Annual Report 2013

Letter from the Chairman of the Board of Management.

Timotheus Höttges, Chairman of the Board of Management
Timotheus Höttges, Chairman of the Board of Management.
Dear Sharholders,

2013 was a good year for Deutsche Telekom, despite the still difficult regulatory environment in Europe and intense competition. Investors and analysts value our implementing power, our reliability, and our credibility. Experts believe that we are better able to master the challenges facing our industry than others are.

Our latest figures prove that we deserve to be trusted. We maintained our position in many of our markets last year, even improving significantly in some key markets. This means that we were more innovative and more successful than many of our peers, some of which have seen their share price decline significantly.

By contrast, the Deutsche Telekom share developed well. Last year, this resulted in a total shareholder return of 56 percent for our investors. In particular, those shareholders benefited who chose the option of the dividend in kind, offered for the first time in Germany.

The share price increase also reflects our good financial position. Deutsche Telekom met its financial targets for the 2013 financial year. Despite higher investments in the networks, along with the takeover of MetroPCS, total debt remained well below EUR 40 billion and the equity ratio stood at a good 27.1 percent.

In 2013, adjusted EBITDA – in other words, earnings before interest, taxes, depreciation, and amortization – was EUR 17.4 billion and free cash flow EUR 4.6 billion. Revenue for the full year increased by 3.4 percent to EUR 60.1 billion. The year-on-year increase in revenue in the fourth quarter reached as much as 6.5 percent due, in part, to the first-time inclusion of MetroPCS as of May 1, 2013. In organic terms, i.e. excluding changes in the composition of the Group and currency effects, our net revenue increased by 0.8 percent in 2013, and 2.8 percent in the fourth quarter.

On this basis, the Board of Management and Supervisory Board will propose a dividend of EUR 0.50 per share to the shareholders’ meeting as planned. To those shareholders who want to support our growth strategy and to give us the necessary room for maneuver, we are once again offering the option of receiving the dividend in kind with a financial benefit of two percent.