SYNERGIES IN ROLL-out of networks by Energy UTILITIES and telecoms 26 June 2014, Brussels Joachim Hoenig, Director, Brussels Representatives Office Group Public & Regulatory Affairs, Deutsche Telekom

6/22/20162 Management Summary  Current Status  Under cooperation arrangements DT is leasing individual infrastructure components (e.g. ducts) or entire networks.  Cooperations provide for a more efficient network roll-out and help enlarging the deployment area as defined by the partners.  Partner usually provides components of the passive infrastructure, DT is leasing network components on a long-term bases, builds and operates the active technical part.  Established cooperation models are standardized:  Integration of the partner’s network components in DT‘s network.  Only minor need for adaption of IT and processes.  Focus on cooperation models with passive network components.

6/22/20163 Why is DT going for cooperations? Benefits of Cooperations  Cost-reduction through (shared) use of existing infrastructures of third parties.  Use of synergies, e.g. through joint civil works / joint roll-out.  Expansion of the FTTx footprint.  Avoidance of parallel network infrastructures.

6/22/20164 Cooperations complement DT‘s OWN roll-out Strategy Value-optimized network roll-out means … Value-optimized network roll-out means … Capital Market „Limited Resources“  Full FTTH roll-out too expensive „Important regional differences“  Profitability: Investment needs vs. regional sales opportunities …own roll-out only in selected regions …Use of cooperation – and sharing models …fast roll-out and high degree of network load „Best networks“  Continuous bandwidth upgrade  FTTx readiness  Broadband for all …Capex- /Opex- Optimization through partnering  High population density  Competition intensity / market attractiveness  Favorable cost structure  Use of third party infrastructure (ducts)  Shared roll-out and coordination  Avoidance of parallel infrastructures  Cooperation with providers of optical fiber lines:  Leasing of passive networks “Fibre Lease Model”  Selective, customer-oriented purchase of wholesale products (BSA/fibre-based local loop)  Joint marketing with cooperation partners (acquisition of assets, pre-sale marketing).  Coordinated / complementary roll-out

6/22/20165 Aspects of cooperation models Prerequisites  Integration of the partners‘ network components into DT‘s network must be feasible on the lowest level of complexity.  Minimal need for adaption of IT and processes.  Focus on cooperation models with passive network components.

6/22/20166 COOPERATION WITH ENERGY UTILITIES  Use of empty and unused gas pipes for fibre roll out  Use of hired fibre lines in overhead power cable infrastructure  Lease or buy FTTH that energy providers roll out in newly developed housing areas  Fibre-Lease-Model: DT leases area-covering fibre network which includes as well fibre for Smart Metering / Smart Grid.

6/22/20167 OVERVIEW COOPERATION InfrastruCturE MDF MFF costumer Costumer AP APL DP Costumer APL DP Leasing of ducts II  DT leases ducts from third party from MDF to street cabinet and rolls out fibre Shared roll-out  During construction works of third parties ducts and cables will be rolled out in a common ditch, e.g. in new housing areas. Leasing of ducts I  DT leases ducts to cooperation partner – partner rolls out FTTH – DT operates network („Fibre- Lease-Model“, FLM) NDF MDF = Main distribution frame OFC = Optical fiber cable NDF = Network distribution frame DP = distribution point FC = Feeder Cable DC = Distribution Cable MFF = Multi Function Frame MDF = Main distribution frame OFC = Optical fiber cable NDF = Network distribution frame DP = distribution point FC = Feeder Cable DC = Distribution Cable MFF = Multi Function Frame OFC in FC section OFC in DC section Copper-wire pairs in DC section Cable ducts / pipes OFC in FC section OFC in DC section Copper-wire pairs in DC section Cable ducts / pipes

6/22/20168 Operation areas/ competences for Cooperations – Infrastructure Required Competences for DT Operation Areas and Partner Shared roll-out  DT operates network  During civil works of 3rd parties ducts /cabels are rolled out  Urban area  Cooperation partner FLM Leasing of ducts  DT rolls out and operates network  DT is leasing ducts from third parties  Cities and rural areas  Municipal utilities  Utilities Leasing of ducts (FLM)  DT is leasing ducts to FLM partners  Partner rolls out FTTH  Renewal of infrastructures of utilities  Preparation of in-house connections /subscriber lines in new housing areas  DT‘s planning expertise during negotiations  Roll-out / operation of active components  DT‘s planning expertise during negotiations  Network roll-out /- operation  All competences as for own roll-out

6/22/20169 DT leases Ductspace FROM THIRD PARTY - KEY ELEMENTS OF COOPERATION AGREEMENT § Contractual partners, location and lease object § Definitions of cable duct, manhole, ductspace, working days § Providing the leased object Obligations of the ductspace owner § Accessing the leased object, deploying and operating the leased object Obligation of DT in relation to owner and other users of the cable duct § Deploying and operating fibre in the leased object Maintenance of cable duct and leased object, rules in case of urgency § Entry into force, duration, prices, commercial conditions, termination 20 years duration with option of extension, regulated price § Liability in case of material and property demages

THANK YOU!