Deutsche Telekom generates net income of EUR 4.6 billion in 2004

Net revenue up 3.7 percent to EUR 57.9 billion, organic revenue growth of 5.8 percent Net income increased from EUR 1.3 billion to EUR 4.6 billion; adjusted net income from EUR 0.2 billion to EUR 2.2 billion Board of Management proposes a dividend of EUR 0.62 for 2004 EBITDA excl. special factors of EUR 19.4 billion compared with EUR 18.3 billion in 2003 Operating result excluding special factors grows 32 percent to EUR 6.9 billion Free cash flow increased from EUR 8.3 billion to EUR 10.2 billion Net debt reduced by EUR 11.4 billion to EUR 35.2 bill

Deutsche Telekom ended the 2004 financial year with net income of EUR 4.6 billion, thus clearly achieving its goal of continued profitable growth. Net revenue increased by 3.7 percent to EUR 57.9 billion in 2004 compared with EUR 55.8 billion in 2003. Exchange rate effects and first-time consolidations of EUR 0.7 billion and deconsolidations of EUR 0.4 billion had a negative impact on revenue in the year under review. Adjusted for these factors, organic revenue growth amounted to 5.8 percent. Deutsche Telekom generated EUR 22.7 billion abroad, 39 percent of revenue. Revenue growth in the Group was mainly attributable to mobile communications and broadband business. As a result of the encouraging performance in the 2004 financial year, the Board of Management plans, subject to final approval by the Supervisory Board, to propose to the shareholders' meeting a dividend of EUR 0.62 per share carrying dividend rights. In addition to the divisions' positive development, the successful implementation of the "Agenda 2004" program played a key role in this success. "Success today is no guarantee of success tomorrow. We are very aware of this. That is why we will also continue to do everything necessary in order to put our current course of growth on a long-term and sustainable footing," said Chairman of the Board of Management, Kai-Uwe Ricke. Consistent debt reduction in the Group As a result of the positive performance of the Group, the level of net debt was also further reduced. Net debt decreased by EUR 11.4 billion to EUR 35.2 billion in 2004. This was achieved primarily due to free cash flow and the sale of investments, such as the sale of a 15-percent share in the Russian mobile communications company MTS in which Deutsche Telekom held a stake of approximately 25 percent. In 2004, free cash flow before dividend payments amounted to EUR 10.2 billion compared with EUR 8.3 billion the previous year. The ratio of net debt to adjusted EBITDA was 1.8 at December 31, 2004. Operating result up EUR 4.4 billion At EUR 19.4 billion, Deutsche Telekom recorded an increase in EBITDA excluding special factors of 5.9 percent. EBITDA excluding special factors amounted to EUR 18.3 billion in the previous year. Organic EBITDA, adjusted for exchange rate fluctuations and changes in the composition of the Group, rose by as much as 7.1 percent to EUR 19.5 billion. The increase in EBITDA is mainly attributable to revenue growth. The adjusted EBITDA margin increased from 32.8 percent to 33.5 percent. The considerable increase in net income from EUR 1.3 billion to EUR 4.6 billion in 2004 largely resulted from the improvement in financial expense and the positive development of the operating results. Operating results in 2003 amounted to EUR 5.4 billion; in 2004, the Group generated EUR 9.9 billion - an increase of roughly 83 percent. In addition to sustained revenue growth and the resulting improvement in adjusted EBITDA, special factors also had a positive impact on operating results. These special factors were mainly attributable to the write-up of EUR 2.4 billion for U.S. mobile communications licenses due to changes in fair value measurements, and proceeds from disposals amounting to just under EUR 1.2 billion. Excluding special factors, operating results improved from EUR 5.2 billion in 2003 to EUR 6.9 billion in 2004. Adjusted net income increased from EUR 0.2 billion to EUR 2.2 billion.                 Q4 2004 millions of € Q4 2003 millions of € Change % FY 2004 millions of € FY 2003 millions of € Change % Net revenue - Domestic - International 14,958 9,587 5,371 14,550 9,002 5,548 2.8 6.5 (3.2) 57,880 35,147 22,733 55,838 34,691 21,147 3.7 1.3 7.5 Adjusted results from ordinary business activities 711 (60) n.a. 3,593 1,122 220.2 Results from ordinary business activities 1,815 (385) n.a. 6,541 1,398 367.9 Adjusted net income 252 (516) n.a. 2,196 222 889.2 Net income 1,423 (364) n.a. 4,634 1,253 269.8 EBITDA excluding special factors 4,732 4,503 5.1 19,364 18,288 5.9 EBITDA 5,839 4,178 39.8 22,315 18,475 20.8 Net cash provided by operating activities 5,499 3,272 68.1 16,307 14,316 13.9 Free cash flow before dividend payments 3,595 892 303.0 10,180 8,285 22.9 Investments in property, plant, and equipment and intangible assets (excluding goodwill) 2,125 2,698 (21.2) 5,936 6,234 (4.8) Net debt at balance sheet date       35,198 46,576 (24.4) Average number of employees 245,730 248,993 (1.3) 247,559 251,263 (1.5)               T-Com                 Q4 2004 millions of € Q4 2003 millions of € Change % FY 2004 millions of € FY 2003 millions of € Change % Total revenue 7,151 7,459 (4.1) 27,814 29,206 (4.8) Net revenue 6,311 6,400 (1.4) 24,425 25,116 (2.8) Results from ordinary business activities4 1,266 1,121 12.9 5,525 4,690 17.8 EBITDA1 2,467 2,480 (0.5) 10,240 10,164 0.7 Adjusted EBITDA2 2,640 2,579 2.4 10,466 10,356 1.1 Number of employees3 124,184 133,330 (6.9) 125,395 139,548 (10.1)               EBITDA = Results of ordinary business activities before net financial income/expense, including income related to subsidiaries, associated and related companies, amortization and depreciation, and before other taxes; for a detailed explanation of these figures, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". For detailed information, see "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". Average number of employees. In contrast to previous reporting, the investment in Toll Collect has been reported under T-Systems rather than T-Com since April 1, 2004. The figures for the previous year have been adjusted accordingly to facilitate comparison. T-Com was again the largest contributor to revenue in the Deutsche Telekom Group with EUR 7.2 billion in the fourth quarter and EUR 27.8 billion in the full 2004 financial year. In comparison to the prior-year period, revenue was down 4.1 percent in the fourth quarter of 2004. Revenue decreased by 4.8 percent in the full 2004 financial year and, on a like-for-like basis, excluding the remaining cable activities that were sold in 2003, by 4.4 percent. The call-by-call and preselection plans offered by T-Com's competitors and the fall in intra-Group revenue continued to weigh on revenue performance in the German market. However, growth in the broadband area helped to slow down the declining revenue trend. Over the full year, external revenue fell by 2.8 percent. In the fourth quarter, however, this quarter-on-quarter decrease was 1.4 percent, well below the average for the year. Revenue from the access business continued to increase by around 8 percent in the 2004 financial year as a result of price measures and increased T-DSL revenue, excluding revenue from T-DSL Business. In contrast, call revenue decreased by more than 13 percent due to regulatory factors, market share losses and stronger demand from customers for more attractively priced optional rates. Adjusted EBITDA increased by 1.1 percent during the 2004 financial year to around EUR 10.5 billion and, on a like-for-like basis, excluding the effects of the sale of the cable business in the first quarter of 2003, by around 2 percent. The adjusted EBITDA margin increased by 2.1 percentage points compared with 2003 to 37.6 percent. The improvement in EBITDA was mainly due to the lower number of employees and the corresponding reduction in personnel-related operating costs. Despite the decrease in revenue, T-Com increased its results from ordinary business activities by EUR 835 million compared with the prior year to EUR 5.5 billion, mainly as a consequence of improved efficiency relating to operating expenses, in particular lower cost of sales, selling costs, and administrative costs. The high demand for broadband fixed network lines in the mass market continued unabated. The number of broadband DSL lines increased in the course of the year by 48.8 percent to a total of 6.1 million (including Central and Eastern Europe). As a result of the consistent marketing of T-DSL, the number of DSL lines in Germany alone increased by 1.8 million to 5.8 million in the year under review. This figure also includes 246,000 DSL lines sold by T-Com to competitors under its resale offer. 628,000 new broadband lines were recorded in Germany in the fourth quarter alone. In the Deutsche Telekom subsidiaries managed by T-Com in Hungary, Croatia and the Slovak Republic, business operations also focused predominantly on the marketing of broadband communications. The number of DSL lines provided by companies in Central and Eastern Europe consequently increased year-on-year by just under 140 percent to 265,000. The number of narrowband lines in Germany and abroad fell by 1.5 percent to 54.7 channels. The number of narrowband lines (including ISDN channels) in operation in Germany was 1.7 percent lower than in the prior year due to substitution by mobile communications and the migration of subscribers to competitors. The number of ISDN channels fell for the first time in the second half of 2004 as a result of the discontinuation of T-Com's attractive price for bundling T-DSL with T-ISDN and the increasing saturation of the market. The number of ISDN channels increased by just under 1 percent in the full year to 21.7 million. T-Mobile                 Q4 2004 millions of € Q4 2003 millions of € Change % FY 2004 millions of € FY 2003 millions of € Change % Total revenue 6,335 5,991 5.7 24,995 22,778 9.7 Net revenue 6,132 5,701 7.6 24,088 21,572 11.7 Results from ordinary business activities1 1,347 194 n.a. 4,636 831 n.a. EBITDA1 2,911 1,666 74.7 10,596 7,016 51.0 Adjusted EBITDA2 1,899 1,666 14.0 7,668 6,671 14.9 Number of employees3 44,617 42,747 4.4 44,226 41,767 5.9               EBITDA = Results of ordinary business activities before net financial income/expense, including income related to subsidiaries, associated and related companies, amortization and depreciation, and before other taxes; for a detailed explanation of these figures, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". For detailed information, see "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". Average number of employees. As the Group's growth driver, T-Mobile increased its revenue by 9.7 percent to just under EUR 25 billion in the full 2004 financial year. Organic revenue growth was once again considerably higher at 14.2 percent. The main growth driver was again T-Mobile USA, which reported a revenue increase of 39 percent to USD 11.7 billion in 2004. Adjusted EBITDA improved by just under 15 percent to around EUR 7.7 billion. Here too, organic growth was considerably higher, at just under 18 percent. T-Mobile Deutschland once again made the biggest contribution to adjusted EBITDA with almost EUR 3.5 billion in the full 2004 financial year. The adjusted EBITDA margin was 43.2 percent in the fourth quarter, thus achieving the full-year target of 40 percent. T-Mobile USA increased its adjusted EBITDA by 61 percent in the 2004 financial year to USD 2.7 billion. The EBITDA margin in U.S. dollars rose to 23.5 percent. T-Mobile UK also increased its adjusted EBITDA margin by 7 percentage points to 31.5 percent in the course of the year. The number of mobile communications subscribers served by all majority shareholdings and associated companies of Deutsche Telekom and T-Mobile International AG also continued to grow in 2004, despite the fact that the penetration rates are already high in many markets. Growth for the full year amounted to more than 13 percent, up by around 9.1 million to 77.4 million subscribers. The number of mobile communications subscribers served by T-Mobile's majority shareholdings increased by more than 8.1 million to almost 69.2 million in the course of the year. Just under 1.9 million net additions were recorded in the fourth quarter alone. T-Mobile USA made a considerable contribution to this marked growth in subscriber numbers, recording an increase over the course of the year of almost 32 percent, or 4.2 million net additions, to 17.3 million subscribers. In the fourth quarter of 2004 alone, net growth in the number of customers served by T-Mobile USA was more than 1 million. The number of newly acquired contract subscribers increased by 5.6 percent quarter-on-quarter to 15.3 million in the fourth quarter of 2004. In the full year, T-Mobile USA recorded growth of 3.6 million fixed-term contract subscribers. T-Mobile Deutschland recorded customer growth of over 1.1 million over the course of the year. The focus of the past financial year was qualitative customer growth - more than 80 percent of net additions were fixed-term contract subscribers. As announced, T-Mobile Deutschland initiated a focused customer acquisition strategy in the second half of 2004 and prioritized increased profitability and concentration on contract subscriber business. New customer growth amounted to 113,000 in the fourth quarter. Although the number of prepaid customers decreased by 46,000, the number of fixed-term contract subscribers rose by 159,000. T-Mobile Deutschland was very successful in attracting customers for the Relax rates, for which marketing began in February 2004. By the end of the year, 1.3 million customers had already opted for one of the Relax rates. The number of customers at T-Mobile UK increased by around 2.1 million to 15.7 million over the course of the year (including Virgin Mobile). In the fourth quarter of 2004 alone, roughly 519,000 net additions were recorded, 57,000 of which were fixed-term contract subscribers. The target of 3 million contract subscribers by the end of 2004 was thus met. T-Mobile Netherlands closed the 2004 financial year with just under 2.3 million customers, an increase of 13.8 percent, or 274,000, over the course of the year. The development of the fixed-term contract subscriber segment - up 152,000 - was particularly encouraging. The number of customers at T-Mobile CZ increased year-on-year by over 400,000, from 3.95 million to 4.36 million. In the fourth quarter alone, T-Mobile CZ recorded 230,000 net additions. Subscriber numbers at T-Mobile Austria increased slightly to over 2.0 million customers. T-Systems                 Q4 2004 millions of € Q4 2003 millions of € Change % FY 2004 millions of € FY 2003 millions of € Change % Total revenue 2,873 2,870 0.1 10,537 10,614 (0.7) Net revenue 1,956 1,917 2.0 7,238 7,184 0.8 Results from ordinary business activities (22) (421) n.a. (211) (581)   EBITDA1 346 336 3.0 1,357 1,412 (3.9) Adjusted EBITDA2 414 399 3.8 1,473 1,415 4.1 Number of employees3 39,551 41,093 (3.8) 39,880 42,108 (5.3)               The Toll Collect joint venture has been managed by and reported under the T-Systems segment since April 1, 2004. For segment reporting purposes, the effects on the statement of income are no longer shown under T-Com, but under T-Systems. The figures for the previous year have been adjusted accordingly to facilitate comparison. EBITDA = Results of ordinary business activities before net financial income/expense, including income related to subsidiaries, associated and related companies, amortization and depreciation, and before other taxes; for a detailed explanation of these figures, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". For detailed information, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". Average number of employees. T-Systems faired well in a market environment characterized by continued pressure on margins and dynamic structural change. Total revenue remained at roughly the same level as in the previous year at EUR 10.5 billion. On a like-for-like basis, however, T-Systems increased its total revenue by almost 1 percent year-on-year. Business with customers outside the Deutsche Telekom Group developed considerably better than total revenue in the year under review. Excluding changes in the composition of the Group, net revenue grew at the same rate as the European ICT market in 2004, with an increase of around 3 percent. This positive development is attributable in particular to revenue growth of 9.1 percent in the IT unit. Business from telecommunications services declined, primarily as a result of intense price competition, especially in International Carrier Services business, with a year-on-year decrease of 5.5 percent. Adjusted EBITDA increased significantly both in the fourth quarter and in the full year compared with the respective prior-year periods. The improvement of over 4 percent to almost 1.5 billion over the full year and the increase of just under 4 percent to EUR 414 million in the fourth quarter alone reflect the positive development of T-Systems' operating performance. This is mainly attributable to the continuous improvement of cost structures as well as efficiency gains in the division. The level of orders received developed pleasingly, with an increase of 6.7 percent compared with 2003 to EUR 11.8 billion. Order levels amounted to around EUR 13.4 billion at December 31, 2004.   T-Online4                 Q4 2004 millions of € Q4 2003 millions of € Change % FY 2004 millions of € FY 2003 millions of € Change % Total revenue 522 504 3.6 1,979 1,851 6.9 Net revenue 465 453 2.6 1,793 1,662 7.9 Results from ordinary business activities (33) (22) (50) 73 104 (29.8) EBITDA1 62 75 (17.3) 419 335 25.1 Adjusted EBITDA2 62 75 (17.3) 420 310 35.5 Number of employees3 3,007 2,615 15.0 2,963 2,637 12.4               EBITDA = Results of ordinary business activities before net financial income/expense, including income related to subsidiaries, associated and related companies, amortization and depreciation, and before other taxes; for a detailed explanation of these figures, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". For detailed information, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". Average number of employees. The T-Online figures shown here were calculated in line with the provisions of German GAAP, as applied throughout the Deutsche Telekom Group, and do not correspond to the figures published by T-Online International AG in accordance with IFRS, as T-Online International AG and Deutsche Telekom AG do not apply the same accounting policies. T-Online increased revenue year-on-year by almost 7 percent to around EUR 2 billion in the 2004 financial year, mainly as a result of growth in the customer base. Revenue amounted to EUR 522 million in the fourth quarter. Adjusted EBITDA grew disproportionately over the course of the year to 35.5 percent. Compared with the previous quarter, adjusted EBITDA decreased by EUR 48 million in the fourth quarter. This development is primarily attributable to higher marketing and selling costs as a result of the Christmas campaign, but also as a consequence of advertising for Musicload, video on demand, activities relating to the German soccer league, or the advertising campaigns run by the Scout24 group. T-Online increased the number of customers with a billing relationship to 13.5 million by the end of the year. Around 11.4 million of these customers were in Germany. The number of DSL subscribers increased by a total of 1.2 million across the Group. T-Online successfully expanded its product range in the digital entertainment markets in 2004. As of December 31, 2004, the Musicload music-download platform offered 420,000 titles for 775,000 registered customers. Musicload recorded 1.4 million downloads in December 2004 alone. Group Headquarters & Shared Services                 Q4 2004 millions of € Q4 2003 millions of € Change % FY 2004 millions of € FY 2003 millions of € Change % Total revenue 1,093 1,048 4.3 4,501 4,268 5.5 Net revenue 94 79 19.0 336 304 10.5 Results from ordinary business activities (998) (1,741) 42.7 (3,792) 4,071 6.9 EBITDA1 (142) (491) 71.1 (317) (276) (14.9) Adjusted EBITDA2 (318) (311) (2.3) (616) (316) (94.9) Number of employees3 34,371 29,209 17.7 35,095 25,203 39.2               EBITDA = Results of ordinary business activities before net financial income/expense, including income related to subsidiaries, associated and related companies, amortization and depreciation, and before other taxes; for a detailed explanation of these figures, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations". For detailed information, please refer to "Reconciliation of pro forma figures" at "www.telekom.de/investor-relations" Average number of employees. At Group Headquarters & Shared Services, results from ordinary business activities improved by around EUR 0.3 billion year-on-year. This is primarily due to the improvement in net financial expense as a consequence of the reduction in the Group's net debt. Vivento increased its employment rate steadily over the course of the year. Of the roughly 18,300 employees (excluding permanent staff) managed by Vivento at the end of the year, approx. 80 percent were in employment. Of the just over 31,100 employees originally transferred to Vivento, around 27,500 have found new jobs or left the Group. Of this figure, around 10,000 of employees were in temporary employment in December. In the 2004 financial year, Vivento created new employment opportunities by developing its own business lines. Vivento Customer Services GmbH & Co. KG (VCS), the provider of innovative and fully-integrated services on the rapidly growing call center market, started operations on January 1, 2004. After setting up its local operations in the course of the year, VCS was present at 18 locations throughout Germany at the end of 2004. Vivento's second business line, Vivento Technical Services GmbH & Co. KG (VTS), started operating in July. VTS has positioned itself as a provider of network infrastructure services on the internal and external market. By establishing its two business lines, Vivento has succeeded in developing sustainable and staff-intensive business activities that offer new career prospects to employees transferred to Vivento. Outlook In 2005, Deutsche Telekom expects adjusted EBITDA, calculated in accordance with IFRS, to be between EUR 20.7 billion and EUR 21.0 billion. The Group plans to invest between EUR 7.5 billion and EUR 8.0 billion in property, plant and equipment and expects to generate free cash flow in the same amount. Deutsche Telekom expects additional cash outflows as a result of the acquisition of additional mobile communications licenses in the U.S. and the reintegration of T-Online. Deutsche Telekom considers the dividend to be paid for 2004 a guide for future dividend payments. Any decisions regarding future dividend payments will, however, be based on the development of net income. The goal remains to offer shareholders an attractive dividend.         This notification contains forward-looking statements that reflect the current views of the Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed on them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control, including those described in the sections "Forward Looking Statements" and "Risk Factors" of the Form 20-F submitted to the U.S. Securities and Exchange Commission. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom's actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account. In addition to the figures shown in accordance with German GAAP, Deutsche Telekom also shows so-called pro forma figures, e.g., EBITDA, adjusted EBITDA, net debt, and free cash flow. These pro forma financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with German GAAP. For a definition of these pro forma figures, please refer to the explanations under "Reconciliation to pro forma figures" on Deutsche Telekom's Investor Relations website at www.deutschetelekom.com.