal reading market is expec­t­ed to grow by 30 percent over the next five years, and the tolino e-reader we co-developed is among the front-runners. The tolino combines the reading comfort of a modern e-reader with the competence and broad offer range of leading bookstores. The tolino brand is now three years old and we played a strategic role in its success story from the start, contributing to the tolino alliance as a partner for technology and innovation. As part of this partnership, we are not just responsible for the design and production of the reading devices, but also provide the technical platform for the common open ecosystem that all of the partners use. Since its launch in the Nether­lands in 2015, the tolino has been introduced in six countries and is increasingly considered as the European solution with German roots.

Read more about:
Partners

Some people like being online at all times, others don’t. Nevertheless, it has already become a normal part of life for many people – even when they get on-board a plane or a train. We modernize our networks every day to provide the best possible service to our customers. We are working on making the best network available to our customers everywhere and at all times.

Our Goal is to be able to provide the best connection everywhere and at all times.

Tom Weller brings the Internet to our customers. As a service technician in fiber optics, he makes sure that the broadband rollout moves forward in ­Germany, so that even rural areas can get ­access to fast Internet ­connections. Change is ­basically part of his ­daily­ ­routine. When his work is ­finished in a particular rollout area, DT ­customers’ lives have gotten that little bit better.

Tanja Koch’s job is to help turn DT inside out. As an employee of the Customer Relations Management’s Strategy, Innovation, and Quality area at Telekom Deutschland, she contributes to setting new impulses so that our company will be different tomorrow from what it is today. Just like every other large corporation, we need constant change to avoid losing our connection to customers. Koch therefore works on practical solutions for the use of large data volumes. These are completely customer-oriented and create tangible added value for both our customers and our company. The idea is to view the vast quantities of data that are created by digitization as an opportunity. Sensitive and intelligent use of this data will allow us to provide our customers with excellent service and optimal products.

Franziska is training to be a saleswoman in office management in our Group. The main thing she is learning at the company is that learning never stops. Passing on work routines is a thing of the past – we want to show all of our employees how to continue reinventing themselves at work all the time. Change is not a problem for Franziska, but rather a goal in her training.

Vladimir Trajanoswki works as Head of a T-Shop in our national company Makedonski Telekom, and is responsible for getting customers excited about ­Deutsche Telekom’s latest offers. He knows our products just as well as daily life in Macedonia. Therefore, he knows that it’s not only about having the latest terminals and the best network on offer. Trust in Deutsche Telekom and in the people behind the brand is the best selling point of all, and trust is born out of continuity in times of major change.

Innovation AND Partnerships

The Problem:

on business trips, people use their company mobile phone to make business calls. however, the recipient of the call often cannot attribute this number to the relevant person as easily as their usual office number.

With StadiumVision, we are transforming a soccer stadium into a multimedia experience space. Fans will be able to access information, live streams, videos, entertainment offers, and interactive campaigns by partners directly during the game. We are bringing the events inside the stadium to the outside world and bringing the outside world into the stadium.

940Wi-Fi-
Antennas

turn the Allianz Arena into a stadium of the future.

The solution:

With our “one number” offer, the number of the business landline always appears on the call recipient’s screen – even when the call is coming from the mobile number.

MagentaEins is a resounding success in Germany: The package deal for mobile communications, fixed-line communications, and DT’s “Entertain” television service has already delighted 2 million customers since its launch. This is why we have extended the offer to our European markets and introduced it to five additional countries to date: MagentaEins is becoming internationally known as MagentaOne.

In our innovation lab “5G:haus” we are bringing together major players to define the architecture and characteristics of tomorrow’s networks with them. However, 5G:haus is not an actual building in a physical location. The innovation lab is actually active at various European locations. In the process, we leverage both the possibilities of our Group’s European infrastructure and the advantages of agile development. Universities, start-ups, manufacturers of network infrastructure, and customers take part in the conversation with us at 5G:haus, as we discuss how the next communications standard should be designed so it can be established worldwide.

We are continuously investing in our networks.

Now it’s paying off, as tests by independent specialized magazines confirmed again last year. We are cooperating with other technology companies to drive technological development and make sure that we can keep offering the best network in the future. In research projects with various manufacturers, for example, we were able to increase the data transfer rates of existing mobile communications networks and make our own mobile network ready for the “Internet of Things.”

Read more about:
Network of the future
Awards: Network and innovations

Be close to the customer: In Product Development, we take this mission to heart. We develop new ideas together with our customers in our Creation Center,

look over their shoulder in their everyday life, and consciously focus on the seemingly small things that make life easier. We then develop product and service ideas in interdisciplinary teams and assess their economic viability, feasibility, and marketability.

Read more about the Creation Center.

IP-migration in our markets:

We are currently carrying out one of the most ambitious technological projects in Europe. We are converting existing lines to IP, the Internet Protocol, in all of our markets. It’s a technological revolution as radical as the automobile replacing the horse-drawn carriage. Although this complex process wasn’t entirely seamless in the beginning, the benefits for our customers make it worth the trouble. With this technology, we are paving the way for innovative services, improving customer service and optimizing the management of our networks.

Much more than just a telephone line Macedonia was the first country in which we successfully completed the IP migration. Our customers there have lots of new options now: They can book additional services on demand, precisely when they need them. At the touch of a button, they can activate Internet access, higher data transfer rates, or the use of a person­al cloud. We have now completed the ­migration to the new IP technology in a total of four countries, as Slovakia, Montenegro, and Croatia followed hot on the heels of Macedonia. In Germany, we had already converted 10 million of our customers’ lines to the new technology at the start of 2016, and about 70,000 additional lines are being migrated each week.

REMOTELY
WELL CARED for

Demographic change is having a double negative impact on the healthcare system: Because the population is ageing, the need for medical care is increasing. At the same time, fewer and fewer qualified doctors and nurses are available – especially in rural areas. This means that patients have to travel increasingly large distances to obtain adequate medical care. Our Deutsche Telekom Healthcare ­Solutions area develops solutions to bridge the distance between patients and doctors and maintain or even improve the quality of care. The keyword in this area is “telemedicine”: remote medical care and cooperation. We are working on this with Carus Consilium Sachsen, a subsidiary of the Carl Gustav Carus University Clinic in Dresden, as part of the collaboration project “CCS Telehealth Ostsachsen,” which is unique in Europe.

Read more about networked for health.

Thanks to telemedicine, doctors always have an eye on their patients.

Thanks to our common telemedicine system, saxony has already arrived in the future of healthcare.

A central aspect of this project is that when patients are discharged from the clinic and return home after having a heart attack, for example, they remain in contact with specially trained nurses over a tablet computer for the aftercare. At the same time, the patients’ vital signs are transmitted to the hospital over the tablet. Laptops and a fully equipped IT workspace support the doctors and nurses in the care of stroke patients. Telemedicine also means that doctors can communicate faster and better:

1,6 Million

people live in the area covered by the telemedicine project “CCS Telehealth Ostsachsen.”

This directly benefits the patients, because a second expert opinion can be called in for difficult cases even if the experts work in different clinics or labs. Previous approaches to telemedicine were mostly conceived as independent solutions, making it difficult to connect different clinics, data centers, and specialists with one another. This is why in Saxony, an open platform was chosen deliberately to allow communication between a va­riety of different IT systems. This allows as many doctors as possible to contribute, regardless of the hardware and software they use. Another challenge in this kind of large-scale cooperation is the security of patient data. A specially secured data network for exchanging information was set up for this purpose, and the servers for the patient information also comply with the highest German data privacy standards.

Doing doctor’s appointments differently: Trained staff analyzes current patient data.

We are connecting
Europe in-flight

Mario Franci, EAN Program Manager at Inmarsat,
is bringing the Internet into airplanes together with Deutsche Telekom.

There is a lot going on in the skies. Flight traffic over Europe is constantly increasing. Although the potential for adding more flights seems limited, the European airspace’s economic potential is far from ha­v­ing been fully tapped. In fact, new business prospects are emerging for us above the clouds.

We already made Internet connections available on international flights with our “Inflight” offer in 2011. Our next goal is to offer a broadband connection of up to 75 megabits per second on-board European flights, and we are getting support from space to do so. Together with Inmarsat, a leading provider of satellite communication, we are currently developing the European Aviation Network (EAN) thanks to which airplanes will receive an Internet connection both from the ground and from space. We are building a Pan-­European mobile communications network of around 300 LTE base stations for this purpose. These stations have a significantly greater range than existing LTE antennas, which means they can reach planes traveling at high altitude and speed.

Great for business travelers: Internet access on European flights.

The ground station of the Inmarsat satellite, which serves as a basis for the EAN connections, is being operated by our Greek subsidiary OTE, while the system as a whole is being steered by Inmarsat in Amsterdam.

As part of a partnership with Inmarsat, the German airline Lufthansa will carry out the first test flights with the combined technology starting in 2017. We want to make broadband connections available across most of the European airspace by early 2018.

Each LTE station covers a radius of approximately

80 KM

at normal flying altitude, which means we can supply most of the European air­space with 300 base stations.

THE BEST SERVICE BEGINS
at Check-in

The electronic tag – quick, easy, and convenient.

We don’t just want to be at our customers’ side once they are on the plane, however, because we can start making their life easier as soon as they are on their way to the plane – for example with an innovative solution that simultaneously benefits the airlines.

It’s a familiar problem: Checking in your luggage at the airport takes up time that you don’t necessarily have. As a consequence, many passengers take more carry-­on luggage on-board than ­necessary. This, in turn, wastes time during boarding and debarking. Airbus launched an innovation project in cooperation with T-Systems and luggage manufacturer RIMOWA, which has now resulted in a clever mobility solution. RIMOWA is offering luggage with an integrated screen, the so-called electronic tag, which was also created in collaboration with T-Systems. Flight passengers can transfer their digital luggage data onto the electronic tag as soon as they check in online. The stopover at semi or fully automated luggage check-in counters will then take the passengers just a few seconds. Additional services, such as an integrated pick-up service for luggage with an electronic tag, are already planned.

The paper tag on your suitcase will soon be obsolete – here comes the electronic tag.

2015

Deutsche Telekom and Inmarsat announce their cooperation to build the European Aviation Network.

2017

The combination of satellite signals and LTE base stations is tested in Lufthansa airplanes.

2018

Our Goal: is for the European Aviation Network to be available across most of the European airspace.

Future prospects:
Cloudy and
Save

Quickly and reliably supplying cars with data from the cloud makes driving safer.

The cloud makes digital life ea­s­ier. Data, computing power, and IT programs are all going online and can be accessed there as needed – almost as easily as getting electricity from the so­cket. We are specialists for cloud-based services. ­T-Systems, our corporate customer segment, offers professional IT services and our national companies operate the network infrastructure for speedy and reliable data transmissions.

We already have a leading position on the cloud market thanks to our tailored solutions for large companies, practical solutions for SMEs, and free offers for consumers. We operate data centers around the world, including the largest and most cutting-edge in Germany (in Biere­/Magdeburg). We also make a unique promise to our customers: to provide them with all services from a single source, from the server center, through the network, software offers, 24-hour service, and all the way to invoicing.

All of this puts us in a good position to succeed in a seminal area. According to our estimates, the global market for cloud-based services is growing by about 25 percent annually and is set to reach a volume of 230 billion euros in 2017.Socially relevant projects like “connected driving”, e-health, the energy transition, and Industry 4.0 are not feasible without cloud-based services. To realize their full potential, we have made the cloud a strategic priority and reorganized our ­T-Systems segment.

Read more about the topic cloud.

We don’t back up the data.
We back up the entire data center.

The security of our customers’ data is always a top priority for us. It starts with the construction of our data centers, which have the strongest possible protection against physical and hacker attacks. To be completely save, we build twin data centers in which the data is mirrored and synchronized continuously. This allows the information to remain available even if one server suffers an outage. Beyond all construction measures, however, the key to our security guarantee is that 600 experts are constantly working on protecting the infrastructure and customer data at ­T-Systems.

That’s why even international firms trust us to operate their IT landscape. To meet these corporate customers’ special speed, security, and availability requirements, we offer them the “private cloud.” This is where all of their data is encrypted and transmitted over insular lines. In addition, all the data lines are redundant and we guarantee an agreed-upon connection quality in the private cloud.

Zero Outage. Our customers appreciate this quality control program, as the third consecutive increase in customer satisfaction shows.

More information available at:
quality.t-systems.com.

Location, location … data privacy

Many people in Europe are worried about whether their user data stored on foreign servers is sufficiently protected. Our location is a real advantage in this regard, because our cloud-based offers are “made in Germany.” In practice, this means that our services run over German data centers that comply with strict German data privacy regulations at the customer’s request.

We provide around

3,000,000,000

users with cloud-based SAP services.

That’s why groups like Microsoft store the data of their German customers with us, and we act as custodians of this information. If a cloud-based application we offer is not operated in Germany, we advise our customers of this fact.

Read more about data protection.

In the Fort Knox of data security: T-Systems employee Benjamin Fischer takes care of the data center in Biere.

All key players under one roof: Our cloud offer is made even stronger by our cooperation with high-profile partners. Companies like SAP, Microsoft, and Salesforce offer their software over our cloud platform. Solutions from Informatica and our AppAgile platform help us provide a virtual IT infrastructure to our business customers. We also extended our offer range with the new “Open Telekom Cloud,” a competitive public cloud service that is available on the public Internet, in coop­­eration with Huawei.

Internal culture and employees

The future of work is already part of my daily routine. I am able to decide for myself when and where I work. I don’t mind checking my e-mails on my work phone at 7:00 a.m. as long as I can have breakfast in peace with my one-year-old son afterwards. What matters is not my presence in the office, but the results I achieve.

"Traditional work­places and working hours are becoming a thing of the past.”

"Hands-off management – managers must learn that they will need to motivate rather than control workers.“

"Megatrends in future digital work – 25 theses" is the result of an expert survey that we carried out in collaboration with St. Gallen University. We surveyed 60 experts worldwide, including top business managers, researchers, association representatives, and trade unionists. The survey’s finding is that digitization is having a dramatic effect on the way we work.

"THE DEMISE OF PHYSICALLY LOCATED WORK­PLACES IS ASSOCIATED WITH A CHANGE FROM A PRESENCE TO A RESULTS CULTURE.“

Many of our employees can already form virtual teams worldwide in an independent manner. For instance, colleagues from different national companies work together on projects for months at a time. Instead of “real” meetings, video chats and phone conferences are increasingly becoming the preferred modes of communication. Every employee within the Group benefits from these international collaborations – especially colleagues in smaller national companies or segments that cannot implement their specialized agendas alone. Our customers, in turn, benefit from solutions that would never even have been designed without virtual collaboration.

Of course, international virtual collaboration requires a seamless, integrated IT infrastructure, the basis of which is a standardized Wi-Fi network at all of our central locations in Europe. An overarching Web-conference system makes it possible to hold virtual meetings, a softphone solution that lets employees make calls with their laptop is replacing the landline, and a cloud-based database allows them to easily share documents with all of their project colleagues. As part of this process, the standardization of our e-mail and calendar platforms ensures seamless communication and makes it easier to organize appointments.

Our employees, our customers, our shareholders – everyone benefits when we successfully reorganize work within our company. It makes us more attractive as an employer, more flexible as a service provider and more efficient as a Group. We call the transformation of the work environment “Future Work.”

Trust. Share. Shape.

Future Work means that we will rely more on virtual collaboration than on physical presence going forward, that trust will be more important than control, that it will often be less “my office” than “our work environment” and that we will be able to achieve a better work-life balance.

Employee communications as a dialog: We have replaced our intranet with a social collaboration platform. This allows our employees to get in touch with each other more easily, work together in groups, and access available knowledge. Communication on the platform is direct, authentic, and fast – hierarchies and functional or national boundaries are crossed. More than 103,000 DT employees in over 30 countries already use the platform, making it one of the largest in-house social collaboration platforms worldwide. Our offer is in line with current trends: In a survey, two thirds of respondents from medium-sized and large companies in Germany stated that they believe the significance of social intranet platforms is likely to increase.

We are
Restructuring –

A spontaneous conversation around a high table replaces a formal meeting in the conference room.

on a daily basis

Our employees at certain locations are already experiencing a reality that we want to establish in an increasing number of offices going forward: flexible workspace design. This means that each employee from a given area can choose his or her workplace freely according to the task at hand. From mobile working, through a quiet single-person workspace, a communicative team project office, and all the way to the lounge area, the place of work is determined by the activity that is undertaken. It therefore makes sense for us to equip the relevant employees with a mobile phone and a laptop. For many people, the aspect that takes some getting used to is that there is no assigned seating in the new office ecosystems anymore. Instead, employees choose the workspace that provides them with the best environment for their task on any given day. Personal items can be stashed in pilot cases, for example, which can be “locked away” during employees’ absence.

Everyone benefits from less space

This may sound like a contradiction, but it actually describes a situation that has advantages for everyone involved: Both the employer and employees benefit from flexible workplace design. Our employees can achieve a better work-life balance. We provide them with spaces that are better suited for their tasks, and the greater level of independence increases their well-being and motivation. In fact, our experiences from several pilot projects even indicate that flexible workplace design can improve the quality of their results. Finally, we require less office space due to our employees’ vacation time, home-office arrangements, and business trips. This is also an important step towards more efficient resource allocation, as it can help to increase the average workspace occupancy rate.

The transition towards this new way of working also requires everyone involved to adapt their understanding of collaboration. Leadership will have less to do with control, and performance will be less associated with presence. Of course, it is also clear that many activities will remain tied to a specific location. After all, our customers rightfully expect to find competent advisers in the Telekom Shops and the Service units at all times. New fiber-optic lines are not likely to lay themselves, either.

"Flexible jobs which also afford individual responsibility and autonomy are associated with higher motivation and personal fulfillment.“

Of course, it is also clear that many activities will remain tied to a specific location. After all, our customers rightfully expect to find competent advisers in the Telekom Shops and the Service units at all times. New fiber-optic lines are not likely to lay themselves, either.

Need to concentrate, but enjoy working in a relaxed setting? Our new work environments have it covered.