WEBINAR VDSL-VECTORINGStephan EgerBruno JacobfeuerbornWolfgang Kopf

DISCLAIMERThis presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forwardlooking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flowsand personnel-related measures. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict andare generally beyond Deutsche Telekom’s control. Among the factors that might influence our ability to achieve our objectives are the progress of our workforce reductioninitiative and other cost-saving measures, and the impact of other significant strategic, labor or business initiatives, including acquisitions, dispositions and businesscombinations, and our network upgrade and expansion initiatives. In addition, stronger than expected competition, technological change, legal proceedings andregulatory developments, among other factors, may have a material adverse effect on our costs and revenue development. Further, the economic downturn in our markets,and changes in interest and currency exchange rates, may also have an impact on our business development and the availability of financing on favorable conditions.Changes to our expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materially affect our resultsat the group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect,our actual performance may materially differ from the performance expressed or implied by forward-looking statements. We can offer no assurance that our estimates orexpectations will be achieved. Without prejudice to existing obligations under capital market law, we do not assume any obligation to update forward-looking statementsto take new information or future events into account or otherwise.In addition to figures prepared in accordance with IFRS, Deutsche Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA,EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net income, free cash flow, gross debt and net debt. These non-GAAP measuresshould be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are notsubject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.2

HOSTEXPERTSStephan EgerBruno JacobfeuerbornSenior Vice President Investor RelationsDirector Technology Telekom Deutschlandand CTO DT GroupWolfgang KopfSenior Vice PresidentPublic & Regulatory Affairs DT Group3

INTEGRATED NETWORK STRATEGY (INS)SMART APPROACH ON OUR WAY TO FTTH1LTE rollout2 Fiber rollout 3banddaorBest bVectoring4 Hybrid accessHybridDevicesLTEDSL4

INS: CAPEX EFFICIENT AND RAPID ROLLOUT OFBEST-IN-CLASS LTE NETWORK1LTE rollout plan – Outdoor pop coveragein %3G (HSPA)Peak performancein Mbit/sLTEHigher capex efficiencyCapex per Mbit/s 260% -70%15088 85 1007538Q3/2012LTE422016long term3G(HSPA)LTE800LTE18003G (HSPA2x5 MHz)LTE 800(10 MHz)LTE 1800(20 MHz)5

INS: FIBER UPGRADE OF FIXED NETWORK IS A SMART“NO REGRET MOVE” TO FTTH2 3Fiber rollout plan – Coveragein %Vectoring performance upgrade1 80in Mbit/sHigher coverage with lower capexCapex per connected home 100% 65Fiber -70%100 300%36405010Q3/20122016long ) with short distribution cable length6

INS: HYBRID REVOLUTION THROUGH COMBINATION OFFIXED AND MOBILE FOR SUPERIOR SPEED EXPERIENCE4Superior offering for customers.Cable footprint (24MN HH)Mobilenetwork Max. uploadHomeGatewayFixednetwork1) broadband speed communication for consumerMax. downloadin Mbit/s12) LTE 1800Mhz 20010050Hybrid(Fiber LTE2)in Mbit/s1 90Copper only (16MN HH)in Mbit/s1150 100VDSLHybrid 116CableADSL 501001616Hybrid Mobile only3(ADSL LTE2)in Mbit/s1 515010406 VDSLHybrid(Fiber LTE2)Cable1ADSL501 10Hybrid Mobile only3(ADSL LTE2)3) Vodafone LTE Zuhause7

VDSL-VECTORING BANDWITH INCREASESSIGNIFICANTLY COMPARED TO VDSL Downlink data rates1Uplink data rates1in Mbit/sin toring10VDSLVDSL-Vectoring1) Real life performance depending on copper cable length8

VECTORING AND HYBRID PROLONGATE THE COPPERLIFECYCLE UP TO 10 YEARSINS fully covers customer use cases for the next decade% of householdssatisfied by DT‘sbandwidth plans10080ADSLADSL-HybridFTTC VectoringFTTC Vectoring-HybridINS Effect:Empowering the networkto fulfill customer needsfor a long time604020020102015202020259

MUTUAL INTERFERENCE BETWEEN ADJACENT COPPERPAIRS IN A CABLE IS THE MAJOR LIMITATION OF VDSLWhat is the matter with crosstalk?Cross section of acable with multiplecopper pairs VDSLMSAN1 CrosstalkSignalper line Cable with multiple copper pairsDownstreamReceiveddisturbedSignal Crosstalk: Electric signal on each copper paircreates “noise”Noise disturbs signal transmission of neighboringpairsThe wider the band of frequencies used the morecrosstalk: VDSL with factor 8x over ADSL2 Result: Bandwidth on each pair is reduced bycrosstalk effects of othersUpstream1) Real life performance depending on copper cable length10

VDSL-VECTORING EQUIPMENT OPTIMIZES SIGNALS BYINTERACTING WITH CONNECTED MODEMSNoise cancellation for you and me Noise cancellation for copper lines 1.VectorMSANTest signalper lineInfo to MSAN13.4.5.VectorDSLAMPrecodedwork signalModemModemModem ReceivertestModem2.ModemModemModem DifferenceModem to test signalModemModemModemModem6.11

BASED ON FTTC, VDSL-VECTORING IS AN IMPORTANT STEPTO BRING FIBER TOWARDS THE CUSTOMER.Gradual fiber rolloutFiber to the Central Office – ADSL2 “Classic”Fiber to the Cabinet – VDSL/VDSLVectoring (Rollout focus of INS)COADSL2 Copper 16 Mbit/sCabinetCOFiberCopper25-100 Mbit/sDPFiber near or to the H50-1000 Mbit/s1) „Distribution Point“ currently not part of the Telekom access network12

ADVANTAGES OF THE FTTC/VECTORING ROLLOUT FORDEUTSCHE TELEKOMTime to market: Rapid expansion of broadband coverage (Household coverage in %) 80 at affordable costs(Capex per homes passed) -70%Cablefootprint36Q3/2012652016further optionADSL 2 FTTC (VDSLVectoring)FTTB(e.g.

LEVERAGING POTENTIAL SYNERGIES WITH OTHER ACCESSIllustrativeNETWORK ROLLOUT PROJECTSAccess network todayNew buildingareaTarget structure after VDSL-Vectoring rolloutNew buildingareaCOCOManagedapartmentblocks ManagedapartmentblocksADSL provisioning from CO site via copper(copper in main & distribution cable)Limited FTTC footprint with VDSL2 technology CopperPassive Cabinet550m rangeCOCOLTE siteVDSL-Vectoring provisioning from cabinet site(Fiber in main, copper in distribution cable)Synergistic fiber connection of bypassing commercial & new buildingareas, apartment blocks, LTE sites etcOpportunistic FTTH rollout & TV Grundversorgung rolloutFiberVDSL-Vectoring enabled copperActive Cabinet14

CURRENT REGULATORY ACCESS REGIMECompetitor’s xDSL access points todayHousehold/APLSub-LoopCabinetCentral OfficeVDSLADSLCOCopperRegional Hub(900 site)Central Hub(73 site)Z900PoP1.2.3.Physical Access to thesub-loop(sub-loop-unbundling)Physical Access tothe local loop(local-loop-unbundling)Layer 3 BSAaccess at PoPsitesFiber15

BNETZA PROPOSAL FOR VECTORING: OVERVIEWCompetitor’s access options in VDSL Vectoring areasHousehold/APLSub-LoopCabinetCentral OfficeRegional Hub(900 site)Central Hub(73 site)VDSL VectoringADSLCOZ900PoP1.1a2.2aPhysical Access to thesub-loop for VDSL(sub-loop-unbundling)Layer 2 BSA at cabinetsite in case of terminationby TelekomPhysical Access tothe local loop(local-loop-unbundling)Provisioning of Layer 2BSA in case ofpreventing sub-loopCoppersubstitute forinterim period?3.Layer 3 BSAaccess at PoPsitesFiber16

BNETZA PROPOSAL: AREAS WITH 2ND INFRASTRUCTUREAccess options for VectoringHousehold/APLSub-Loop1.CabinetCentral OfficeVDSL VectoringADSL Central HubCOZ900PoP2.2a3.1a1a Right of termination (only for Telekom) Regional HubRequires L2 BSA at/close to street cabinetTermination of already existing competitor street cabinets if carrierrefuses to upgrade to Vectoring (not before 2017)Termination of newly established street cabinets with 12 months notice if: 75 % of buildings in street cabinet area are connected to parallelinfrastructure (cable/fiber operator) Telekom has rolled out more street cabinets than competitors Availabiltiy of L2-BSA at street cabinet at the same price as sub-loop( EUR 6.79)2a Preventing sub-loop Prerequisite for preventing access to sup-loop: “Suitable” L2 BSAPricing: No provisions (ex-post regulation) yetIn discussion: L2 BSA will be available in 2016 Will L3 BSA as an interim solution be accepted?17

BNETZA PROPOSAL: AREAS WITHOUT 2ND INFRASTRUCTUREAccess options for VectoringHousehold/APLSub-Loop1.CabinetCentral OfficeVDSL VectoringADSL1aRegional HubCentral HubCOZ900PoP2.2a3.2a Preventing sub-loop Telekom is not able to terminate, but to prevent sub-loopFirst operator rolling out vectoring is privileged and investments areprotectedPrerequisite: All companies must offer L2 BSA as substitute“Cherry picking” in rural areas may lead to a Greyhound racing, butexpected only in lucrative spotsFull coverage of rural areas is unlikely No regional monopolies are permitted, obligations aregenerally symmetricalFor first time, regulator imposes reciprocal, open access18

BNETZA FRAMEWORK ALLOWS USE OF VECTORINGAccess to sub-loops can be refusedRegulatorycertainty and flexibleframework forVectoring roll-outPriority for Telekom in specific areasNo exclusivity for Vectoring, Open AccessFirst step towards regionalization19

TIMEFRAME VECTORINGDecember 19:DT amendmentto the ULL accessobligationsApril 08: DraftconsultationpaperNationalconsultationMay 10Notification ure TAL atleast 6 monthsQ2/13Reference-offerprocedure BSA atleast 6 monthsAugust:FTTC/Vectoring Rollout in non VDSLareasFinaldecision:Q1/14at theearliestLaunch ofhybridrouterVDSL/VectoringswapFinal decisionBNetzAAugustQ3/13Q4/13Q1/14Q2/14Q3/14Q4/14 2015/1620


FTTH Vectoring VDSL VDSL-Vectoring Download Upload 300% 40 10 F i be r 2 3 1) with short distribution cable length long term 80 2016 65 Q3/2012 36 Capex per connected home Higher coverage with lower capex in Mb