Supervisory Board’s report to the 2011 shareholders’ meeting.

For Deutsche Telekom, the 2010 financial year was marked by the implementation of the merger of its fixed-network and mobile operations in Germany, the development of T-Mobile USA and strategic plans for the business in the United States, and the persistently difficult competitive and regulatory environment. Despite the macroeconomic challenges in Southern and Eastern Europe, in the 2010 financial year the Group succeeded in achieving positive results and meeting expectations. The Supervisory Board exercised its statutory functions as an advisory and supervisory body and gave the Board of Management its full support.

The Supervisory Board continually monitored the Board of Management’s activities to manage the business and the Group as a whole. Specifically, its supervisory role consisted of ensuring that these activities were lawful, compliant, appropriate, and efficient. The primary prerequisites for fulfilling this role were the Board of Management’s written and oral reports. The Board of Management regularly reported to the Supervisory Board on the corporate planning, business developments, and significant business transactions of the Company and of principal subsidiaries and associates. The Supervisory Board regularly reviewed the situation of the Company on the basis of the Board of Management’s written and oral reports each time the Supervisory Board or one of its committees met. On the agenda of every Supervisory Board meeting was the development of the business, as was a discussion of any deviations from the originally planned course of business. The Board of Management fulfilled its duties to inform the Supervisory Board quickly and in full. The Board of Management’s reports met all statutory requirements, the standards of good corporate governance, and the criteria imposed on them by the Supervisory Board with regard to both content and scope. In addition to the reports, the Supervisory Board requested and received supplementary information. The Supervisory Board critically analyzed and verified the plausibility of these reports and this information.

A document prepared by the Supervisory Board lists all types of transactions and measures of fundamental importance for which the Board of Management has to obtain approval from the Supervisory Board. This document is an integral part of the Rules of Procedure of the Supervisory Board and the Board of Management. The Supervisory Board regularly reviews the list of items and amends it as necessary. The Supervisory Board met with the Board of Management for a discussion and thorough review of all the transactions and measures that require the Supervisory Board’s approval. These meetings served in particular to discuss the benefits and effects of each transaction. The Supervisory Board approved all the transactions and measures submitted. The Audit Committee regularly met to examine a variety of issues, including the quarterly reports, discuss these with the external auditors, and approve them.

Between meetings, the Chairman of the Supervisory Board regularly met with the Board of Management and especially with its Chairman to discuss the Company’s strategy, the development of its business, and its risk management, and was informed of the general business situation and significant events.

Besides the statutory regular reports, the Supervisory Board also discussed and reviewed the following issues in greater depth:

• The way in which the merger of the Company’s fixed-network and mobile operations in Germany was implemented.
• The development of the regulatory and competitive environment and implications for Group strategy and planning.
• Implementation of the Group strategy, discussed during an in-depth conference between the Board of Management and the Supervisory Board.
• The development of the U.S. business and strategic planning for T-Mobile USA.
• The establishment of the UK-based joint venture between T-Mobile UK and Orange UK.
• The development of OTE in Greece, with special consideration given to the current state of the Greek economy.
• Issues in connection with the legal dispute surrounding PTC in Poland.