UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2006

DEUTSCHE TELEKOM AG
(Translation of registrant’s name into English)

Friedrich-Ebert-Allee 140
53113 Bonn
Germany
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x   Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o   No x

This report is deemed submitted and not filed pursuant to the rules and regulations of the Securities and Exchange Commission.

Deutsche Telekom First three quarters of 2006.

Deutsche Telekom First three quarters of 2006

a              Since figures are rounded, totals may differ.

b             For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 44 et seq.

Deutsche Telekom First three quarters of 2006

Deutsche Telekom at a glance.

At a glance

Deutsche Telekom First three quarters of 2006

a                     For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, the adjusted EBITDA margin as well as special factors affecting profit or loss and the adjusted net profit, please refer to “Reconciliation of pro forma figures,” page 44 et seq.

b                    Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses.

c                     One ADS (American Depositary Share) corresponds in economic terms to one ordinary share of Deutsche Telekom AG.

d                    Cash outflows for investments in property, plant and equipment, and intangible assets (excluding goodwill) as shown in the cash flow statement.

e                     For detailed information, please refer to “Reconciliation of pro forma figures,” page 47 et seq.

f                       Based on shareholders’ equity excluding amounts earmarked for dividend payments, which are treated as current liabilities.

g                    Telephone lines of the Group (including ISDN channels), including for internal use.

h                    Broadband lines in operation, including Germany, Eastern and Western Europe.

i                        Number of customers of the fully consolidated mobile communications companies of the Mobile Communications strategic business area. For an explanation of the change in the method for counting mobile customers as of 2006, please refer to page 22.

Deutsche Telekom First three quarters of 2006

Telekom 2010.

“We shape the information and telecommunications industry as Europe’s number one and the leading services company in the industry.” To create the necessary framework for becoming Europe’s leading telecommunications provider in terms of both revenue and earnings, Deutsche Telekom has launched its program Telekom 2010.

The implementation of this new strategy involves seven areas of action.The program focuses on Germany, Europe and
the United States, Deutsche Telekom’s core consumer markets, and on the international business customer segment. In addition, it will address three major challenges: innovation, service, and efficiency.

Germany — Despite fierce competition and new business models developing on the market, the Group will defend its market leadership and leverage revenue-related synergies. Besides an attractive package consisting of fixed-network and mobile communications services with an improved level of service, the Group will launch new products and rates such as T-Home, Internet-based value-added services and mobile Internet. Deutsche Telekom is fully leveraging the convergence between fixed-line and mobile communications services and further developing its sales channels in order to reach all potential customers in all areas.

Europe — Revenue market shares will be sustainably expanded and the Group’s market position in Eastern Europe secured. In the European mobile communications markets in which Deutsche Telekom is present, it pursues a clear attacking strategy focusing on fixed-network substitution and an extended product portfolio. Depending on the individual market situation, the customer base will be leveraged to enter broadband markets.

United States — T-Mobile USA’s revenue market shares will be increased and the company developed into the Group’s largest business unit in the consumer market. The frequencies acquired in the spectrum auction in the United States will result in higher network capacity, allowing the company to add attractive 3G services to its portfolio.

Business customers — The aim is to defend the Group’s market position in Germany and become one of the top three providers in selected customer segments. T-Systems will focus more on defined sectors, including the automotive industry and the public sector, while offering a comprehensive portfolio of integrated IT and telecommunications services.

Innovation — As an innovation leader, Deutsche Telekom shapes markets by focusing on the industry’s large fields of innovation: IPTV, mobile Internet, and ICT services. The potential for convergent products and solutions will be fully exploited. Deutsche Telekom will focus systematically on new business development.

Service — Improving the quality of service is one of the primary objectives. By early 2008, 80 percent of all customer inquiries are to be resolved upon initial contact with Deutsche Telekom (first-done rate). To this end existing measures, such as customer relationship management will be systematically expanded. The Group will benefit from T-Mobile USA’s successful service models, introduce new process models at T-Com, and exploit the advantages of an integrated customer database spanning all the business areas.

Efficiency — Deutsche Telekom will reduce its structural costs in production, IT, sales, marketing, and shared services considerably by 2010.

Deutsche Telekom First three quarters of 2006

Telekom 2010 is the successor to the Excellence Program, which brought together the Group’s core transformation activities. The success achieved under the Excellence Program is the foundation of Telekom 2010. For instance, in the third quarter of 2006 T-Com introduced its new 3x3 rate system, a collection of complete packages, and launched its triple-play service T-Home in October 2006. T-Mobile’s calling plans such as the Max flat rate and the extended Relax rates have contributed significantly to improving the price image of mobile communications. In late August 2006, an integrated customer database was introduced that will help to improve the quality of service and enable more effective cross and up-selling. The ground was prepared for a reduction in internal IT costs and on the production side, preparations for the Next Generation Network completed. The Group’s workforce restructuring program is running according to plan.

The Group’s management is being restructured concurrently with the launch of Telekom 2010. Besides managing the Business Customers strategic business area, Lothar Pauly is now also responsible worldwide for networks, IT, and procurement. T-Mobile’s CEO René Obermann is in charge of the T-Punkt shops and trading partners in Germany. Chairman of the Board of Management Kai-Uwe Ricke now also coordinates Group-wide brand management, advertising planning, and the advertising budget.

Deutsche Telekom First three quarters of 2006

Contents.

Deutsche Telekom First three quaters of 2006

Developments in the Group.

·                                          Net revenue: plus 3.1 percent year-on-year from EUR 44.1 billion to EUR 45.5 billion.

·                                          Group EBITDA adjusted for special factors1: minus 4.1 percent year-on-year from EUR 15.5 billion to EUR 14.9 billion; Group EBITDA down from EUR 15.4 billion to EUR 14.4 billion.

·                                          Net profit adjusted for special factors1 down year-on-year from EUR 3.6 billion to EUR 3.0 billion; net profit down from EUR 4.6 billion to EUR 4.0 billion.

·                                          Free cash flow2 before dividend payments: minus EUR 0.2 billion year-on-year from EUR 3.5 billion to EUR 3.3 billion.

·                                          Net debt3 down from EUR 40.8 billion at September 30, 2005 to EUR 38.3 billion.

This development was again the result of two offsetting trends:

·                                          Proportion of net revenue generated outside Germany up from 42.3 percent to 45.6 percent.

·                                          Within Germany:

·                                          Revenue down by 2.7 percent year-on-year from EUR 25.4 billion to EUR 24.7 billion in the first nine months of 2006 as a result of high pressure from competition and on prices; almost unchanged in the third quarter at EUR 8.4 billion.

·                                          Adjusted for special factors, EBITDA of subsidiaries based in Germany down by 8.0 percent year-on-year from EUR 10.0 billion to EUR 9.2 billion in the first nine months.

·                                          Outside Germany:

·                                          Revenue up by 11.0 percent year-on-year from EUR 18.7 billion to EUR 20.7 billion in the first nine months of 2006.

·                                          Adjusted for special factors, EBITDA of subsidiaries based outside Germany up by 2.8 percent year-on-year from EUR 5.5 billion to EUR 5.7 billion.

1                     For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, the adjusted EBITDA margin and special factors affecting
net profit/loss after income taxes and the adjusted net profit, please refer to “Reconciliation of pro forma figures,” page 44 et seq.

2                     Deutsche Telekom defines free cash flow as cash generated from operations less interest paid and cash outflows for investments in property,
plant and equipment, and intangible assets (excluding goodwill). For calculation of free cash flow, please refer to “Reconciliation of pro forma figures,” page 47.

3                     For detailed information, please refer to “Reconciliation of pro forma figures,” page 48.

Deutsche Telekom First three quaters of 2006

Highlights.

Events in the third quarter of 2006.

Group

Vienna arbitration court strengthens Deutsche Telekom’s position with regard to Polska Telefonya Cyfrowa Sp.zo.o. (PTC).

·                  On June 6, 2006, a court of arbitration in Vienna issued a final partial judgment stating that the exercise by T-Mobile Deutschland of a call option on Elektrim S.A.’s share of approximately 48 percent in PTC on February 15, 2005 was effective. Consequently, representatives of Deutsche Telekom have since taken over the positions of Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of PTC. Please refer to the “Outlook” section for more information regarding the development of the situation after September 30, 2006.

Share buy-backs following T-Online merger.

·                  On August 25, 2006, Deutsche Telekom AG completed the share buy-back program that was launched on August 14 2006. The program was announced in October 2004 and was intended to buy back the T-Shares issued in the course of the merger of T-Online International AG into Deutsche Telekom AG in order to prevent an increase in the number of Deutsche Telekom shares subsequent to the merger. By August 25, 2006, a total of 62,730,182 shares with a proportionate amount of the share capital of EUR 160,589,265.92, i.e., approximately 1.4 percent of the share capital, had been repurchased at an average price of EUR 11.29 for a total consideration of EUR 708,334,785.39.

Long-term rating.

·                  On September 11, 2006, Standard & Poor’s changed its outlook for Deutsche Telekom AG’s long-term rating from stable to negative, citing higher-than-anticipated expenditure for the auctioning of mobile communications licenses in the United States and the adjustment of the Company’s guidance for 2006 and 2007. The long-term ratings with Fitch and Moody’s remained unchanged in the reporting period at A- and A3, respectively.

Medium-term note issue.

·                  In July 2006, Deutsche Telekom took advantage of the favorable market environment to issue a medium-term note of GBP 250 million. The seven-year bond was issued as part of the existing debt issuance program and successfully placed by the participating banks.

Staff restructuring continues.

·                  The Group is continuing to implement its staff restructuring program, with staff adjustments affecting a total of 32,000 jobs to take place on a voluntary basis, e.g., through a redundancy payment scheme. The special redundancy payment program of Deutsche Telekom AG, “Abfindung spezial,” expired on August 31, 2006. The redundancy model with increased redundancy payments for T-Systems Enterprise Services and T-Systems Business Services expires on December 31, 2006. The build-up of expanding business areas, such as T-Punkt Vertriebsgesellschaft, and the restructuring of T-Com are being implemented as scheduled.

4,300 trainees start their career at Deutsche Telekom.

·                  Deutsche Telekom’s trainees started their training year on September 1, 2006 in twelve different professions and study courses that combine theory with practice. This is the first year of the new business diploma in dialog marketing. Deutsche Telekom has also increased the number of traineeships by 300 compared with the prior year. Most

Deutsche Telekom First three quaters of 2006

of these traineeships are for retail staff for T-Punkt Vertriebsgesellschaft. With some 12,000 trainees each year, Deutsche Telekom is one of the largest providers of vocational training in Germany and hence is an investor in the future of Germany’s society.

Deutsche Telekom First three quarters of 2006

Mobile Communications

End of Auction 66 in the United States.

·                  T-Mobile USA is well positioned to continue expanding its business. The company acquired a large amount of additional spectrum for data and voice services in Auction 66. T-Mobile USA acquired a total of 120 licenses in various regional classes around the country for a total of USD 4.2 billion, or around EUR 3.3 billion. The costs for T-Mobile USA in dollars per MHz of spectrum per person of population (POP) of USD 0.63 were considerably lower than in most of the previous spectrum auctions in the United States and as such were at the lower end of analysts’ expectations at the beginning of the auction. T-Mobile USA more than doubled its frequency spectrum in the top 100 markets in the United States. The roll-out of the mobile broadband network has already started and most of the work will be completed in 2007 and 2008. T-Mobile USA is budgeting around EUR 2.1 billion for the roll-out from 2006 to 2009.

T-Mobile once again rated best mobile communications network in Germany.

·                  T-Mobile’s network in Germany was once again rated the best GSM mobile communications network in this year’s quality test in the October 2006 issue of the “connect” magazine. The test results were based on test runs on autobahns, major and minor roads, as well as on train routes throughout the entire country in August 2006.

Broadband/Fixed Network

Entering the triple-play era.

·                  T-Com entered the triple-play era in the third quarter of 2006, introducing packages combining voice communication, Internet access, and television via Internet (IPTV) in Germany, France, and Croatia. IPTV and related services are provided in Germany and France on the basis of a common platform developed by Microsoft. The new triple-play packages contain features such as time shift TV and an electronic program guide (EPG). In Hungary, Magyar Telekom introduced a triple-play offer on November 6, 2006, while Slovak Telekom is planning to launch a triple-play package in Slovakia at the end of 2006. Preparations for the launch of a triple-play product were also systematically continued in Spain in the third quarter of 2006.

Launch of the new “3x3 complete packages.”

·                  Following the successful merger of T-Online International AG into Deutsche Telekom AG, T-Com launched a fully integrated product portfolio on the market introducing its new complete packages. T-Com is systematiccally focusing its product portfolio on what customers want—simple, attractive prices and, in particular, first-rate service, for example the complete installation of all hardware and software components at a fixed rate. T-Com has been offering custommers new complete packages since mid-September 2006, each consisting of three Call & Surf options for telephony and Internet communication. Within four weeks, one million customers had already ordered one of the new offers, the majority opting for one of the attractive packages bundling voice and Internet communication.

Deutsche Telekom First three quarters of 2006

Launch of the innovative T-One product.

·                  T-One, the innovative convergence product launched at the beginning of August 2006, is T-Com’s first fixed-mobile convergence product and the first dual-phone service introduced throughout Germany that allows customers to use fixed-line and mobile telephony with a single handset. The advantages of the convergence solution are obvious: one line, one telephone, one voicemail box, one bill. Thanks to two different product options, T-One can be used with a traditional telephone line or as a DSL-based service. Both plans are enhanced by a mobile communications component allowing customers to use T-One also while on the move.

Regulatory order on IP bitstream access.

·                  On September 13, 2006, the Federal Network Agency announced a regulatory order obliging Deutsche Telekom AG to grant competitors IP bitstream access, i.e., IP-based unbundled broadband access, on request. IP bitstream access enables competitors to offer access to the Internet, especially broadband access, to end users, and primarily targets the mass market. The order requires Deutsche Telekom AG to grant IP bitstream access on non-discriminatory terms and to submit its rates for such access services to the Federal Network Agency for advance approval, whereby the rates must be based on the costs of efficient service provision. Deutsche Telekom AG is of the opinion that it has been marketing such an IP bitstream offer since mid-2004 with the wholesale combination of DSL resale and T-DSL ZISP. Deutsche Telekom AG is required to submit a reference offer for IP bitstream access by mid-December 2006. In view of the subsequent reference offer proceedings and the expected network access proceedings that competitors are striving to implement, it is possible that this offer will be expanded or implemented to the disadvantage of Deutsche Telekom.

Business Customers

T-Systems creates electronic procurement platform for Audi.

·                  T-Systems is integrating purchasing and finance processes for operating assets in a uniform online solution for the car manufacturer Audi AG. Various existing IT systems will be merged to produce a single e-procurement solution and integrated into the company’s IT environment by 2008. The procurement of all production-supporting materials such as construction and IT services, but also the entire billing process, is to be effected via a single solution, enabling Audi to reduce its procurement volume and, consequently, its costs.

T-Systems establishes world-wide network for industrial company Tyrolit.

·                  T-Systems Austria is the international network provider for the manufacturing company Tyrolit, which is part of the Swarovski group. Tyrolit uses the corporate network to manage its global production processes and employs the Telekom Global Net for corporate communications. The Business Customers area will connect 14 international sales and production sites in Europe, the United States, and Thailand to Tyrolit’s corporate network. Other international sites, such as Brazil, will follow. Tyrolit has signed a three-year contract for these services with T-Systems, connecting international Tyrolit sites on four continents.

T-Systems sets up new IT system of the Madrid city tax authorities.

·                  The Business Customers strategic business area is responsible for the overall technical design and implementation
of the new IT system of Madrid’s tax authorities. The new IT system will improve the service for citizens by simplifying and accelerating administrative processes. It will also increase productivity in the administrative areas by accelerating response times. Access to the tax management system is fast, easy and convenient via telephone, Internet, or office application. As a neutral service provider, T-Systems guarantees the security and confidentiality of tax data.

T-Systems operates nationwide IP communications network for DAK.

·                  The German health insurance company DAK will soon use a central, IP-based platform for voice and

Deutsche Telekom First three quarters of 2006

                        data communication. With the central multi-service platform developed by T-Systems, approximately 14,000 DAK employees at around 900 branches across the country will be able to use IP telephones in a virtual private network (VPN). The new platform will enable DAK to integrate telephony into its successful centrally operated data processing concept, implemented several years ago, to which all employees already have access. The contract concluded with T-Systems has a three-digit million volume and will initially run for six years.

T-Systems to deliver and operate desktop systems for Airbus in Spain.

·                  Airbus has commissioned T-Systems to provide all necessary PC workstations and services as well as a service hotline for 2,300 users at its Spanish sites. Airbus’ goal is to create an internationally uniform and more cost-efficient desktop infrastructure. The three-year contract expands a cross-country framework agreement that has been in place since 2003 with Airbus sites in Germany, France, and the United Kingdom.

Deutsche Telekom First three quarters of 2006

Business developments.
Overall economic situation/industry situation.

Global economic development

The global economy continued its upswing in the third quarter of 2006, albeit slightly slower than in previous quarters. This was caused by a decrease in momentum in the U.S. economy and, to a lesser extent, in Japan. Accelerated growth in the euro zone and the United Kingdom were unable to offset the decline in the two leading industrialized countries. In the emerging countries, production continued its vigorous upward trend, although the pace of growth varied slightly in the individual countries. The macroeconomic environment underwent a slight improvement in the third quarter of 2006 compared with previous quarters. While oil prices reached new highs in August 2006, they had rapidly slid back down again by the end of September. The prices of other raw materials also stagnated or declined in the third quarter of 2006. In spite of this development, consumer prices were affected by the sharp hikes in raw material prices in earlier quarters.

The economy in the euro zone continued to grow strongly in the third quarter of 2006, with the gross domestic product (GDP) climbing by an annualized 3.4 percent. By mid-year, the increase in GDP had accelerated, particularly in countries that had previously recorded lower-than-average growth rates, notably Germany and Italy. Growth in the euro zone was primarily driven not just by exports but also by domestic demand, chiefly due to significantly higher capital expenditure on fixed assets. Private consumption in the euro zone has also slowly been gaining momentum throughout 2006. The rate of inflation fell substantially in September 2006 to 1.8 percent. The strong recovery in the euro zone led the European Central Bank (ECB) to tighten monetary policy further. Although expansion in Germany trailed behind the rest of the euro zone in the first quarter of the year, a range of economic indicators show that the upswing in the German economy has strengthened considerably since the second quarter of 2006. The significant contribution to growth made by exports to date was surpassed by domestic demand from mid-2006 onwards. Corporate investment in equipment and construction is rising appreciably, and private consumption is also on the rise, though haltingly. The number of people employed rose by just under 300,000, with the unemployment rate falling to 10.1 percent in September. The upsurge in prices decreased slightly due to the decline in oil prices. Economic institutions are forecasting 2.3-percent growth in overall production in Germany. Economic expansion in the United Kingdom also picked up during 2006, with GDP rising by a projected 2.9 percent since the beginning of the year. Economic development in EU Member States in Central and Eastern Europe remained robust in the third quarter of the year, although the pace of growth varied in the individual countries. While Poland and Slovenia stepped up production, Hungary experienced a slow-down despite an expansionary financial policy.

The United States has seen its economic activity weaken since spring 2006, with private consumption and corporate investments both losing considerable momentum. In view of this economic downturn, the Federal Reserve (FED) has left its target rate for Federal Funds unchanged at 5.25 percent since June 2006, after having increased it from 1 percent to 5.25 percent within two years.

Deutsche Telekom First three quarters of 2006

The outlook for the last quarter of 2006 indicates slightly weaker economic growth in industrialized countries, although the pace of growth differs from country to country. The German economy will be buoyed by the increase in consumer spending in anticipation of the increase in value-added tax scheduled for 2007. By contrast, economic growth in the United States will remain restrained as the boom on the real estate market tails off. The risks of the high oil price affecting private consumption worldwide and investment, which dominated the summer of 2006, were reduced in the third quarter of 2006.

Telecommunications market

The strong price pressure caused by deregulation in the telecommunications sector is reflected once more in the July to September 2006 figures published by the Federal Statistical Office for the overall telecommunications services price index (fixed network, mobile communications, and Internet). From the perspective of private households, consumer prices for fixed network, mobile communications, and Internet telecommunication services in the third quarter of 2006 were an average of 3.4 percent lower than in the same quarter in 2005. On average, prices for mobile telephony services in particular were 11.3 percent lower in the third quarter of 2006 than in the previous year. Consumer prices for Internet use also declined by an average of 4.4 percent year-on-year.

Regulation: Telecommunications Act

The German Federal Cabinet adopted a draft amendment to the Telecommunications Act on May 17, 2006. The amendments relate primarily to the temporary exemption of new markets from market regulation, and to a range of provisions that extend consumer protection. The question of whether, and if so to what extent, this meets Deutsche Telekom’s call for the high-speed fiber optic network to be exempted from regulation cannot yet be conclusively assessed on the basis of the existing draft legislation. The provisions referring to consumer protection indicate that in addition to the fixed network, mobile communications will be subject to a higher level of consumer protection regulation going forward. Depending on the ultimate form of this amendment, it could entail considerable investment and revenue risks for the industry as a whole in Germany. Deutsche Telekom does not expect the amendment to the Telecommunications Act to come into force before early 2007.

Regulation: directives and recommendations

The fundamental principles of sector-specific regulation of the European telecommunications markets are set out in EU directives and other communications issued by the European Commission. The directives and recommendations adopted in 2002 are currently being reviewed (2006 Review). At the end of June 2006, the Commission published a communication on intended changes to the relevant directives and the draft of a new recommendation on the telecommunications submarkets to be regulated (Markets Recommendation).

The Commission’s communication concerning the 2006 Review shows that it is no longer pursuing its original goal of reducing sector-specific regulation and a transition to general competition law, but instead is now aiming to strengthen regulation, while at the same time substantially expanding the Commission’s powers. The latter intention is likely to meet with resistance from both national governments and regulators. The first draft of the revised directives is expected for the end of 2006, and translation into national law is unlikely before 2008/2009.

Although the draft Markets Recommendation provides for a reduction in the number of regulated markets — in particular end-customer markets — it only effectively excludes those markets that are already largely unregulated in many countries. On the other hand, the Commission is proposing to extend regulation to additional wholesale markets for mobile communications. The Markets Recommendation is expected to enter into force at the end of the year and will then be implemented by the individual Member States.

Deutsche Telekom First three quarters of 2006

Business developments in the Group.

Net revenue

Net revenue at the Deutsche Telekom Group rose to around EUR 45.5 billion in the first nine months of 2006. This represents an increase of EUR 1.4 billion or 3.1 percent compared with the same period of the previous year. The Group thus continued its positive revenue development. This continued growth course was aided by consolidation effects in the amount of around EUR 0.5 billion and by the reversal of deferred revenue recognition relating to changed customer retention periods in the Broadband/Fixed Network strategic business area amounting to EUR 0.2 billion. Exchange rate effects of around EUR 0.1 billion, especially from the translation of U.S. dollars (USD) to euros, also had a positive impact. The year-on-year increase in the third quarter of 2006 was EUR 0.4 billion, or 2.8 percent.

Once again, the primary factor driving revenue growth was the positive development in the Mobile Communications strategic business area, with T-Mobile USA remaining the growth engine. Overall, Mobile Communications recorded 9.3 percent year-on-year revenue growth in the first nine months and 6.8 percent in the third quarter of 2006.

By contrast, the total revenue generated by the Broadband/Fixed Network strategic business area declined year-on-year. This was due above all to the loss of narrowband lines, the decrease in call revenues, and the substantial decline in prices in the Internet access market. Overall, this could not be offset by the volume-related growth in DSL resale and in subscriber lines.

Revenue in the Business Customers strategic business area also declined. The continued intense level of price pressure in the Telecommunications and Computing & Desktop Services areas led to a decrease in revenue at the Enterprise Services unit in particular.

(a)             Total revenue (including revenue between strategic business areas).

(b)            Elimination of revenue between strategic business areas.

Contribution of the strategic business areas to net revenue (after elimination of revenue between strategic business areas)

Deutsche Telekom First three quarters of 2006

The Mobile Communications strategic business area made the largest contribution to net revenue in the reporting period, with a share of 50.7 percent. The percentage of net revenue generated by the Broadband/Fixed Network and Business Customers strategic business areas was 34.1 percent and 14.7 percent respectively.

Net revenue generated outside Germany

The proportion of net revenue generated outside Germany continued to show a positive trend. In the first nine months of the current financial year, it increased by around 3.3 percentage points year-on-year, to 45.6 percent. This encouraging growth is also reflected in the year-on-year comparison of the third quarters. Compared with the third quarter of 2005, the Deutsche Telekom Group increased the share net revenue generated internationally by around EUR 0.4 billion in the third quarter of 2006 to around EUR 7.1 billion. This successful international growth is being driven primarily by the positive revenue development at T-Mobile USA and T-Mobile UK.

Domestic revenue continued to fall in a year-on-year comparison of the first nine months. In a year-on-year comparison of the third quarters, revenue remained almost unchanged.

Profit before income taxes

Profit before income taxes in the first nine months of 2006 amounted to approximately EUR 4.3 billion, compared with EUR 6.9 billion in the prior year. Higher selling expenses in the reporting period, resulting from increased commission and marketing expenses, were the primary factor contributing to the decline in profit from operations from EUR 7.6 billion to EUR 6.4 billion. Added to this was the increase in the loss from financial activities. In the prior year this loss had been reduced by the inclusion of a profit of around EUR 1 billion on the sale of the shares in MTS.

Deutsche Telekom First three quarters of 2006

Net profit

At around EUR 4.0 billion, net profit for the first three quarters of 2006 was down EUR 0.6 billion year-on-year, mainly as a result of the effects already described. Net profit was positively influenced by the change in income tax expenses, which fell by around EUR 1.9 billion year-on-year. This decrease was attributable in particular to the reversal of tax provisions and the recognition of previously unrecognized deferred tax assets relating to loss carryforwards.

Net profit was positively affected by special factors amounting to around EUR 1.0 billion net in the first nine months of 2006. These relate primarily to an income tax benefit attributable to the realization of previously unrecognized deferred tax assets relating to loss carryforwards of around EUR 1.3 billion at T-Mobile USA and proceeds from the sale of Celcom in 2003 that were not received until the first quarter of 2006. Expenses for severance and voluntary redundancy payments and restructuring, for example, had an offsetting effect. Net profit in the prior-year period had been positively affected by special factors totaling EUR 1.0 billion, mainly attributable to the sale of the remaining stake in MTS. Adjusted for special factors, net profit at the end of the third quarter of 2006 was around EUR 3.0 billion, compared with EUR 3.6 billion in the prior-year period.

EBIT

(a)             EBIT is profit/loss from operations as shown in the income statement.

EBIT declined to around EUR 6.4 billion in the first nine months of 2006. Both the strategic business areas and Group Headquarters & Shared Services recorded a decrease in profit from operations.

EBITDA

EBITDA was around EUR 14.4 billion in the first nine months of 2006, a decrease of around EUR 1 billion or 6.5 percent year-on-year. Only the Mobile Communications business area recorded a slight increase in EBITDA.

Deutsche Telekom First three quarters of 2006

Adjusted EBITDA

EBITDA was negatively affected by special factors of EUR 508 million net in the first three quarters of 2006. These consisted mainly of expenses for severance and voluntary redundancy payments and for restructuring. The Group also recognized one-time expenses relating to DSL campaigns in the income statement. Negative special factors totaling EUR 147 million net were recorded in the previous year, mainly relating to voluntary redundancy payments and restructuring expenses.

Adjusted for special factors, EBITDA in the first nine months of 2006 decreased by EUR 0.6 billion to EUR 14.9 billion.
The decrease is mainly attributable to the decline in adjusted EBITDA in the Broadband/Fixed Network business area, particularly as a result of the drop in fixed-network revenue, increased customer acquisition costs, especially in the broadband area, and higher costs in connection with the launch of new products. This combined impact on adjusted EBITDA was partially offset by cost-cutting measures. The decrease in the Business Customers strategic business area is mainly attributeable to persistently high price and cost pressures. The Mobile Communications business area and Group Headquarters & Shared Services recorded a further increase in adjusted EBITDA. The growth at Mobile Communications was driven mainly by the positive revenue development as a result of continued strong customer growth. Group Headquarters & Shared Services increased its adjusted EBITDA as a result of higher earnings from real estate sales and reduced personnel costs relating to the lower headcount at Vivento.

(a)             Deutsche Telekom defines EBITDA as profit/loss from operations excluding depreciation, amortization and impairment losses. For a detailed explanation of the special factors affecting EBITDA, adjusted EBITDA, and the adjusted EBITDA margin, please refer to “Reconciliation of pro forma figures,” page 44 et seq.

Deutsche Telekom First three quarters of 2006

Free cash flow

The decrease in free cash flow is mainly a result of the decline in profit from operations. This effect was partially compensated by lower interest payments and changes in working capital, as well as a decrease in the level of capital expenditure. Staff restructuring measures had a negative impact of EUR 0.3 billion on free cash flow in the first nine months of 2006.

(a)                               For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 47.

Net debt

Net debt decreased from EUR 38.6 billion at the end of 2005 to EUR 38.3 billion. In addition to the positive cash flow, the effect of the conversion to equity of the mandatory convertible bond, proceeds from real estate sales, and exchange rate effects contributed to this decrease. They were offset mainly by dividend payments, the acquisition of the IT services provider gedas and tele.ring, and the share buy-back following the merger of T-Online International AG into Deutsche Telekom AG.

In a year-on-year comparison, net debt was reduced significantly by EUR 2.5 billion.

(a)                               For detailed information and calculations, please refer to “Reconciliation of pro forma figures,” page 48.

Deutsche Telekom First three quarters of 2006

Strategic business areas.

Mobile Communications

The Mobile Communications strategic business area bundles all activities of T-Mobile International AG & Co. KG. T-Mobile is represented in Germany, the United States, the United Kingdom, the Netherlands, Austria, the Czech Republic, Hungary, Slovakia, Croatia, Macedonia, Montenegro and Poland. All T-Mobile companies offer digital mobile voice and data services to consumers and business customers. T-Mobile also sells hardware and other terminal devices in connection with the services offered. In addition, T-Mobile services are sold to resellers and to companies that buy network services and market them independently to third parties (mobile virtual network operators, or MVNOs).

(a)                               For a detailed explanation of the calculations and definitions of the various amounts, please refer to page 22 et seq.

Broadband/Fixed Network

The Broadband/Fixed Network strategic business area offers consumers and small business customers state-of-the-art infrastructure for traditional fixed-network services, broadband Internet access, and multimedia services. Broadband/Fixed Network also does business with national and international network operators and with resellers (wholesale including resale), and provides upstream services for Deutsche Telekom’s other strategic business areas.

Following the merger of T-Online International AG into Deutsche Telekom AG, T-Online no longer reports as a separate unit, but is managed as a product brand. For reporting purposes, Broadband/Fixed Network is broken down into its domestic and international segments. The Scout24 group is reported in the domestic segment since its parent company has its registered office in Germany.

(a)                               For a detailed explanation of the calculations and definitions of the various amounts, please refer to page 26 et seq.

Deutsche Telekom First three quarters of 2006

Business Customers

The Business Customers strategic business area offers its customers products and services from a single source along the entire information and communications technology value chain. The Business Customers strategic business area is divided into two business units: T-Systems Enterprise Services, which supports around 60 multinational corporations and large public authorities, and T-Systems Business Services, which serves around 160,000 large and medium-sized enterprises. T-Systems, Deutsche Telekom’s business customer brand, is represented in over 20 countries by subsidiaries, primarily in Germany and Western Europe (France, Spain, Italy, the United Kingdom, Austria, Switzerland, Belgium, and the Netherlands).

(a)                               For a detailed explanation of the calculations and definitions of the various amounts, please refer to page 33 et seq.

Deutsche Telekom First three quarters of 2006

Mobile Communications.

Mobile Communications:
Customer development and selected KPIs