'Save for Growth' New efficiency program

• T-Mobile International presents the details of its savings and efficiency program 'Save for Growth'
• Up to 500 million euros for strategic growth initiatives
• Targeted savings volume by the end of 2006: one billion euros
• Savings through optimized management of handset subsidies, narrowed product and service portfolios, increased bundling, improvement of purchasing conditions, and greater personnel productivity
• Reduction of personnel costs

Today in Bonn, T-Mobile International presented details of its savings and efficiency program "Save for Growth". With this program, T-Mobile aims to achieve savings of one billion euros (around 10 percent of revenue) by the end of 2006. Of this sum, the company wants to invest up to 500 million euros in the realization of its growth goals.

Thus T-Mobile is creating the necessary resources to drive three growth initiatives:
- further development of mobile Internet for leisure time and office
- offering simpler and less expensive mobile phone tariffs
- further development of integrated network platforms (GPRS, UMTS, W-LAN)

85 percent of the savings are solely distributed in the following areas:
- targeted management of device subsidies as well as improving purchasing conditions and development costs of mobile terminals (500 million euros)
- Optimization of supplier relationships and the utilization of Group synergies (250 million euros)
- Focusing product and service portfolios (50 million euros)
- Reduction of overhead costs (50 million euros)

Only 15 percent of the savings result from:
- reduction of personnel and additional personnel costs in the European companies (150 million euros - corresponding to around 10 percent of total personnel costs)

"We are at the beginning of a new era," explained René Obermann, Chief Executive Officer of T-Mobile International. "The mobile telecommunications industry is on the verge of a shift. The focus is no longer on growth purely in SIM cards, it is in the development and maintenance of more intensive customer relationships." According to Obermann, T-Mobile has recognized this early on and is now creating the necessary conditions to successfully continue the business. As a result of the high market penetration in most European markets, the business is changing. "The course is clear: profitable growth at reasonable costs instead of growth at any price; simple and inexpensive tariffs in connection with realistic handset prices," said the T-Mobile CEO. "We already began with this several months ago in our most important European markets, primarily in Germany. These measures allow us to continue to offer an attractive handset portfolio at lower costs, while at the same time giving us more maneuvering room for tariff offensives," stated Obermann.

For this reason T-Mobile is shifting its focus in procurement of handsets. Timotheus Hoettges, Member of the Board of T-Mobile International, responsible for European Sales and Service activities: "Until now we have placed emphasis on a very large selection of models, whereby only a portion of these met with proportionate resonance among customers. In the future, we will more strongly orient ourselves to the actual customer needs and narrow the range." On one hand, we will place a stronger focus on selected T-Mobile specific devices that deliver real competitive advantage. As an example, he cited the very successful MDA family of devices, for which there was an especially strong demand during the Christmas season. By the end of the year, T-Mobile was able to sell 100,000 of these devices in Europe. On the other hand, T-Mobile will reduce its terminal program to 30-40 models from currently more than 50. This will allow for greater control in handset procurement volume, which will enable more attractive prices for these devices.

Further strategic leverage arises in the area of optimizing supplier relationships and by the increased utilization of Group Synergies.

As an example, René Obermann gave the recently completed "European Backbone Network", which directly connects all T-Mobile networks with one another and brings about significant quality and cost advantages. This is because T-Mobile no longer has to pay to use the networks of third parties. Along with this, T-Mobile wishes to integrate the internal, technical processes across Europe to an even greater degree. In this way, T- Systems will also be increasingly used as internal IT partner. In addition, the creation of a virtual "European Operation Factory" is planned: "The advantage is obvious. Today we already have a download center for electronic content like ringtones or games for all T-Mobile companies. Network and service management will also be centrally controlled for the European T-Mobile companies," said Obermann.

Along with this, T-Mobile will further increase the profitability requirements of its products and services. The company is reviewing which offerings it will develop itself and which it will have developed by partners. Obermann: "From today's standpoint, it doesn't make much sense for T-Mobile to develop content offerings, for example. In the meantime, companies have come into existence - some also with our help - which can do this job substantially better and less expensively than we." As an example, he named traffic information services, which T-Mobile still produces to a degree. In the future, T-Mobile wants to focus in this area even more strongly on the topics of "service, quality and simplicity".

Further savings potential also arise in the area of overhead costs: through savings in areas like consulting, building maintenance, rent and travel expenses.

In summary, with these measures, T-Mobile aims to realize the lion's share of the targeted savings, 85 percent of one billion euros or around 850 million euros. The remaining portion of the savings is to be achieved through an increase in personnel productivity. Therefore, T-Mobile plans to decrease personnel costs in Germany, the UK, the Netherlands, Austria and the Czech Republic by around 150 million euros.

Realizing the necessary savings in personnel costs could require up to 2,200 job cuts in Europe (around 10 percent of the entire workforce) within the next two years.

T-Mobile Czech Republic expects to reduce the number of employees by 160 by the end of 2006, which is approximately 6.5 percent of the total number of employees. The job cuts will be primarily realized by not replacing employees leaving the company (natural staff turnover).

As early as in 2003, T-Mobile Czech Republic started a strategic program with the aim of becoming the largest mobile operator in the Czech Republic. "Our current strategy is based on the same principles as the "Save for Growth" program, which will provide us with an even greater competitive advantage and will make us more successful. Our main goal thus remains becoming No. 1 in the Czech mobile market. We expect that we will be able to reduce our costs by one billion Czech crowns within two years and invest a half of this amount into activities that will ensure our growth in the following years," said Roland Mahler, Managing Director of T-Mobile Czech Republic.

T-Mobile Czech Republic, a member of the international telecommunications group Deutsche Telekom, has almost 6.2 million customers, the number-one operator in the Czech market. T-Mobile is an integrated operator: in addition to telecommunications services, it offers comprehensive ICT solutions not only for companies, but also for other organizations and individuals. It provides outstanding services in the high-speed network, which was proved repeatedly by benchmark testing performed by umlaut (former P3) with Best-in-Test seal.

T-Mobile Czech Republic places emphasis on taking a responsible approach to the environment and society. It adheres to fair business practices, helps beneficial applications and services to see the light of day, supports non-profit organizations, small businesses and individuals, and lends a helping hand whenever crisis situations arise. The company’s employees serve as volunteers in many places across the entire Czech Republic.

More information about the company is available at www.t-mobile.cz, www.t-press.cz (the portal for journalists) and www.t-mobile.cz/pomahame (information on the company’s CSR activities).

Contact details of the press unit: press@t-press.cz.