Development of business at Deutsche Telekom AG

Deutsche Telekom AG prepares its annual financial statements in accordance with the principles of German GAAP, as specified in the German Commercial Code (Handelsgesetzbuch – HGB) and the German Stock Corporation Act (Aktiengesetz – AktG).

As the Headquarters of the Deutsche Telekom Group, we perform strategic and cross-segment management functions and provide services for other Group companies. The profits and losses of our subsidiaries and Group financing measures have a material effect on our financial position and results of operations. For example, we were able to offset the decline in non-contract terminal equipment business in our Germany operating segment with efficiency enhancement measures. In our Systems Solutions operating segment, the accounting treatment of risks from individual corporate customer contracts and the general downward trend in ICT business as well as exchange rate effects had a negative impact on results. The Europe operating segment continued to be affected by competitive and price pressure in 2016.

Deutsche Telekom AG reported income after taxes for the 2016 financial year of EUR 2.0 billion. In addition to the operating business, the development of business in the reporting year was influenced by a number of very different effects (e.g., increased take up of the early retirement program for civil servants, a reversal of a write-down at T-Mobile Global Zwischenholding GmbH, Bonn, and a write-down at T-Mobile Global Holding GmbH, Bonn, on the indirect stake held there in the British BT Group plc), arising from both the company’s own business and from income related to subsidiaries, associated and related companies.