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Executives

Stephan Eger -

Timotheus Höttges - Chief Financial Officer and Member of the Board of Management

René Obermann - Chairman of the Management Board and Chief Executive Officer

Analysts

Nick Delfas - Morgan Stanley, Research Division

Simon Weeden - Citigroup Inc, Research Division

Frederic Boulan - Morgan Stanley, Research Division

Emmet Kelly - BofA Merrill Lynch, Research Division

Matthew Bloxham - Deutsche Bank AG, Research Division

Hannes Wittig - JP Morgan Chase & Co, Research Division

Robin Bienenstock - Sanford C. Bernstein & Co., LLC., Research Division

Mathieu Robilliard - Exane BNP Paribas, Research Division

Justin Funnell - Crédit Suisse AG, Research Division

Ulrich Rathe - Jefferies & Company, Inc., Research Division

Peter Kurt Nielsen - CA Cheuvreux, Research Division

Paul Marsch - Berenberg Bank, Research Division

Andrew Parnis - UBS Investment Bank, Research Division

Jonathan Dann - Barclays Capital, Research Division

Hugh I. McCaffrey - Goldman Sachs Group Inc., Research Division

Deutsche Telekom AG (OTCQX:DTEGY) Q1 2012 Earnings Call May 10, 2012 8:00 AM ET

Operator

Welcome to Deutsche Telekom's Conference Call. Disclaimer: This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flows and personnel-related measures. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control.

Among the factors that might influence our ability to achieve our objectives are the progress of our workforce reduction initiative and other cost-saving measures and the impact of other significant strategic, labor or business initiatives, including acquisitions, dispositions and business combinations and our network upgrade and expansion initiatives. In addition, stronger-than-expected competition, technological change, legal proceedings and regulatory 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 results at 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 or expectations will be achieved.

Without prejudice to existing obligations under capital market law, we do not assume any obligation to update forward-looking statements to 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 measures should be considered in addition to, but not as a substitute for the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.

On our customer's request, this conference will be recorded. Now, please listen to the statement of Timotheus Höttges. Afterwards, you're welcome to ask your questions. Now, I'll hand you over to Mr. Stephan Eger.

Stephan Eger

Good afternoon, and good morning to our listeners in the U.S., and welcome to the first quarter conference calls of Deutsche Telekom. I'm here with Tim Höttges, our Group CFO, and I'll send you the warmest regards of our Group CEO, René Obermann. He is not in the States. He's not in Mexico City. He's participating in a political event in Berlin, so sorry to disappoint you on that. We have round about an hour's time so, i.e. we have to cut off sharply at 3:00.

So without any further ado, I hand over to Tim, our Group CFO.

Timotheus Höttges

Hello, everybody. This is only Tim here, so good afternoon and good morning to the U.S. First of all, we have delivered our solid quarter at DTE and reiterate our full year guidance. Our revenue trends have improved now versus 2011 in Germany and in Europe, resulting in a decline of only 1.1% this quarter. Our adjusted EBITDA, driven by a strong performance in the U.S. and Europe is almost stable year-over-year, as is our free cash flow at EUR 1.1 billion.

And unlike many of our peers, we execute upon our shareholder remuneration and our dividend policy by proposing to our AGM on May 24 an unchanged dividend of EUR 0.70 per share. In our stronghold market, Germany, we continue to perform better than most European peers while maintaining a strong market position and financial profile. The revenue trend in Germany is better than in any quarter in 2011. At the same time, we continue to show a high and even year-over-year slightly increased margin of close to 41%.

In the fixed line business, we showed very positive operational KPIs, with again drastically reduced line losses at 259,000. The improved broadband net adds of 102,000 supported by a broadband churn on a historic low or the very strong IPTV sales of 173,000. In mobile data, revenue growth remains strong at 20% year-over-year, driven by a further increase in smartphone sales with almost 300,000 iPhones sold alone.

In our European segment, we see continuous improvement in revenue and EBITDA trends. The organic revenue decline was only 0.7% in the first quarter. Here, we did see some encouraging trends, particularly in Greece, Romania and Bulgaria. The organic EBITDA decline was reduced to 2.2%. At the same time, we again saw satisfying operational KPIs like smartphone, broadband or mobile contract subscriber growth figures.

In the U.S., we delivered an improvement in our overall customer and contract customer trends. Now the difficult fourth quarter, and delivered a strong financial quarter, which will give us the necessary headroom to invest as planned into the execution of our Challenger strategy throughout the rest of this year.

Let me briefly comment on the Q1 key financials for the group. As just mentioned, we are pleased with the revenue and EBITDA development in the first quarter. As you see in the table on Chart 6, due to an almost unchanged cash CapEx number, in the first quarter, also our group free cash flow is stable year-over-year. The net income number in the first quarter was mainly negatively influenced by 2 effects: a provision for the early retirement program in Germany, which we took in Q1 this year versus in Q2 last year, so this is just a seasonalization during the course of this year. EUR 80 million of additional depreciation, predominantly from the U.S. versus Q1 last year, is due to the deal announcement in March 2011, the business had been classified as held for sale, and depreciations were stopped by then.

On Slide 7, you see the revenue and EBITDA development in Q1 for the group and on a segmental level. The reported revenue decline for the group was helped by EUR 86 million positive currency impact, mainly coming from the U.S. dollar. The organic EBITDA decline on a group level was 1.7%.

In Germany, the 2.3% revenue decline was driven by an improved minus 2.6% decline in our core fixed network business and a 1.8% decline in service revenues in mobile. In the U.S., the 2% revenue growth in euro was driven by the favorable foreign exchange development. The organic revenue decline was 2.3%, driven by mobile service revenue declining 5.4% year-over-year. The increase in adjusted EBITDA at TM U.S. of 8% in U.S. dollar terms was driven by a great drop on cost cutting, lower network costs and lower SACs and CRCs as a result of the success of our value plans.

In our European segment, the 2.6% decline in reported revenues was mainly driven by negative foreign exchange effects of EUR 72 million and the mobile regulation impact of EUR 51 million for the quarter. The organic revenue decrease was 0.7%, showing a continuous improvement versus the previous quarters. The EBITDA decline was 4.3%, also impacted by negative impact from foreign exchange of EUR 26 million and the mobile regulation of EUR 17 million, resulting in an organic EBITDA decline of 2.2%.

At system solutions, we saw a modest decline in revenues of 0.7%, mainly driven by almost 4% lower internal revenues mainly coming from our Save for Service initiatives within the group. On the EBITDA side, there's a slight improvement versus last year.

Let's turn to the first quarter detail in Germany. On Slide 8, you will find a new and more granular split on the development of our revenues in Germany. The revenue trend in Germany improved to minus 2.3% after minus 6.1% in Q4, partially driven by the discontinuation of the MTR impact and some of the onetimers we had last year, but also by an improvement in our core fixed network revenues and wholesale revenues. Our core fixed network revenues have improved from minus 5.4% last quarter to minus 2.6% this quarter, with the main drivers being lower line losses and a healthy growth in our TV revenues.

Wholesale revenues improved from minus 11.6% in Q4 to minus 3.9% in Q1, mainly driven by an improvement in voice and network services. The adjusted EBITDA for Germany declined by 2% in the quarter, helped by a 1.6% OpEx reduction and resulting in a healthy and slightly year-over-year increased margin of almost 41%.

Mobile revenues declined by 1.2%, driven by deterioration in service revenues. On a positive note, within mobile service revenues, the strong mobile data growth continued in Q1 with a 20% growth rate year-over-year.

We saw strong smartphone and iPhone sales in the quarter. Total customer and contract customer intake, however, was negative primarily driven by the customer migration of one reseller, which heavily impacted our net adds and contract churn figures. However, our underlying branded contract customer churn remained stable at a rock solid 1%. We are speeding up our LTE rollout toward capacity limits and already covered 1/4 of the German population by the end of the first quarter, up 11 percentage points in 1 quarter alone.

Let me give you some details on the development of our mobile service revenues in Germany in Q1 and our measures to address this in the coming months. Service revenues in the first quarter declined by 1.8%, mainly driven by the decline in voice revenues, minus EUR 87 million, SMS revenues, minus EUR 12 million and visitor revenues, minus EUR 9 million, which only partially was compensated by the healthy 20% growth in mobile data.

Business customer mobile services declined by 1.5%, driven by price declines as the result of tough competition, which could not be entirely compensated by customer growth. Retail customer service revenues declined by 2%, with the main drivers being ongoing migration of customers into our new tariff profile and lower service provider revenues, lower contribution from prepaid due to less voice usage and the deterioration of our prepaid customer mix.

So what will now be our key initiative to address this weakness? First, within our branded contract customer base, we will push very hard on mobile broadband, focusing on LTE, tablets, sticks and data tariffs. On the business customer side, we will try to test the large potential of our fixed-only customers better, particularly also with mobile data offers.

On the service provider side, we continue our efforts within ethnic and discount brands, and will also adjust our wholesale product portfolio. And in prepaid, we will come up with a new tariff proposition for our customers very soon.

In the German fixed broadband market, we stabilized our market share in excess of 45%, with a strong number of broadband net adds of 102,000 in the quarter, resulting in an improved market share of net adds of beyond 30% on our calculations. At the same time, we showed another very strong quarter in IPTV sales, with 173,000 new Entertain customers won, bringing the total number of Entertain customers now to over 1.7 million. This upselling strategy helped to increase our average revenue per access line by EUR 0.40 to EUR 25.60.

Line losses were more than 24% lower than last year at only 259,000, one of the lowest quarter ever. Furthermore, we increased our broadband coverage in Germany, pushing our VDSL coverage to 36%; our DSL, 16 megabit coverage to 53%; and our Entertain via that coverage, up to 82% of the population here in Germany.

Turning to the U.S. Overall, we are pleased with the U.S. performance, especially compared to the expectations. Although clearly, there are several areas of concerns remaining. Please note that we changed, by the way, on your request, our customer reporting to branded customer reporting in line with our U.S. peers and to increase transparency of reporting. Branded contract is the old contract without machine-to-machine customers; branded prepaid, the old prepaid without MVNOs. We provide a reconciliation with the previous metrics in the IR backup.

Service revenues decreased by 5.4%, resulting from our customer losses. Please note that once again, service revenues under U.S. GAAP decreased to a lesser extent, minus 4% due to the inclusion of onetime fees, which are not included in the service revenues under IFRS.

EBITDA also benefited from the success of value plans, which were introduced last July. Both SAC per gross add and SRC per retained customers were down more than 30% year-on-year. In addition, network costs also decreased by 4.5%, despite a large increase in data volume due to the transition to fiber back order.

In terms of customers, T-Mobile U.S. returned to customer growth in the first quarter due to strong prepaid growth and the return to positive growth in machine-to-machine. You may recall that these were negative in Q4 due to the loss of one large customer. On the other hand, branded contract customer losses, though improved, remained high due to lower gross adds and still a high churn.

Looking just at branded contract, that is contract without machine-to-machine customers, we saw a positive ARPU development with branded contract ARPU up $2 year-on-year due to very strong growth in data.

T-Mobile made good progress with regards to the implementation of the Challenger strategy. Following FCC approval in late April, the AT&T breakup spectrum was transferred in early May. We recently signed the contracts with Ericsson and Nokia Siemens Networks for the network modernization. So we remain firmly on track with regard to network modernization which includes refining of 1,900 spectrum from GSM to HSPA+. This would allow existing iPhones to work on our HSPA+ Network.

In terms of brand relaunch, we just started Phase I of the rebranding, with our test drive campaign, which you may have seen already. We continued our distribution push with 150 new branded dealers. In addition, we expect to add more than 7,000 new doors among our national retail partners this year. The B2B ramp has been initiated, and we signed 4 new MVNOs.

Finally, we have launched multiple initiatives as part of Reinvent, aiming for $900 million of gross cost savings in 2012 alone. This includes the recent rationalization of our call centers in the U.S. resulting in 1,900 net job reductions. We are also making progress with our churn reduction initiative. For the quarter, branded contract churn was reduced to 2.5% and the latest monthly numbers were even lower.

Turning to the European segment, we saw the continuation of the improvements in trends from recent quarters. As a result, organic revenue and EBITDA were close to a stabilization in the first quarter. This was helped by a Europe-wide performance improvement program, a simplification of the steering of our net goals and the rigid focus on activities like smartphone and mobile broadband push. The growth in key market KPIs, like TV, broadband and mobile contract customers remained strong in the first quarter in all [indiscernible] and this despite economic trends in some of the markets like Hungary, Croatia and Greece, which are remaining very difficult.

Turning to our operations. In integrated markets, the revenue trend in Greece improved, improved further in Q1, particular driven by a good performance in mobile as a result of the higher subscriber base and revenue initiatives in the consumer segment. In fixed line, revenues continues to remain under pressure from an unfair, totally unfair and not consumer-oriented Exanto [ph] regulation keeping our offers at uncompetitive levels.

The margin in Greece remained broadly stable year-over-year at 37.7%. In Croatia, the economy deteriorated in Q1 and austerity measures like the reinstatement of a 6% mobile tax, the introduction of a dividend withdrawing tax or the increase of the VAT up to 25% are not really supportive. Operationally, the business held up quite well, with revenues being helped by our ICT business and a higher year-over-year margin driven by strong cost discipline. Further cost savings and staff reductions are planned and announced for the year.

Looking at Hungary, the situation remains difficult, as you all know. Negative foreign exchange effects impacted again the figures in euro terms. The potential new usage-based telco tax replacing the old one might create a burden on private and business customers and thus jeopardize the country's competitiveness. With respect to the competitive environment, all 3 mobile operators have appealed against the decision to distribute frequencies to the new entrant, so far unsuccessfully.

In this difficult environment, our management team does a fantastic job fighting revenue declines by innovative approaches like reselling electricity and gas, as well as insurance contracts via their distribution channels and advanced integrated fixed and mobile offers.

The EBITDA year-over-year comparison is negatively impacted by a positive onetimer in Q1 of last year. In Slovakia, we returned to revenue growth in the first quarter, driven by fixed line and ICT revenue growth where rest of margin drop year-over-year, there is a very strong Q1 last year. Positively, the growth in TV, satellite customers was 31%; and in IPTV customers of 10.5% was very strong this quarter.

In our mobile-centric businesses, revenues in euro were impacted by competitive pressures, as well, tough regulation and a weak Polish zloty and Czech koruna in the quarter.

In Poland, revenues in Q1 were heavily impacted by foreign exchange and the MTR cut. Underlying revenues, x those effects, were up by 3%, mainly driven by device revenues and due to more smartphone sales. The underlying EBITDA was almost on the previous year's level in spite of heavy competition. We outperformed our main competitor, Orange, with regard to total revenues and contract net adds in this quarter.

In the Netherlands, revenues were positively impacted by a higher subscriber base, higher device revenues due to more smartphones being sold. The rest effects from the unlimited offer cancellation already seen in Q4 and other revenue initiatives. The EBITDA search can be explained by a very weak Q1 2011, a more rational market invest and for the cost savings. Furthermore, the outperformance versus our main competitor, KPN, in terms of service revenues and contract net adds, is very positive.

In the Czech Republic, we are facing tough competition. Underlying revenues, x foreign exchange and regulation, however, turned positive to 1.9%. Whereas underlying EBITDA dropped slightly by 2.9%, mainly driven by a strong smartphone push in the quarter, resulting in an increase in the share of dispatched smartphones from 30% last year to now 49% in Q1 and a healthy 24% mobile data revenue growth.

In Austria, we saw a continuation of the contract subscriber growth in Q1 and a strong smartphone push. 74% of all dispatch devices in Q1 were smartphones. Revenues declined by 1%, but without the regulatory impact, underlying revenues grew by 3.5%.

In this context, let me say a few words about our U.K. joint venture, Everything Everywhere, which already reported results last week. We continue to see good progress in terms of customer and underlying service revenue growth, as well as synergy execution at Everything Everywhere and have launched a massive media campaign in order to push our planned LTE rollout in the U.K. And of course, DT remains fully committed to make Everything Everywhere a long-term success in the U.K. mobile market.

In system solutions, we saw a slight revenue decline of 0.7%, mainly driven by our Save for Service initiatives internally, whereas external revenue showed a slight increase, basically a similar picture as in Q4 last year. On the EBITDA and EBIT, we made some good progress versus last year, which was particular weak, mainly driven by EUR 166 million gross cost savings in that quarter.

Turning to the group financials, free cash flow was solid with an increase of 5.7% to EUR 1.1 billion. The improvement in underlying net cash generated from operations was predominantly due to less tax and interest payments. The underlying CapEx development was essentially stable at a high level at EUR 2.1 billion. The decrease in others resulted from less asset sales.

Let's turn to the development of reported net income, Slide 19. Looking at the year-on-year comparison and starting off at our net profit of EUR 480 million in Q1 last year, we saw an improved financial result due to the sale of our stake in Telekom Serbia, which at the same time, increased the minorities.

Profit and loss taxes decreased, partially resulting from a U.S.-related one-off tax charge in Q1. Including various other smaller effects, this would have increased net income to EUR 639 million. However, as already mentioned, we took the EUR 464 million provision for an early retirement program in Germany in Q1, partially offset by EUR 143 million tax benefit from this provision. This represents a different timing of special sectors compared to 2011. In 2011, we took the provision for the early retirement in the second quarter.

In addition, we saw EUR 80 million of additional depreciation, predominantly from the U.S. due to the U.S. being fully consolidated again. As of the announcement of the AT&T deal last year, the U.S. was categorized as held for sale, with no further depreciation. This was reversed in Q4 when the deal was canceled. Therefore, the trend of higher depreciation will continue in Q2 and Q3, but then reversing in the fourth quarter. As a result of these factors, reported net income decreased to EUR 238 million, which is not a concern for me at all.

Finally, our balance sheet ratios improved further with an improved net debt over EBITDA ratio and a gearing in Q1. Net debt dropped below the EUR 40 billion mark to EUR 38.6 billion, while shareholders' equity remained stable around EUR 40 billion.

We continue to maintain solid ratings with stable outlooks from all major rating agencies. Important to note is that we currently enjoy very favorable refinancing terms, particularly versus some of our peers. We took advantage of this earlier this year for some bond issuance, leaving us now refinanced for almost 36 months, way ahead of our normal liquidity reserve policy.

Before turning to the Q&A session, let me say something about our Q1 performance and how this fits in our full year guidance. Q1 was a solid quarter for revenues, and even more, for EBITDA. Nonetheless, we confirm today our full year 2012 guidance, which includes a year-over-year EBITDA decline of EUR 700 million due to the following reasons. In the U.S., we will start to see more investments into our Challenger strategy from Q2 onwards, especially into the Phase 1 of our brand relaunch, and thus, higher media spend and into B2B platform.

In Europe, we cannot exclude further negative developments, be it on the macro or the regulatory or austerity side, impacting our results negatively. Furthermore, we will invest more into marketing in some of our markets in Q2 and Q3 in order to push mobile broadband even further and gain market shares.

So overall, let me say this was a solid quarter, it was appreciated from the capital market so far, and we have quite solid numbers from the balance sheet ratios. With this, I like to finish my presentation and am ready for your questions.

Question-and-Answer Session

Stephan Eger

Thank you very much, Tim. We'll start right away with the Q&A session. [Operator Instructions] And we'll start off with Nick Delfas from Morgan Stanley. Nick?

Nick Delfas - Morgan Stanley, Research Division

Just a couple of questions. Could you just tell us how you're doing on LTE in Germany? You said you covered 25% of the population. Have you got a subscriber number? And also a question on Entertain. How is the split going between your satellite service and your over DSL service?

Timotheus Höttges

So the first thing, Nick, the first thing is that today, we are building our LTE network at maximum speed. As you might recall, we have increased our CapEx over the last 2 years for mobile, our build out, by more than 50%. So something in the vicinity of EUR 600 million is only going into the LTE push. This is a head-to-head race with Vodafone here in Germany. The others are not present at all in this circumstance. Now we have covered 25% of our POPs in Germany. We have increased our footprint by 11% points only this quarter, and we're not only in the countryside, but as well in the cities. We are frontrunners in that one. And the huge investments, which we took into the German mobile network, shows already success. There was not a single test, and there was a couple, more than 6 or 7 tests, which were done recently, which wasn't won by the group, and by the way, with big differences to all the competitors. So therefore, I think we cannot do more at that point in time. The amount of sites, which we have built so far are in the vicinity of 1,505 in Germany, furthermore on 4G. That is 4G alone.

Nick Delfas - Morgan Stanley, Research Division

Do you have the subscribers?

Timotheus Höttges

On the subscriber side, we are something in the vicinity of 70,000 subscribers. On Entertain Sat, your second question, we had 80,000 net adds in the first quarter, more than 200,000 after 7 months. We have launched a new proposition and action oriented to tariff product here in the market recently. The only limitation we had were the media receivers because we were sold out, and so we could have sold even more on the satellite product. But we hope that we are able to deliver on the demand very soon. That is, I think, the message we got from our delivery here.

Stephan Eger

We continue with Simon Weeden from Citigroup.

Simon Weeden - Citigroup Inc, Research Division

I wondered if you could share with us how you saw the trends in the U.S. as you exited the quarter and through into April. And also update us on roughly what proportion of contract gross additions are taking an equipment installment plan this quarter.

Timotheus Höttges

The trends in the U.S. are pretty much unchanged to the first quarter. As I've said, the trend on our branded contract is improving. We see a slight slowdown on gross adds in the overall market, on contract gross adds in the overall market in the U.S. And our churn is improving a quarter -- month-over-month.

Stephan Eger

And Simon, on your question with respect to how much of the cost addition's coming from the equipment installment plan. So the value plans account for about 45% in the first quarter. Let's continue with Fred Boulan. Fred?

Frederic Boulan - Morgan Stanley, Research Division

Two questions from my side. Firstly, on your domestic broadband strategy, if you can share your thoughts on how your high-speed broadband rollout is going? Cable operation reached about 2/3 of the country with DOCSIS 3.0 at the end of this year. Are you comfortable with your VDSL progress? And secondly, on domestic mobile, you mentioned an action plan to regain momentum by mobile broadband and prepaid, but what do you make of increasing pricing pressure in the market? Are we not seeing a broader repricing, which will make a recovery in revenues a bit more difficult to achieve?

Timotheus Höttges

Fred, thank you for your question. I think with regards to the broadband rollout, we will definitely further improve the broadband coverage in Germany. We have seen that we increased our VDSL coverage up to 36% of the population. We are very closely working with the housing association to get even more access to customers in the apartments. And on top of that, the U.S. coverage improving as well. So we had a record CapEx in Germany last year of EUR 3.7 billion total in Germany, something in the vicinity of EUR 600 million to EUR 700 million for mobile, so you could imagine how much is going into the fixed line business here. This is, by the way, something in the vicinity of 14% of total sales or, let's say, every $0.50 of EUR 1 we earn on EBITDA terms, we are investing in Germany into the -- into an improvement of our broadband connectivity. So the big question mark, which always get discussed is the question about fiber to the home and whether we pursue here. Yes, we are even working to improve our rollout in this area, but the big rollout is always questions from -- or depending on the regulatory environment in Germany, which is still unclear for us. So this is a political discussion, which is heating up here in Germany hopefully. And then we will give you details if something is changing here. Your second question was with regards to the pricing and the current launches we have seen. E-Plus has launched a very aggressive tariff, which is called Europhone and Drillisch followed that offer immediately. And I think that we are seeing another MVNO following. The offer is an All-Net and Surf-Flat 500 megabytes for EUR 24.90, SIM-only offer. And by the way, on Internet services. It's a small company, I think, with 10 employees. Until now, we have not planned to cut our prices. As you know, we are a premium operator. We are a market leader, and we are behaving rational in this regard. We are watching it carefully, and we have to find appropriate answers on how to react. So far -- so nothing to worry, but I do not see that this is something we could compare with free, in France for instance, because the market for this specific segment is already well covered and the price gap to the existing average prices is not that big as in France.

Frederic Boulan - Morgan Stanley, Research Division

Okay, but do you think the plans you have can allow you to regrow top line at one point this year in mobile, or the idea is just to contain the pressure that we're starting to see in Q1?

Timotheus Höttges

You might understand that we are not giving a guidance on specific revenue in the segment. But our clear ambition -- and that was the reason that we highlighted our mobile initiatives in this presentation today is, that we want to improve our position here. It is not our intention to decline that business. It's clear, our intention with the tailwind on the MTRs and others to grow the business here in Germany, mainly with the data proposition we are pursuing. So therefore, we have measures, we have plans behind that, and hopefully, we could get them executed.

Stephan Eger

Let's move over to Emmet Kelly from Merrill Lynch.

Emmet Kelly - BofA Merrill Lynch, Research Division

Just 2 questions, please. The first question is on German fixed line. So we've seen a nice improvement in your revenue growth trends there at the beginning of 2012. I think we've gone from negative 4.5% growth in Q4 last year to negative 2.5% in Q1 this year. Can you just give us an insight into what the main drivers are here, and whether we might see further improvements going forward into the rest of 2012? My second question is on Sky Deutschland. Sky has now won exclusive rights for the Bundesliga on all platforms in Germany. Just wondering how do you see your relationship with Sky evolving in the future, especially given your push of the Entertain Sat product at the moment.

Timotheus Höttges

So yes, we are quite happy with the development in the fixed-line business. And mainly, by the way, that with the net add sales, we are again, with a market share at higher than 30%. So we participate even in the growth of this market with the relevant share. And our churn rate in this business is developing nicely as well. So where are -- where's the sales coming from? What are the lead products? TV, I mentioned that already, 170,000 net adds; VDSL 66,000, so customers appreciating bandwidth. That is what we are facing here. And therefore, we believe that with the double and with the triple play offers, which we currently announce our offer in the market, we are attractive for the German customers. With regards to the Bundesliga rights, it was always our clear statement that we are not doing bad deals. And we had a clear understanding on how much we are willing to invest for the total package on Bundesliga. In this calculation, we anticipated a further growth on the data market, which was already quite ambitious. And it was our clear message that we said the net present value is the maximum -- if the net present value is turning to 0, is the maximum we are willing to pay. So we were outbid in this regard -- by the way, big time. So therefore, I feel very comfortable that we took the right decision here. I cannot comment on Sky's business model, but for us, this is somewhat clear. Our cost structure, our distribution model and even the synergies we would have with our media spend would have been significantly bigger, the synergies, than the one Sky has. But anyway, I'm not talking about their business model. Now we are trying to collaborate with Sky so that we are able to continue our Bundesliga offering. The live coverage on our platform is something which is attractive, definitely. 10% of our Entertain customers are using Bundesliga today. Today, it's too early to say. We cannot see, let's say, the final outcome of the discussion. But from a commercial perspective, I would guess that we would find a positive commercial solutions with Sky here in Germany.

Stephan Eger

Moving on to Matthew Bloxham from Deutsche Bank.

Matthew Bloxham - Deutsche Bank AG, Research Division

Yes, just a couple of quick questions about cost-reduction plans. We've seen in the last year Save for Service, and I know you've just recently agreed to some staff wage increases in Germany. How we should think about the kind of shape and/or communication of any current plans beyond the current form of program?

Timotheus Höttges

Look, we have -- in our presentations, our focus is laid on turning the revenue trend, improving, let's say, the over-performance of our portfolio stabilizing. Save for Service is an incremental piece of this turnaround story, of this improvement, which we're pursuing across the markets. There is not a single country, there is not a single segment where we are not working on Save for Service initiatives. On the U.S., we have committed a EUR 900 million saving plan for this year. On Germany, we have saved EUR 300 million of OpEx in the first quarter, which is, I think, is a recent -- sorry, EUR 300 million for the group, which is a reasonable run rate. It might be that we will make a more detailed description of Save for Service throughout the year for our investors here. But Save for Service is clearly, let's say, a main initiative within the group. We know that we still have a gap on the productivity, on the margin level, to our peers of something around 2% to 3% points. And we are working towards these benchmarks on the way how we organize our processes. With regards to the wage agreement in Germany, let me maybe give you some further details how this wage agreement is constructed. The nominal increase is 2.3% in 2012, 2.1% and 2.1%, so 2 steps in the 12 months thereafter. Overall, this would add up to 6.5%. The underlying increase is only 3.7% over 2 years. Why is that? Because it includes a 3-month delay where we do not have an increase for our German operation. If you would now compare OpEx with OpEx, so take the current OpEx level for our wages, including, let's say, the increase for the civil servants, as well for the rest of the employees, the total increase of OpEx after 3 years would be EUR 200 million. There are no other commitments made in this agreement. So all the other ways of improving our cost base, our total workforce costs within the group, are open, and we will work within our Save for Service initiatives to further improve the productivity.

Stephan Eger

Hannes Wittig from JPMorgan, please?

Hannes Wittig - JP Morgan Chase & Co, Research Division

I have one question related to the U.S. and one question related to Germany. In the U.S., I think the obvious question would be, if you had any comment related to other press speculation yesterday related to a potential IP or M&A, the question is simply being, not that I expect you to comment much, but whether there's anything you can rule in or out at this stage and whether the comment that René provided in the Q4 conference call that we shouldn't expect any big decision or any major deal anytime soon still applies? And when it comes to Germany, the question relates to the civil servant retirement legislation, which, to my understanding, expires this year. So how would that impact the shape of your cost-cutting if that was the case? And how would that impact also restructuring charges going forward, if you could comment on that, please?

Timotheus Höttges

Hannes, so maybe everybody's maybe waiting that we make a statement with regards to the rumors around the U.S. And you know that I will not and I cannot and I don't want to make any kind of speculations or statements towards the rumors in the U.S. And therefore, what was right in the past is right today. The first and almost most important thing, what we always have said is, we want to improve our operative position in the U.S. business. And I think the first quarter is quite encouraging. We are well on track with our Challenger program. We are well on track on, let's say, the reforming of our network and the program around that. And we know that we will have an LTE offer, which is competitive enough with all the players in the U.S. market, will be launched in 2013. So therefore, the first task is on its execution and well on track. Now towards the possible transactions, we always have said that we want to have a derisking of our U.S. business and the self-funding platform of, let's say, further investments. This is right and it keeps -- it stays right. So therefore, we are talking in the U.S. We are trying to find opportunities to improve the economies of scale in the U.S., but I cannot give you any more details what's going on. And even not commenting on whether a deal is coming or not coming or whether we do an IPO, that would be then too explicit. With regard to the civil servants and the [German], so far, nothing has been decided from a government perspective. But only for your information, if this program would get extended, this is the cheapest way for Deutsche Telekom to reduce its OpEx basis from the instruments we have.

Stephan Eger

Let's move on to Robin Bienenstock of Sanford Bernstein, please?

Robin Bienenstock - Sanford C. Bernstein & Co., LLC., Research Division

Two questions. I guess, historically, the union members on your board had voted for the dividends. So I was wondering when you had conversations with them about salaries, is the dividend and those future investment in the network something that is discussed? And separately, a number of your peers are looking at trying to reduce subsidy or indeed separate handset financing from service plans, and we've seen a bit more of that in Germany recently. I was wondering if -- what you think about that and whether you think that's something that could be appealing to you in Germany.

Timotheus Höttges

So, Robin, first, we have had no board decision about discussion on whether we trade dividend, again further network build out of whatsoever. We -- I think it was -- we feel very comfortable in what we have laid out with our financial strategy and our dividend commitments 2 years ago. We have now -- we are now executing the second tranche of the 3-year program. We have said that we are committed towards the third year on that one as well. We recognize that a lot of peers in the European environment are not able to fill the dividend commitments. I think that is different to Deutsche Telekom. Unlike our peers, our payout ratio is only around 50%. And unlike our peers, we did not underspend in infrastructure. And I want to be very clear on that one. I mentioned already the build out of our LTE networks, not only in Germany, but as well in Europe. In Germany, we are spending 50% more than over the last average run rates in normal years. And we have the physical limitation today on the speed on the LTE build out. And therefore, there is no -- nothing we are sacrificing today for our dividend. The opposite is the case; we're even to take some of the cash flow to pay down our debt. So therefore, I think nothing to say. Nevertheless, internally, we are thinking about what would be our answer in 2013 toward the next phase of our financial strategy. This is an internal discussion. Haven't had a discussion with the board so far, and we will come to the investors the moment we have a clear focus on that.

Stephan Eger

Robin, did that cover your questions?

Robin Bienenstock - Sanford C. Bernstein & Co., LLC., Research Division

Yes. But on the subsidy?

Stephan Eger

The subsidy [German]. Can you repeat your question on the subsidies again?

Robin Bienenstock - Sanford C. Bernstein & Co., LLC., Research Division

Yes, so the question was just simply a comment on the fact that some of your peers have been moving to try to reduce subsidy in Europe, and we're seeing more in the way of separation of handset financing from service plans in various markets in Europe. And I was wondering whether you thought that was something that would be interesting for you, and whether you could see that happening more in Germany as well.

Timotheus Höttges

Sorry. Now I got your question. I think with regard to Germany, we are market-leading in Germany, and therefore, we are offering both. We have a clear SIM-only product which we have in the marketplace and the customer is paying then the handset full price. And there might be even some promotions on certain stocks, but this is the one offer, so then the tariff is, at least, more attractive from a price point. But as a premium provider, it is very important for our customer base, when we looked at that one, to either offer subsidized handsets. And I'll give you one example. We have a promotion, including subsidies, on iPads. We have a tariff point, EUR 39.99 on the monthly recurring charge. And if you commit to 24 months, you get the iPad for EUR 99. And this is very well appreciated from our customer base. And from an economic perspective, it is as well something which is attractive for us. So we are normally not looking on whether we do it with or without promotion, we are always looking on the payback of the customer, the amortization rates, which we have with customers along the 24 months' duration.

Stephan Eger

Let's continue with Mathieu Robilliard from Exane. Mathieu?

Mathieu Robilliard - Exane BNP Paribas, Research Division

Yes, just one quick question, please. With regards to the U.S., it seems that the cost base has declined by around 200 million year-on-year, if I get my math right, USD $200 million. Could you quantify maybe how much of that is due to the fact that you now have a roaming agreement with AT&T that supposedly -- I mean it's lower roaming costs, and how much is due to lower commercial expenses linked to the value plans?

Stephan Eger

So as we said in the presentation, Mathieu, I think a good chunk comes from the value plans, a good chunk comes from the reduced network costs, as we always said, due to the fiber link. And there is also some indirect cost savings coming from the closure of call centers and staff reductions, et cetera. That's the level of detail we want to give on that on. Let's move on with Justin Funnell from Crédit Suisse. Justin?

Justin Funnell - Crédit Suisse AG, Research Division

Level 4 in Germany, you're obviously doing pretty well in broadband, TV, I mean does looking at Level 4 still be a -- is it still a strategic priority when you're looking at the opportunities to acquire Level 4 operators? And should we expect you to be doing a deal in that area in the next 12 months? And then secondly, your comments about the rate debates -- political debates about fiber in Germany, was heating up. Could you give us a bit more color on that? Is it heating up in a good direction or a more worrying direction, please?

Timotheus Höttges

I think the first thing is, we should not discuss fiber rollout separately. What we all should discuss is a tech cable because we are not building the fiber for its fiber purpose only. We're building it to keep our market share at a high level to be competitive in the environment, not only short term, but even long term. So in this circumstance, we are not discussing fiber only. We are discussing the entire infrastructure and even the access to the Level 4 as a kind of consistent program. If you would now question whether in this approach to a tech cable, TeleColumbus would be a target for acquisition for Deutsche Telekom or a reentry into cable as one of the answers. I will not comment on any kind of the speculations which you might have seen in the news here. We are working on -- in every areas on attacking the cable and not letting them grow significantly. With regards to the fiber discussion, maybe let me state something on the regulatory side, what it would take for us to grow our investments here. I think the biggest problem we have is that the German market is overregulated. And we are very vocal on that one in the news, in the political situation at this time. If the market is asking for more fiber investment, the overall commercial environment test has to change. And how could that be enabled? I think one of the arguments could be that we regulate cable and Deutsche Telekom symmetrically. Either we get out of the regulation in the market where we are facing infrastructure competition or that cable get regulated the same way as we do. Second, I think, we need risk-sharing agreements. We are very much fighting on the so-called contingent model here in Germany, that if people want to use our infrastructure, that they are not only have to pay a monthly fee or a minute fee or a kilobyte fee, but they even have to make a fixed investment commitment if they're buying certain bundles. And what we need as well to reduce the overall cost is that infrastructure wholesale obligations should be -- get imposed for competitors, so that everybody could use the others' existing infrastructure being as taxed or everything. This would significantly reduce the overall investment and would help us to realize the return on capital employed. That is the way how we're steering the fiber rollout today.

Stephan Eger

Moving on to Ulrich Rathe from Jefferies.

Ulrich Rathe - Jefferies & Company, Inc., Research Division

My first question would be on the book-to-bill and T-Systems and the order intake, I think it was one of the lowest in memory. Is this a weak quarter? And are there any reasons to anticipate this increase again? And what influence might it have on the future revenue performance of T-Systems? A second question is, obviously the whole sector's sort of valuations have come down, including DT's. Has this, in any way, increased your appetite for M&A? Are you now increasingly look at opportunities that probably do cross your desk every day? Or do you have essentially an unchanged view on that? I think you have ruled out sort of major M&A some time ago. Is that still true in the current environment?

Timotheus Höttges

Okay, I think the system solution answers are very straightforward. The order entry always compares with last year. And last year, in the first quarter, we had a few big deals. I want to mention one big deal. This was the entire data center outsourcing of Everything Everywhere, which we booked in that quarter. This quarter, we haven't seen big deals compared like this one. We saw some deals like BIT in the first quarter, but one of the reasons is that we haven't had these huge deals. By the way, there is a trend or the tendency in this industry that there are less big deals as the ones we have seen in the quarters before. On top of that, I think we are focusing very much on improving the productivity on the existing big deals. You saw already the positive impact on that one in the first quarter. We had huge transition and transformation costs off that deals at the beginning. Now we end the phase on capitalizing on that one. So therefore, very much was focused on quality and on profitability of the existing deals than rather now fighting for new ones. But nevertheless, I talked to Ryan at Kiliman's [ph] yesterday on the order entry situation and he said he's not worried about his pipe towards the remainder of the year. There's some interesting things coming, so don't take quarter as a trend. With regards to the M&A policy -- and our M&A policy stays completely unchanged, and we are not planning any big acquisitions. What we are doing today, and you see that we are very disciplined following our financial strategy, which is, by the way, highly appreciated on the bond market, we have recently accessed the U.S. bond market with EUR 2 billion. We had a 5-year coupon [ph] at 2.9% and we had a 30-year coupon [ph] at 4.9%, only to give you an indication how cheap we could refinancing ourselves. And including the breakup fee, this will help us just on the EBITDA -- on the cash flow side, to reduce our interest payment by more than EUR 200 million already this year. All of this is we are very disciplined and focusing on further reducing our debt burden for the full year 2012. So excess cash is used for that one. By the way, the same is true for OTE, where we make great progress on reducing the debt position as well. That doesn't exclude smaller deals. I think it makes a lot of sense to accelerate the growth in our digital business unit with some brownfield investment or some smaller acquisitions. This is always possible to accelerate the growth profile of our group and you will, maybe, follow that in our subsegment documentation which we have in our -- for the first time this quarter.

Stephan Eger

Moving onto Peter Kurt Nielsen from Cheuvreux. Peter Kurt?

Peter Kurt Nielsen - CA Cheuvreux, Research Division

Just one quick question with Tim's reply to the previous question on German broadband. Tim, are you see anything externally or internally in your base, any indications that would make you doubt that you can really better maintain a share of net adds up above 30%-plus and the current low churn rate on domestic DSL for the remainder of the year?

Timotheus Höttges

Look, first, I think the churn rate is definitely something which we precisely understand. We understand the customer base, we have a huge CRM system, we have a lot of innovative products. So it is not thus just a price competition. It has a lot to do with the service proposition. But as well with the question is future in-build -- when a customer decides upon a German product or Deutsche Telekom product. And with Entertain and with a lot of other innovative things, I think we are very confident that we could keep the churn rate at the level of where we are today. Now the net add number is always depending on how fast a market is growing. If you have a very slow increase of new customers' growth that's coming to the market at the same churn rates, your net add number is always depending on this circumstance. I cannot guarantee the 30% net add for the remainder of the year. We definitely fight for that one. It has to do with the overgrowth of the market. And I think with the new price points and with the new offerings we have in the market, we are doing pretty well over the first 4 months of this year.

Stephan Eger

Let's continue with Paul Marsch from Berenberg.

Paul Marsch - Berenberg Bank, Research Division

Two questions. I wonder if you could remind me, the 36% VDSL coverage that you've talked about, what would that be as a percentage of the installed cable customer base? I wonder if you know that statistic. And what scope do you have to drive VDSL speeds even higher? You're obviously investing in expanding VDSL coverage. Are you investing in driving VDSL speeds higher as well?

Timotheus Höttges

So a very quick answer on the VDSL question, the overlapping area with VDSL is 90% to 95% overlapping with the cable footprint. And Paul, if you have in mind, do we have a competitive answer in this area with VDSL? Yes, definitely. Our VDSL coverage is in these areas, and that is one of the reasons that we are increasing our VDSL coverage in Germany. Are we investing more in VDSL speeds? Definitely, yes. You know and we laid that out in one of the last presentations. We are following a hybrid approach. So you see that already in the presentation of today, but even in the last ones, that from DSL, we have improved to ADSL, into 16 megabit. From 2 megabit, we went to 6 megabit as our, let's say, normal proposition. From ADSL2+, we go to VDSL. And in our labs, we are working these days on Vectored DSL as one of the opportunities to further extend the speed on our copper lines. And on top of that, we are even improving some fiber to the home where it makes sense and where we have to build an entirely new network. And on top of that, and that is quite encouraging and we have to look into that one, we are working very intensely on partnerships. We have announced Kemut [ph] as one example where the fiber link and the fiber excess is built by a municipality or a local company. And we are the exclusive distributor on this infrastructure, so then we are not building but we are using high bandwidth. So in all this together, and in some areas, even LTE as an answer, we have now a hybrid approach with bandwidth to attack cable in Germany.

Stephan Eger

So there's 3 more people waiting in the chain. Maybe let's get started with Andrew Parnis of UBS. Andy?

Andrew Parnis - UBS Investment Bank, Research Division

I have 2 questions, both on the U.S. The first one was just on the branded contract net add losses fell quite significantly Q4 to Q1. Is this a number now you expect it to keep on falling? Or do you think sort of around sort of 500 level is sort of a reasonable run rate for the rest of the year? And then the second question was just on the Verizon spectrum. They basically said that they're interested in selling off some of their 700-megahertz A and B licenses in the U.S. Is this something you'd be interested with, even though maybe it's not necessarily as a exact fit with the current spectrum you hold?

René Obermann

Okay, Andrew, I think, very clear statement. Our most important task in the U.S. is to improve our contract blended churn. That is no question. We have seen a big churn, I think it was 710,000 customers in the fourth quarter. We have seen 500,000 now losses in the first quarter. And whatever we do, whatever number is -- the first discussion is around improving the churn in the U.S. And by the way, we have some encouraging developments. It's not that we see it accelerating, we see improving trends. But as I said earlier, we have to even consider that the total market, the gross add market, the new contract gross adds is slowing down in the U.S. So even if we are reducing our net adds -- sorry, our churn, if we're reducing our churn, if we're not seeing more gross adds in the market, then we are facing further churn in the U.S. environment. So what does that mean? We cannot give you now a precise number on how many net adds -- losses we would see over the next quarters. But definitely, we are working on improvements. We are planning improvements internally, and we hope to deliver them over the next quarters. With regards to your question on Verizon Wireless, they have announced that they may sell a 700-megahertz spectrum in the A and the B block conditional on the spectrum core purchasing being approved. Whether this spectrum is interesting for us, first of all, we are not interested in 700-megahertz spectrum at this time. This is an incomplete footprint, and there is even interference with the Channel 51 TV station. So honestly, this spectrum is nothing which is -- which would be attractive for us. We need -- we would like to see AWS spectrum coming to the market, which would be adjacent to our footprint, and this is definitely something that we will be interested in. But on the 700-megahertz side, we are a little more reluctant.

Stephan Eger

Let's continue with Jonathan Dann of Barclays.

Jonathan Dann - Barclays Capital, Research Division

A question on your LTE strategies. Are you pursuing LTE? Or why are you rolling out LTE at different spectrum bands inside the U.S., Germany, the U.K.? I mean, it would seem that the new iPhones will presumably have LTE on the same bands. And then the second question, I was just going through the T-Mobile press release in the U.S., it seems that bad debts have nearly doubled. What's happening there?

René Obermann

Look, the first thing is, I think on the LTE band, this is always something to do with the allocation of spectrum in their respective countries. And we have to deploy the spectrum, we were able to acquire, and therefore, it differs from market to market. But there is a tendency, and you would see that, across our footprint, that 1,800, and the adjacent spectrum band is the one which we are deploying. And with regards to the interesting line, we are working on LTE on the latest, so we do not need a second chipset for this product. We could only deploy one chipset with the LTE band which we have, which would be advantageous to the AT&T and the Verizon version. And we could use with this spectrum the stand-up products of Apple, which will be delivered into the market from 2000-whatever onwards on the 4G proposition. Your second question was with regards to the G&A costs and whether they increased despite our cost-cutting efforts. Year-on-year, there is an increase. We had higher bad debt expense associated with new products and changes in customer mix towards subprime. I'm only talking about U.S. here. And sequentially, you had some higher personal incentive expenses. Just remember, we have the retention as well and some renewal upgrade commissions to be paid in the first quarter. So that is the reason that we have this addiction or this difficulty to explain development on the cost side.

Stephan Eger

The last one is Hugh McCaffrey from Goldman Sachs.

Hugh I. McCaffrey - Goldman Sachs Group Inc., Research Division

Two questions, please. Firstly, just in the U.S., can you give us any color on whether the iPhone switcher and I guess plan for the second half is still on target? Do you expect to be able to launch that in Q3, Q4? And I guess have you started trialing spectrum, reforming ahead of that? And secondly, just on Comstar and T-Mobile in Germany, how do you think about managing the price gap between Comstar and T-Mobile? And what do you think is a sustainable price difference between the 2 brands?

Stephan Eger

Maybe I'll start out with the price gap between Comstar and the Deutsche Telekom plan over T-Mobile plan. Yes, we think it is sustainable. Comstar is our low-fills plan. We see ourselves well positioned against the competition in the low-fills segments. So far no need to change anything from this -- from today's perspective.

Timotheus Höttges

Hugh, with regards to the question or the color on the U.S. strategy, T-Mobile in the U.S. we're planning to launch 4G HSPA service in the 1,900-megahertz band in a very large number of markets by the end of the year, in fourth quarter. And with this launch, we will automatically have access for the iPhone switchers, so therefore, yes. Definitely, this is in our strategy, included. And whatever we could do here to accelerate and whatever we could do to foster that, we will do. So a positive message in this regard. And was there a second reference ahead of the fourth quarter? No, I think that was answering your question also.

Stephan Eger

Did it answer your question, sorry?

Hugh I. McCaffrey - Goldman Sachs Group Inc., Research Division

Sorry, yes. It was just on the spectrum reforming in the 1,900 band, have you started trialing that yet, because I understand there may be some risk of disrupting your customers if you do that? So I was just trying to get...

Timotheus Höttges

No, no, just spontaneous out of my mind and from the business reviews with Philipp Humm [ph] and his team, they have started the trials and they were very encouraging. So they were -- network modernization trials in both East and West Coast cities have shown up to 33% increase in data speeds, as well as improved signal quality and in-building coverage. And we have seen even happy iPhone users that have blogged about it. So that is, I'd say, the official answer which I get from the U.S. team on that subject. So therefore, I think nothing to worry in this regard. The team is quite optimistic.

Stephan Eger

Thank you, Hugh. Thank you, Tim. I think we are now coming to an end. Sorry for overrunning. If there is still some questions out there, I think my team will note that, and will call you right away. As always, you know that there's a replay for this conference call. And if you want to, we can also send you the script.

Thank you very much, Tim. Thank you all in the room, and thanks to our investors out there. And see you either in London, Milan, Frankfurt, Boston or New York in the next 4 days. Cheers. Bye-bye.

Operator

We'd like to thank you for participating at this conference. The recording of this conference will be available for the next 7 days by dialing Germany 49-1-(805) 204-3089, while our reference number 428685#. We are looking forward to hear from you again. Goodbye.

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