Deutsche Telekom AG

Timotheus Hottges - Chief Executive Officer Thomas Dannenfeldt - Chief Financial Officer Hannes Wittig - Head, IR

Polo Tang - UBS Simon - Citi Akhil Dattani - JPMorgan Chase & Co. Stephane Beyazian - Raymond James Guy Peddy please - Macquarie Ottavio Adorisio - Societe Generale Robert Grindle - Deutsche Bank Mathieu Robilliard - Barclays Samuel McHugh - Exane BNP Paribas Usman Ghazi - Berenberg Andrew Lee - Goldman Sachs Russell Waller - New Street Research Fred Boulan - Bank of America Ulrich Rathe - Jefferies Dhananjay Mirchandani - Sanford

Yes, good afternoon, everyone and welcome to our Q3 2017 conference call. With me today is our CEO, Tim Hottges; and our CFO, Thomas Dannenfeldt.

Tim, as always, will first go through a few highlights, followed by Thomas who will talk about the quarter's financials in more detail. And again after this, we have time for Q&A.

Before I hand over to Tim, please pay attention to our usual disclaimer, which you will find in the presentation. And now it is my great pleasure to hand over to Tim.

Yes. Thank you, Hannes and a very warm welcome also from my side.

I am pleased to say that at the nine months stage, we are well on track for our 2017 targets. Q3 was a strong quarter.

All our major businesses are growing – growing customers and growing revenues. We have upgraded our EBITDA guidance again this morning due to T-Mobile U.S.

and our free cash flow is on track for another year of double-digit growth. So let me start on page number four.

Our philosophy, strong investments, drive customer growth and financial results. And because of this we can keep growing investments to keep this virtuous cycle going.

Let us look at investments a bit closer. Year-to-date our investments are up 12.2%, in line with our full-year guidance of around €12 billion.

Of this we plan to spend a bit over €5 billion in our various German operations, including over €4 billion in our German unit. And as you know a lot of this will be spent on fiber.

I know you are worried about the German CapEx risk. I have seen the most recent Capex consensus for Germany, which is now stable through 2021.

As Thomas already said in the second quarter call, from today's perspective that seems a reasonable assumption and provides a strong basis to deliver for German customers going forward a number of possible scenarios. Because it makes sense, we continue to focus our resources on bringing high-speed connectivity to as many customers as quickly as possible.

Last week we switched on 3.5 million vectoring homes bringing the year-to-date installations to 7 million. By the year-end, we are aiming to raise this to 10 million.

Just consider this for a second, we have almost 40 million households in Germany, and only in one year we are installing fiber to the cabinet installation for almost 10 million households. These homes will get 100 megabits per second now, and up to 250 megabits per second from next summer.

We also started our fiber build out to German business parks. You may have seen a number of announcements here in recent weeks.

For instance, in Hamburg or in Düsseldorf or in rural southwest Germany, or in the [indiscernible]. And we just won a tender for fiber to the home subsidies in rural eastern Germany.

Where others talk, we just do it. Because of our investments we grew across all our geographies; in the US, in the Germany and in our other European operations and the financial results reflect this.

Year-to-date, our revenues are up 4.2%, our adjusted EBITDA is up 6.6% and our free cash flow is up 8.8%. And we delivered strongly this quarter, reducing our net debt to EBITDA ratio to 2.3 times from 2.5 times the quarter before.

So we are well on track for investing in our future and generating double-digit free cash flow growth. We raised our EBITDA guidance again for 2017 to keep executing against the targets from our capital markets day in 2015.

Slide 5 shows some examples for our success within our quarter, especially focusing on customers. In the last 12 months, we added a further 1.6 million converged customers.

The number of fiber customers in Germany grew by 2.8 million and in the US we won 5.9 million customers. In the cloud, our growth has re-accelerated to 14%.

Page 6, as usual, shows by means of a few examples how we drive customer experience through innovations. We doubled the customers in our smart home platform in the last 12 months.

Over 350,000 customers take advantage of our hybrid, an increase of about 100,000 compared to last year. Downloads of our service have increased as did our levels of online IT support.

We are using digitization to simplify our processes and the customer experience. And like for our peers, this is of course an area of great focus.

Our StreamOn tariffs in Germany have proved increasingly popular. We already have over 400,000 subscribers in Germany, and we have recently launched it in Croatia, Poland and Greece.

In the US, Netflix on us is our latest carrier proposition, and it is off to a very good start. Slide 7 compares our year-to-date performance with our guidance.

It is fair to say that this year again we are quite comfortably ahead of the group level guidance we issued at the 2015 capital markets day. For 2017, we now incorporate the recent EBITDA guidance increase by T-Mobile U.S.

adjusted for currency and accounting, this translates into the €150 billion that you can see in our Group guidance increase. The outlook for the remainder of our businesses is unchanged.

Mainly due to higher investments in the US and Greece, we are keeping our free cash flow outlook for 2017 unchanged at around €5.5 billion, up from €4.9 billion last year. Before I pass onto Thomas, let me comment on last weekend's news regarding T-Mobile and Sprint.

You will remember our statements in our first and second quarter conference calls that it is possible if not likely that there will be various discussions regarding various potential strategic combinations among industry participants, including ourselves. And we said, it was far from clear that any such discussions will lead to a successful outcome.

This is where we are. In the last few months, T-Mobile U.S.

and Sprint together with their parent companies have explored ways to create a win-win for their shareholders and for US consumers by scaling up and realizing substantial synergies. However, this weekend we decided to terminate our discussions.

You will remember our stated design criteria for a possible agreement; to be clearly superior to our excellent standalone prospects, any merger would have to stack up primarily on valuation, on effective governance, on regulatory concerns and have strong financial foundations. In the end, unfortunately, we could not make the equation work, and this is where we are.

But what you can be absolutely sure of is that we did our very diligent homework on all of these criteria. Where do we go from here?

The answer is simple. We won't stop.

With our support, T-Mobile U.S. has invested over $40 billion in the last five years.

We are only starting to benefit from these investments. We are winning the network tests even before the new low band spectrum has been deployed.

Our unique and massive regional expansion opportunity, where we are just starting; and we are only just starting to leverage our B2B opportunity. Our financial performance is excellent, allowing us to maintain a high investment profile and strong commercial momentum.

In Q3, for instance, adjusted for the hurricane damage, our EBITDA was almost $300 million ahead of consensus expectations. T-Mobile is in great shape, and we won't stop or should I say we are just starting.

But as ever, while we are excited about our standalone prospects, we will of course remain open-minded about other opportunities to create value for our shareholders. Before I hand it over to Thomas, let me also express my sincere thanks to Niek Jan van Damme, and Reinhard Clemens, who are leaving us at the end of this year.

I'm very grateful for their contributions. You can see the strength of our German operations today.

Now let me turn it over to Thomas to review our excellent third quarter in Germany and elsewhere in greater detail.

Thank you Tim, and a warm welcome to everyone from me as well. So let us deep dive a little bit into the numbers.

Adjusted EBITDA grew 3.3% this quarter and by 6.6% at the nine month stage. Our adjusted net income grew 19.6% this quarter, and meanwhile our reported net income is impacted by a write-down in T-Systems, which reflects recent challenges in the IT part of the business, especially a much weaker than expected order book.

Year-to-date free cash flow growth is consistent with our guided 10% mid-term CAGR, and well on track with our around €5.5 billion target for this year. So moving on to Slide 10 then, in Germany, our sales were stable this quarter, driven by growth in total service revenues.

Our EBITDA grew 4.5%. Remember we told you last time our EBITDA growth for the year would be backend loaded.

We are now seeing the benefits from the operating expense reductions we expected, including, for example, the merger of our sales and technical field service. So clearly we are well on track for our guided EBITDA growth this year.

On the next slide, you can see that our reported total service revenues swung to a slight growth in Q3, both in fixed and mobile service revenues, and this is after the effects from roaming and the fixed and mobile termination rate cuts that went into effect in December last year. Underlying mobile service revenue growth amounted to almost 4%, and underlying total service revenue grew to almost 2% year-over-year.

We are currently tracking a bit ahead of our mobile service revenue midterm growth CAGR that we guided towards at the 2015 capital markets day. On the other hand, we are tracking a bit below the promised growth rate on broadband.

So, I think net-net it is very fair to say that we are pretty much where we thought we would be. Looking at mobile on Slide 12, our service revenues grew 0.9% this quarter.

Based on our innovative tariffs, we are seeing a shift to higher value plans with continued growth in our own branded contract base, and that way we are able to monetize the growth in the data consumption. Despite various competitive promotions, our commercial performance has been very steady.

Our own branded customer base grew by 137,000. And as you can see on Page 13, mobile data growth remains very strong at 55% year-on-year.

With the average usage now at 1.6 gigabyte a month, and we are making good progress with convergence. This quarter, we further increased the percentage of homes with MagentaEINS contract to 18%.

And 40% of our Magenta branded mobile contracts are now part of a convergent relationship, up 9 percentage points in the last 12 months. Our up-selling remains very successful and contributes to our improving service revenues.

MagentaEINS homes spend on average now €8.08 per month more with us than before. So moving onto fixed line on Slide 14.

Here we rebounded to add 70,000 broadband customers this quarter. Our hard IP migration will continue through year-end 2018, but we could offset this through the strength of our commercial offerings.

Line losses also improved sequentially. Demand for our fiber products remains very strong with 700,000 additions this quarter.

Again, with the majority coming on our retail platform. TV net adds benefited from the launch of our new StartTV in May and our telecom sport packages in August.

The launch of [Entertain TV] last month with exclusive titles should further increase the attractiveness of our TV offerings going forward. So turning to our fixed products on Slide 15.

Our retail revenues fell 0.6% year-on-year. Our broadband revenues grew 0.6% this quarter.

This reflects the impact of promotions we launched last year, plus the ongoing headwind from our IP hard migration. We continue to expect a slight improvement in this run rate in the coming quarters as last year's test the best promotion began to roll over.

On Slide 16 you can see that we now pass 68% of German households with our fiber network. Let me remind you that next year we will ramp up speeds for most homes in our vectoring footprint to 250 megabits per second.

65% of our access lines are already on IP, up from 49% a year ago. This accelerating run rate takes us towards our target of migrating our B2C access lines to all IP by the end of 2018.

So moving on to our usual two slides on T-Mobile U.S. As Tim said, our momentum remains very strong.

We won 0.6 million branded postpaid phone customers, two thirds of the total market’s growth, and we kept ARPUs generally stable with prepaid ARPUs reaching a new record level of nearly $39. Service revenue grew by 6.5%, while IFRS EBITDA grew 11% and this was in spite of a $148 million headwind from the recent storms.

And as mentioned already, T-mobile raised its EBITDA outlook for 2017 by $200 million. On the next slide, as usual we show some selected performance metrics for our U.S.

business. Our branded postpaid phone churn improved further and reached a record third quarter low of 1.23%.

Our bad debt expenses remained stable, while cost of service affected by the storm costs but better on an underlying basis. As you can see, our US network has underpinned that performance.

It keeps getting better. The recent Ookla data shows that T-Mobile 4G upload and download speeds have been improving, while at the same time our competitors’ network performance is worsening.

By the end of this year we will have deployed 600 megahertz spectrum to 62 million PoPs over 1.2 million square miles, and launch 3000 retail shops. Many of these new geographies to monetize our network and brand proposition.

To sum it up, it was another great quarter for T-mobile U.S.. So moving on to our European segment, we continue to show positive commercial momentum.

We added 265,000 new contract customers, including 56,000 in Poland, and we added 167,000 new converged homes. Our revenues in Europe were up 1.6% this quarter and up 0.7% organically.

Reported EBITDA was down 2.9% but, adjusted for our recent reorganization and FX, EBITDA would have been down only 1.3%, in line with a trend we continue to expect for the year as a whole. And the next chart shows that we now have migrated 66% of our homes in Europe to IP.

Our LTE coverage now stands at 93%, and our fiber coverage has reached 30% with accelerated penetration forthcoming in Greece, especially. So moving on to systems solutions, on the next slide then.

Revenues rose 2% while EBITDA fell 5.8%. But we continue to expect around €0.5 billion of EBITDA for the year as a whole.

We are seeing good momentum in the Cloud and security, and in our road tolling business. Our connectivity business is growing as well.

But we still experience headwinds from classical IT businesses. These headwinds have manifested themselves in a weaker than expected order book and the mentioned goodwill write-down.

Looking forward, we are delighted to welcome Adel Al-Saleh as our new board member for T-Systems from the beginning of January on, and I'm really looking forward to his contribution on the business. The next slide shows Group Development, which now comprises mainly T-Mobile Netherlands and our German towers.

We're now showing the numbers on the slide here without the STRATO business. We had another good quarter in the Netherlands, with 66,000 contract net adds.

This is now the ninth consecutive quarter of contract customer growth. Dutch service revenue reflected headwinds from regulation and termination rate cuts, while EBITDA reflected changes in Dutch consumer protection laws and roam like home.

Excluding regulation, our mobile service revenues would have been up 1.1% year-on-year. Our tower business is still absorbing transition costs following the carve out from our German segment.

From 2018 on, we expect growth in revenues and EBITDA from new builds and increased collocation and amendment activity. As already mentioned, our third quarter free cash flow was very slightly down year-on-year, but clearly above consensus expectations and we are well on track to generate €5.5 billion for 2017 as a whole.

Growth in our adjusted net income was driven mainly by higher adjusted EBITDA and benefits from interest expense optimization. Higher taxes and a higher share for the minorities, driven by the strong performance of the U.S, partially offset this positive impact.

Our net debt reduction reflected A, the growth in free cash flow this year, and B, effects due to the euro’s appreciation against the dollar. Recall at the end of this quarter, the US convertible will be exercised and result in further deleveraging.

Slide 25 shows our financial metrics. And as mentioned, despite the U.S.

spectrum auction, our net debt fell to 2.3x adjusted EBITDA. Remaining with our comfort zone of 2x to 2.5x adjusted EBITDA, we're not particularly pleased with that.

My final slide, as always, summarizes the strategy we presented to you at the last 2015 capital market day. We continue to execute well against our targets.

It was a good quarter across most if not all our markets, and the best is yet to come. And with that said, we will be delighted to answer your questions, and I guess I will hand back to the operator, or Hannes.

Yes. Thank you very much Hannes.

My question is related to fiber to the premise and the role of government subsidies to facilitate a potential rollout and rural Germany. Is some of your competitors adjusting that up to €24 billion in subsidies could be allocated to such infrastructure upgrades to about 8 million premises outside your target BDSL footprint?

Can you give us a sense of how likely you think this scenario really is and what role you expect to play as Deutsche Telekom should this scenario indeed materialize? Thank you.

Hi Jay, it's Tim. Like I’m so, quick answer on that one, today we have 1.7 billion subsidies in the market and the municipalities now let's say the governed were able to spend the money.

So we are talking about 718 million which have been spent yet. The reason for that one is not that there is no willingness to spend it.

Major is the approval phase and construction capacities in Germany. One of the reasons as you know that Deutsche Telekom is building up big time on the fiber deployment in Germany.

You have heard the numbers from Thomas just few minutes ago. We are opening up let's say fiber connected street cabinet every four minutes, every four minutes while we are sitting here and next year it's going to be every three minutes.

On top of that we have this huge infrastructure programs going on in Germany for any other infrastructure so the fall, the construction capacity is very, very limited. The chancellor by the way mentioned that already in several speeches because she knows about the situation.

What we have done to compensate for the shortage is, we are hiring people around the thousand people from Spain. We have people from Romania.

We have people from [indiscernible] so working here for us already to fulfill this requirement. If these subsidies would go up significantly, I can tell you we do not have a money problem, we have a capacity problem.

That's the first thing. The second thing is sometimes Vodafone they are jumping forward and then just jumping back.

Look we are used to that one but independent from that they seems to find out that they have no interest at somebody's overbuilding cable. So I got already messages from Berlin that they are not interested in a high subsidized program and I know from the small players in Germany that they are very concerned about this huge subsidization programs and that they are losing control about let's say the rollout of the footprint which they are aiming for.

So there will be in the new government however, it might be constituted, a group of, an amount of local subsidization. I strongly recommend it's in the vicinity of 1 billion to 2 billion on an annual basis and the capacity will be hard to find.

Hopefully, there is some elasticity going forward but I do not expect that there will be problem significantly beyond that and even the discussion that maybe the proceeds of setting Deutsche Telekom would help to fund this and if you talk to the leaders in this regard, I think there is now even more realistic approach towards the first ideas, but we will see so that's my way looking forward. What it means for us, we will move on in our fiber built all in all FTTC build-out.

We will fill let's say the commitments which we have given to the public. We see that we are doing absolutely right thing.

We will have 10 million households being connected to vectoring by the end of the year. Think about that magnitude and what we see is, with 700,000 on an average customers a quarter, you see that the customers are voting with their feet and we are very happy and very successful on the tick-up rate which we currently see.

Maybe two to add to that on the specifics of the experiences we have right now on those subsidization programs as we are participating in those programs and have a good success rate basically we are talking about two-thirds of success rates. For instance, in just last week we want a public subsidy program to connect 40,000 FTTH homes in rural East Germany, the biggest one in Germany right now.

So as long as we take a fair share the terms are reasonable and the subsidies are not per say about things. I think that's the way we look at it.

Yes. Hi, thanks.

Just a few questions. The first one is, on the U.S.

and really a bigger picture question about potential M&A going forward. So if the DOJ are pushing back against the horizontal DO like AT&T and Time Warner, can 4, 3 mobile consolidations happen or can fix the mobile consolidation ever happened in the U.S.

And my second question is really just the clarification in terms of the German election outcome, so specifically do you think new coalition government will push for you to do more in terms of FTTH and kind of clarify also your comments about what politicians think about DT stake sell, I know sorry I wasn't quite clear in terms of what you are saying in response to the first question? Thanks.

Look, the first whatever Deutsche Telekom is investing in this 4.2 billion or whatever number for this year its fiber, its fiber. We are not building copper, we are building fiber everywhere and we are connecting street cabinets with fiber.

So in the new construction areas we are building fiber. And even you know in the areas of our business communities, we are building only fiber.

So therefore if some of our competitors criticize us, not building the right technology I don't know what the right technology might be but we are building fiber. So that said, it will not change going – this will not change going forward.

Now the government is talking about the technology and I make everywhere clear in the ones being in Germany and reading let's say my interviews or my statements on that one, I think we should keep the customer in mind. The most important thing are the needs of our customers and the first need is that he is able in his private life to consume all kind of services today and tomorrow and is sufficient I call it [indiscernible] in a kind of zero defect manner.

This is our ambition and that is what we're building the capacity for and that is why we are trying to get at many customers as possible into this infrastructure. I think going forward there will be a mix of technologies.

There will be fiber to the home deployments in the city's and I appreciate highly the possibilities which are given now that we have two kind of construction possibilities like Michael Turchin and others subsidies. Second, there will be corporation model.

We have an alliance with all the small carriers which is Mnet, which is AB Airtel, which is heavy Lintel, which is Netcologne and others that we are trying to fight that the regulation gets changed that when we doing a corporation model and when we building fiber there should be no regulation for none of the other players. So we have to now convince only Vodafone and [indiscernible] that they are supporting us.

I understand that they would love to use our technology but I think this is unfair for my way going forward. So corporation models is the second way of deploying it.

The third area is we should be technically agnostic. I think the new technologies like Wi-Fi to the home, the kind of OMT outdoor so that we do not have to go for the rose garden of every house in Germany but still deploying one geek into private homes or that we have 5G technologies for the rural areas where fiber deployment doesn't make sense or even G.fast in certain areas.

So I will fight and I would constantly fight for technology agnostic approach and if we look to the election programs or to the programs of the big parties stick approach and if you look to the election programs or to the programs of the of the big parties they are like the CD ONCS built out and this is that say what we are going to do. I do not see that at the end of the day that one of the parties nor the Jamaica coalition will really let's say intend to force people only to go into the fiber to the home build-out and anyhow they cannot force private companies to build a specific technology.

So therefore, I think our build-out scenario is very clear. It's built on first deploying now fiber to the cab and to really connecting the people who are not connected today especially in the rural areas, this is a big political issue as well.

Second going to fiber rollout then in areas where we are fighting huge competition with cable. In parallel to that one we are deploying the industrial zones because we want to enable digitization in Germany and maybe some offers to schools and then we are going to improve our intensity to cooperate with the smaller players that we do not have redundant fiber to the home build-out and faster deployment of that one always under the assumption that we have no regulation anymore on that one.

And in the other areas we want to deploy a technology mix which is supporting customers’ demand. This is the way going forward and we have a clear passed out this one and that's the one I'm loving for.

Yes, just wanted to add one thing I think the situation Germany you should remember is such that by the end of 2018, 70% of the population will have access to cable footprint that's quite different from various other European countries and we will connect to over 80% of the population with fiber to the street. So we have a situation where let's say 85% plus of German households have a house void for choice and then you have a section of the population which isn't.

I just want to make this – bring this into awareness because it's quite, its different situation from other countries in Europe. And on your question on the M&A you asked perspective.

Let me emphasize again how committed and convinced we are about our standalone store in the U.S. So we are not worried about the T-Mobile running out of steam.

Our network leadership is becoming more and more apparent. We are enhancing the distribution footprint B2B opportunity, so not only geographic expansion but also segment expansion.

You have seen the financial performance so there's enough firepower available. We are convinced that there is a very, very good standalone perspective and in convergence the yes picture is different from Europe.

We believe there is scope for successful mobile only player and our approach is always to be front footed when it comes to contents. First we have been John and we had Netflix offer in there.

So as Tim said it's a quite simple story. We won't stop.

What we are not going to do is speculate about potential combinations in the market as we are never speculating on that one. Our way to deal with that is if there is something to talk about we will find ways to talk about and then find out.

I want to just see if you provide just about Germany and first question would be what contribution price rises made to the gross rates that you have pasted in the third quarter particularly taking into account nice improved you saw in second and I think particularly things don’t shape, but maybe mobile as well. And then the second question just on the customers that you have migrated more like, did you see differences in the behavior?

Are there any helpful or possibly unhelpful changes in [indiscernible] or propensity to take up so product or that sort of thing in terms of both customer side of that equation? Thanks.

Hi Simon this is Thomas. First of all, the simple answer on the question of price raise is, the growth rate it's very little.

It's as you know we have made a price rise in Q2 in the single play that is coming through but it's very minor share of the whole improvement. The basic improvement is by improving the original mix so more customers on the MNL rather than the S-tariff plans.

By the way it's whole true for fixed and mobile side and not for raising price points per say. And the second question is the customers are ready to call, what we have seen there is the better after migration sometimes we still have struggle and trouble in the migration phase with customers but after migration a good experience to customers but let me remind you our churn anyway around 6% to 7% on a yearly basis.

So there is no fundamental change in the churn here but we know from the customer side that obviously there are some things you can do it more easily in the [indiscernible] and the way you the experience our business and our products is for customer is improving but as the churn is already so low. No significant changes here.

Yes, hi, good afternoon. Two questions please.

Firstly, we have spoken a lot about CapEx but I guess the other thing that people in spectra debating for quite a lot of moment is the joint dominance regulation issues. So I guess I just seem to understand what your thoughts on that and I guess on top of that how likely or not do you think that is just a general update on that would be useful.

And then secondly, on the U.S. and M&A I guess another big picture question I was just wanting to follow up on was just in terms of how you think about or what you are able to say about the process and what happened.

Yesterday Sprint CO commented that the big issue was matters unwillingness to increase control which would seem to make that somewhat insurmountable issue given that historically you have said very similar thing yourself controlling being important. So I guess what I am really trying to get to is, are the issues being that you think very substantial, very hard to address or is there any possibility that at some point the conditions could once again mean you could revisit?

Thanks.

The German discussion about the regulation currently is as follows. We have what we highly appreciate this market consultation phase going on, how strong the market dominance is at that point in time from Deutsche Telekom on a regional basis, and we know that this has changed since the regulation the Deutsche Telekom was invented 20 years ago so we hope that we will see and regionalize significant less regulation on German fixed line than mall regulation.

The second thing is we do not expect that there are any kind of significantly price adjustments to the layer 3 bit stream access which is part of the upcoming regulation because here everywhere we support to say we understand that you are investing heavily and therefore we expect that you have to earn this money back and therefore we support let's say the cost based approach analytics which we bring to their attention. Joint dominance regulation is nothing which is currently discussed here.

In Germany unfortunately the parliament and council have both reacted to the pressure by national regulators organized to direct on this kind of things. So they do not want to see any kind of significant markets power from one of the players here but that there is a need for further regulation here.

It's not the case. Even in the paper, in the court, we are discussing more the intention to deregulate the company who are investing into fiber.

So it's not ready and to be fair there is a certain amount of frustration of the big players in this fixed line environment. I hope that the – that we can convince the parliament to change their approach to this one before it goes into the initial and consultations, here, but what is seen from the court so far is disappointing.

It's not really motivating or encouraging us to invest more but it's not worsen the situation to be fair as well. And I’m going to answer the second question Tim then can shed later on the – if he wants to on the U.S.

big picture. First of all, as always we don’t comment on Marcellus messages, I think what is important and you may recall that we’ve been always very clear on the criteria we set out to evaluate a potential transaction, his valuations to govern and to trust issues [indiscernible].

And all of those dimensions in totality are important to discussion like this, I’m not sure whether it’s right on facto. But the second question I think was, whether that deal is off the table forever and I think the answer is two folded.

First of all, never seen him I think that’s clear we continue to see a strong industrial logic, always be clear about that since the AT&T failed. So there is an industrial logic for wireless market consolidation and we always said it can make sense on the right terms.

On the other hand believe we surely did not make an announcement like this and I’ll talk news this week because we wanted to continue the discussion anytime. So never say never but I guess here it is what is giving you indication.

Let me give a little bit more flavor the situation with Sprint and T-Mobile U.S. and the parent companies.

The first, the relationship and my – with Softbank and [Masa Sun] is very important and I’d have loved to see an even closer working relationship between the two companies. I’d very much admire Masa Sun, his entrepreneur spirit and his visions and even his braveness to move forward with a lot of things being it let say in the internet of things, being it in the artificial intelligence, being it even the satellite communication services.

I admire Masa and I call him a friend nevertheless, business first. Always business first and it’s much more difficult and this relation says to say no, then to say yes.

We had a very intensive and good relationship and honestly I respect much more other partners on the other side that I did before in the way how we work together, how we build up the business cases, how we came up let’s say over the due diligence phases, how we understood the different angles of this deal and of a joint activity. Now that said at the end of the day, you’ve to look on the situation of how is the valuation, how is an effective governance, how is the anti-trust risk and how is the sound financial framework to be established for this kind of attitude.

And all of these criteria have been important for us on a decision and you can be sure that we did our homework along all of them and to just improve that Thomas and myself we flew 50,000 kilometers in one week to just check with everybody what’s the right way going forward and what’s let’s say the total creation of the deal. At the end of the day, I always said, I’m not doing bad deals.

And since I’m in this office, I’m very proud that so far I haven’t made a mistake on that one. So I hope that you respect our decision on that even if maybe the intention at the beginning was a little bit different, I think there are lot of big synergies in this case.

It’s a great opportunity, the doors to this great entrepreneur Masa Sun and his team are never closed at Deutsche Telekom, but for now I think we had to take a decision which has been communicated.

Okay, thank you Tim. Next question I’ll take from Ulrich Rathe from Jefferies.

Thank you. I’ve two questions please, the first one is a operational one on Germany in mobile the postpaid churn is down really quite far beyond sort of historical track record and I was just wondering whether that something is happening in the branded base or in the service provider base or whatever else you can say about that?

And my second question is on T-Mobile, maybe asking it a different way, in the past where before potential discussion for [indiscernible] in the market, I’ve heard you comment that T-Mobile doesn’t really produce returns on investment that U.S. returns on capital that returns on capital overall even if the leaders are lower than average that there is no organic path for T-Mobile to reach returns on capital.

I mean, I was just wondering when you talk about being well positioned with T-Mobile you could sort of interpret this as saying T-Mobile is in a good position to continue growing and taking share. But with no returns sort of eventually building up something that led with the ever stronger deal partner at some point or you’re not saying no, there is really an organic path to producing commensurate return on capital with the sort of growth trajectory that we’ve built-up for T-Mobile?

Thank you.

Yes, I’m going to start with the first question on the postpaid churn. It’s quite simple our contract churn rate with odds [Lebara] so the famous element of fluctuation we always have numbers is basically if you look at last five, six, seven quarters it’s more or less always 1% or it’s open 1.1 and so for the little bit of ups and downs it’s the same negative note.

No significant change and no changes, the fluctuation is not there. I think what we’ve seen in the mobile market is very high loyalty, the customers satisfactory, customers on one hand and we’re working up-selling and in that contract part of the business which is on branded has no significant changes.

On the second question with regard to the return and capital employed and economic value added, Ulrich you’re absolutely right, five years ago development on the mobile side with this huge customer growth which we’ve seen over the last 15 quarters is helping us significantly in the improvements. On top of that our capital cost came down significantly over that time.

So earning our capital cost and even beyond is more likely than it ever was for the huge U.S. operations and whatever we do and it comes to new markets and new build-outs we’ve this equation in mind.

So with regard to this I very much changed the perspective from what it is. This was the reason why we’ve invested so much money over the last years because we see this positive development.

Thank you Tim and now I would like to have Fred’s question please. Fred Boulan from Bank of America.

Hi good afternoon. The question is, first of all on remedy we had a nice pickup in EBITDA growth for the quarter and if you could detail some of the key co-driver you mentioned the merger via tech services, but how we should think about the German margin for that business in the near term?

And back to fiber if you could help us a little bit on this kind of how you articulate in the more different timings being the political timings, and also from your competitor, it could be Vodafone you should work on, kind of you should code with your own timing to define your high feed movement strategy beyond the target share for the 2018? Thank you very much.

Hi Fred, this is Thomas, I’m going to start with the question about German margins, I think key drivers, I’ve mentioned one which is the integration on the customer service and feed service side obviously what you’ve there is and operations where you had redundancy in the structure of the business most set up on one hand and on the other hand you had processes being delivered to the customer running through several organizations and one part of the indirect OpEx reductions you see here is obviously streamlining the processes now in one organizations much easier and getting rid of redundant organization structures in there. So that redundancy element, process optimization is one part that by the way there is also better capacity utilization of real estate locations and technology which is windfall on effect of some parts that we’re doing in the IP migration.

So all that adds up to what you see here and I think that will support further on in the margins I think given the guidance of 250, whatever margin should be there is no change in there. As I get to fiber in Germany and the timings, look we’ve a commitment with regards to the vectoring rollout in Germany which is 2018 on invokers and little bit into 2019, then we further would improve the build-out and the bandwidth in Germany as we discussed earlier today.

That said, the most recent consensus is reflecting this CapEx requirements for our build-out with almost stable CapEx projections of around 4.3 billion for the German segment for 2021 and a bit over 5 billion in the region of Germany as a whole. This is including all CapEx, including the safe 5G and employment and the IT refinements which we need and that might give you an orientation.

And as said earlier, we believe that from an investment perspective, it is not a money issue at that point in time, it’s even a capacity issue in the work. Now, the question about fiber build-out is even something to do with the decisions about the deregulation and the political support for that one.

It’s too early to say how Germany or the EC might decide on that one. I hope that coming up clear decision on that one and then we will give you our assessment of what that means from an economic terms perspective.

The only thing which I can leave with you and take that serious I’ll not invest into something which is not financial viable.

Okay, the next question is from Russell Waller at New Street Research, please.

Yes, thank you. Just a quick one on the Netherlands, so I was wondering if you saw the potential for value creating deal there, I guess Teddy 2 spectrum and asset might be available as of January I’ll see in the past four to three just being controversial in your – do you think that the opinion you might look at that deal in a different way given the fixed mobile infrastructure dominance so for KPN and you guys.

And then my second question was just on the U.S. obviously the asset is pointing very nicely.

I was just wondering what does worry you about the medium term outlook, I mean, I’m thinking for example, densification for 5G for example, is that something that you would consider when thinking about inorganic opportunities for example, do you worry, the impact your OpEx or CapEx bill as you’ve to identify your networks? Thank you.

Look, coming up first with the Netherlands and to be clear in principle, we like market condition. In Netherlands we’ve two very strong integrated incumbent and it seems still that consumers would benefit if the two mobile centric operators could join forces and really develop a powerful third force.

But clearly, our first part has been to strengthen our existing asset as much as is possible in the given circumstances and I hope that the listeners of that call would give us credit about how we’re solving our challenged environments. We’ve fixed the Netherlands since four quarters we’re number one in the contract net heads.

We’ve fixed Poland very encouraging moment here even from a fixed [indiscernible] offerings we have fixed the European entity which is now on a growth base. Again so, I would say more or less all big challenges, we’ve had one year ago back to growth and nevertheless, the good progress we’re making and the good subscriber goal for customer growth which we have and the excellent network which just won the P3 text for another time and we are open to the consultation.

So that said let's see what the other side might consider on this one and the European Commission that might treat this but that's our position of that.

Yes and maybe on the U.S. what worries most in the medium-term first of all I think as you know we have great assets here one of the greatest asset we have here is a team which can deliver on network densification and rollout better and faster than any other team I've seen in the world.

Just remember the integration of Mitsubishi as networking tool as T-Mobile, U.S. network.

So I think in 5G we are front footed. We leveraged our new low band spectrum.

We are deploying small cells. I think other than in Europe in the U.S.

it's much easier to get the fiber access to the sides as you know in Europe sometimes it's more difficult to get to a good connectivity set up for your sites. We have already the dense marked footprint and as I set of rolling out fast on the small cells.

So I think in terms of the capabilities, ingredients for success they are all there, and so there is no worry about that. What about the OpEx, yes it's part of the equation of running a network.

If you don't own the complete fiber footprint like we sometimes do in the European operations. It's part of your financial and your economical equation but that's no use.

It's not like today. Thomas let me add one sentence on that one.

The deployment of the 5G capabilities with Nokia and Samsung will begin in 2018 already. And the 600 MHz spectrum where we gained the biggest portion this will provide us the spectral capacity for the small cell employment by even you know for the deployment of the entire country.

So this is for us. The prerequisites for the 5G deployment and I think we are well positioned in this area.

Okay. Next we have Andrew Lee at Goldman Sachs.

Yes. Good afternoon everyone.

I had a question on other opportunities in the U.S. and then one on maybe more domestically.

On the other opportunities is more buyback with reference to your comments that we have other opportunities to create value team is saying. How do you think about buybacks given the rapid deleveraging that you delivered with your free cash flow growth or given the IFRS changes in the trigger of operating leases would you rather focus on de-gearing the balance sheet.

If it is buybacks when we tell us about this and would DT sell into the buyback? I mean just on the cost cutting and digitalization you clearly have a big opportunity here.

Is that something you can bring forward or is that something you have to wait for all IP migration to be complete to deliver meaningfully? Thank you.

It's great to see teaming us generating increasing amounts of cash while the [indiscernible] brings down the leverage quite rapidly. That's very encouraging even looking forward into the combination of T-Mobile USA and Deutsche Telekom.

So the choice you mentioned is definitely a nice one to make. That said both dividends and buybacks have their merits and I have to say at this stage we have no decisions to communicate but we hear U.S.

investor. Cost cutting, the way the IP migration works in terms of the savings related to that is partly, it is basically the savings are depending on the completion.

That's more or less the technical part of the savings where you need to switch off platforms to get to ramp down the cost and partly you can – you see that already prior to complete shutdown or retirements for instance if you can simplify processes like I mentioned part of what you have seen in Q3. So it is partly something which happens while you go and partly you need to finalize the whole thing to get especially the technology savings.

That's the way it works and that kind of patent is embedded in the all guidance we have given you, so it's partly prior to retire and partly after retire.

Great. Thanks Thomas.

The next question is from Usman Ghazi at Berenberg, please.

Hello gentlemen, thank you for taking my question. I would two please.

The first question was just on the job, would you be able to segment the trend between the consumer and enterprise business? I know last quarter enterprise of 4% consumer slightly down I mean is that a very significant change in that trend this quarter?

And then other question was just on the all IP migration. I think Tim you mentioned in a recent note that the all IP kind of migration was costing around 500 million in German OpEx per annum.

So the question really was as we get to end 2018 is it the case that suddenly the 500 million OpEx drops out or is that a more phased over a number of years? Thank you.

Okay Usman, so I will answer both questions. The first one okay if they let me, okay.

So the first one on the B2C and B2B trends, I think we are happy to see good trends in both segments of our business. I think we are monetizing our customer base well.

I think there is not really that much to add. So I think what you would see in this quarter I think both units contribute to the strength of the performance and we hope and confident as well we will continue.

So as far as the all IP costs are concern and – so first it's our B2C rollout that will be completed by the end of 2018. So we still have B2B work to do in the German segment and in systems.

So we will start to see some of the benefits as Thomas has described earlier coming through at the network level and others will take longer as per our guidance at the capital markets day and so I think it will be a phased and gradual development with some improvements coming through beginning in 19.

Next we will take a question from Samuel McHugh at Exane BNP Paribas, please.

Two questions if I can. First on the mobile service trend in Germany, I think we kind of called from trends that improved quite a lot on an underlying basis.

So if you could just talk about what you're seeing in terms of more for more maybe average kind of gigabyte packages people I think you mentioned a bit more towards the medium and large packages. I guess you seem to be having a pretty positive impact.

And then secondly, on the U.S. we think to us the guide for the quarter, what kind of productivity or kind of comparison can you make between some of the new stores you have opened this year compared to existing stores and when should we expect that start ramping up a bit more?

Thank you.

Go ahead. So I am going to start now with the German question.

I think basically what we have seen during the course of the last quarters is an improvement and as I said in the mix of S, M and L what you have seen if you just add M and L so the higher, more richer tariff plans. The percentage of customers taking those has improved by 15% roughly and that was basically driven by more volume but also stream, the way stream on works is you only can get you are M and L customer.

So what we are doing is we are using those elements to incentivize the people and then the customers to choose more richer products and that is what works well and what is shifting the mix into much richer shape. I think that's basically the answer on number – question number one and now Tim.

Look, I would say it is still too early to tell you something about the productivity of the new shops. It only takes 12 months in order to know exactly where how successful they are.

It's anyhow you are much more flexible and reacting on and good and bad shops. Year-to-date T-Mobile has added 1,200 magenta branded and 1,300 metric PCS shops and plans to add an additional 500 shops by end of the year and what we know for far so the latter category has so far checked sales productivity quite nicely.

It is always associated with a 70 MHz deployment. So whatever we open up an infrastructure where we haven't been before and opening up a shop the priority of this shop is quite encouraging.

So anyhow we are much more flexible in reacting and therefore we are not concerned. We are monitoring it but to give you a full let's say productivity analysis on that one is quite early.

Thanks Tim. So next question is from Mathieu Robilliard of Barclays.

Please.

Good afternoon and thank you. So I have two questions.

The first with regards to EBITDA and CapEx at the group level. So the second time you raised EBITDA guidance which is great at the good level.

You haven't changed your free cash flow guidance. So my question is really if you look ahead as you continue to do maybe better than you had expected on EBITDA, is it something that you would use to invest more because you see more projects where you can deploy up capital effectively or at some point you think the free cash flow growth can accelerate.

That's the first question. And second question with regards to costs.

So we have also put a lot on the all IP migration and the cost associated to that. But I imagine that the other areas where you are working, digitalization etcetera, etcetera and it's very hard for us to compare between companies where they stand and all the additional aspects, the network, the IT system, the customer interactions.

How do you think you are doing there and what are the big areas where you still think you can improve efficiencies but also probably need to invest to get those efficiencies? Thank you.

Thanks Mathieu for the questions. First of all on the EBITDA and the CapEx of the group, I think you’re spot on with we have increased the EBITDA but not the free cash flow.

That's simply I think in Q2 you have seen that the U.S. raised the CapEx or moved up to the upper end of their CapEx guidance because they are accelerating at 600 well at this time.

It is decreased operations and spending money on the fiber deployment there and I think that's you know that pattern what for instance from the German side what happens in Greece as well. So we are accelerated to rollout there and we will see good network infrastructure and for sure also the revenue improvement and finally the EBITDA improvement that.

So my way I said that last quarter already, my way to look at the whole free cash flow guidance is there is we have given a clear message in terms what you should expect and we will deliver on that one and we will make sure that we deliver on that one. Whenever we can create headroom we have a discussion whether there is money to be spent in a way that we can keep going with that kind of fantastic run rate and improvement of free cash show and then this time 600 for this year in Q2 and the increased the rollout that was the decision behind.

So now we extend this call for another two hours because this question is very exciting and very relevant for our business talking about let's say the impact of the digitization on our businesses. Look if from a strategic perspective if you asked me what are the challenges of our business the first one is the competition which we have in our market.

It's still ongoing. The second is a threat from over-the-top substitution.

I think it was very intensive over the last year. It has slowed down.

So it's not anymore that new kind of business which are entering to that into our landscape like SDN, cloud providers or like network of network players. This is our new business models which are trying to substitute services from us this is something which is increasing and the fourth one which is a challenging item for us as a Telco is more digital Telco.

So Telcos are really leveraging their capabilities in a month productive digital way. So there is something for an old incumbent like us where we have to react on.

So the digitization of our internal processes and the process towards the customer is one of the key amendments which we will do or which we have done already to our strategy. To give you some examples how we want to drive that end it's the simplification of which we have to do within the -- starting at the front end, for instance in Germany we have recorded 3.6 million visits on our magenta service app.

This is an increase of 28% year-over-year and this is reducing the load on our off-line channels significantly and Austria another example this is – this company is now using a web-based check pot so which is helping to answer questions of customers in a much more efficient and faster way. Second topic on how we drive digitization and is for me the topic of advanced analytics.

By analyzing and interpreting all the data which we have and we are sitting on tons of data on a personalized and individual level we have increased the conversion rates of specific campaigns by more than 70% much more individualized offers which we can create and which are much more resonating then with the custom. Another one is the back end.

We use robotics to automate big processes. Standardized routines in RS and to generate efficiencies including thousands employees each year in Germany already today and we are just at the beginning of that one or we even use big data analytics to improve, to manage our field forces.

This is something what we are experimenting with. And the last one just you know, another flavor is what we are building our own boat, so that every employee can change and automate the processes individually using in the company.

So if you’re looking about your salary, if you want to go on vacation, you go into standard routines within the IT systems and we are now created the capability that every employer could build his own boat and by using this boat he could significantly improve his own productivity. So it's a big, big effort which we are addressing.

I think more and more coming topic for our industry and therefore more to come in our bilateral talks or even later the year to give you a flavor of what we are doing here.

Thank you Tim, we are working just to add one element because there was one aspect of the question I think is still open. That's not so much a matter of big investments, the CapEx investments.

That's what Tim mentioned the whole process is much more about the way people work, how they address the challenges they have every day in their business rather than big investment things. So don't expect any big numbers behind that one.

Thanks Thomas. Here speaks the IR Board.

Okay so our next question is from Robert Grindle at Deutsche Bank.

I wonder if I could -- just typical one from me. The first on key systems, the business has been a bit sluggish for some time and despite clouding better and you have written down some goodwill, what was the main problem with your -- obviously it was light but was it coming from any particular segment and I think you have got new management then?

What's the progress on this forward looking basis or are we just looking at more stabled EBITDA or should we be expecting or is it a bit more pressure from here and then follow-up on the mobile service right your question and any reason to think and it was a great print this quarter any reason to think why the trends aren't persisting into Q4, and linked is, any reason to think that the handset upgrade cycle is turning in Germany? You do seem to have a quite a high handset revenue this quarter which also helps you on the service revenues?

Thank you.

I'm going to start with the system question first of all. So there is I missed that Tim wanted to take the question, so bad luck.

So you need to deal with me now. Okay.

So onto systems, basically if you look into systems you have the international taco business. You have the security party if IoT.

You have whatever I missed other than IT. Obviously the cloud business and/or road business all those are doing well, all those are growing.

And so that is not where the issue sits. The issue is clearly on the classical IT business.

I think that complete market is in the decline first of all. Secondly we've increased our levels of profitability we want to see in those deals and that's the key reason I think or the key reasons why we have seen order book declining.

Basically the right off you have seen is the reflection of what you have seen last four quarters in terms of development as we hired a new guy for the IT business and having Adel on board both are IT experts. I think that will give new parts for that business but to be clear in terms of what you should expect we feel absolutely comfortable with the consensus regarding the systems and so I think that should give you an idea about the forecast.

Second question was mobile service revenues. I missed that question.

What was that? You can take it.

Yes I think Robert if I understand you correctly you wanted to get a sense for you know how sustainable our mobile service revenue trends are. And also you had request on handset cycle.

So I don't think there is anything particular on the handset cycle that is worth communicating. I mean, I think everyone is aware that when the iPhone arrived in Germany and so on and but it hasn't – wouldn't look at this is something where we have anything to communicate.

In terms of the service ran for four months overall. I think we are encouraged by current trends and we have no reason to think that these trends will dramatically change at anytime soon but they are driven by good monetization growing data usage.

You see our KPI is doing well and etc. but of course to some extent also dependent on the competitive environment here but it's fine where we are and we are happy with where we are.

And long may last and hopefully it gets even better. So the next question is from Ottavio Adorisio of Societe Generale please.

Hi, good afternoon gentlemen. Two questions actually two follow-up from comments made by Tim.

The very first one, it’s on the fiber and in reply to the Vodafone gigabyte investment plan. Is it possible to have a bit more granularity because in the communication you give a lot of data points for consumers but is it possible to share a bit more with businesses?

Vodafone is talking about or targeting 2000 business parks and according to them there is something like 32,000 in Germany so – and the question is that in how many of these business parks first of all are these numbers correct? The 32,000 is correct number and how many of these business parks you already connect with fiber and what will be your target and is it possible the timing?

The second one is also another follow-up. It's on the comments Tim has made on the CapEx envelope until 2021.

You said that you would rather be comfortable with new census at 4.3 billion. You also mentioned that includes 5G.

Now your further plan has got a lot of attention but looking at the comments made by – makes around it looks like 5G is also become a pretty important in Germany because of the very high lobbying from the automotive industry that's very strong and a very big interest to have an self-driving cars. So my question is I think in 2021, is the case that 5G potential is now being loaded up so it will be back in loaded most of these investments?

Or you reckon that you just wait and see how much the automatic industry will put in terms of their own investments to go and potentially match-up investment? Thanks.

So good questions. Ottavio, first thing on fiber.

Now the Vodafone gigabyte investment plan which is an amount of I think 2 billion or whatever it's a joke. It's a joke and so we are investing in the German entity 4.2 billion into infrastructure on an annual basis and we are moving on and we are doing that already for the last years.

So therefore, that we see that but again Vodafone is very strong in the way of selling something but I think sometimes it questions the substance on that one. So I don't say that arrogant but even city fiber announcement today and I haven't looked into the details but I do not believe that they are approaching five million customers but that's just a side comment.

Now that said we have on the business parks the following analytics, 10,000 business parks in Germany. From this 10,000 business parks there are 3,000 which are really relevant because in this 3,000 business parks more than 80% of all SMB's are registered.

So this is the so-called very intense area and this is the area which we are tackling first. This is part of our investment plan.

This is part of our CapEx which we are laying out and we want to connect them all. I mentioned that already at the annual meeting and that's our plan and we have started already.

Every week we are announcing a new opening on that one. Thomas made I think four or five, big cities are in his speech but there is much more and if you are interested, we could easily release all of this.

This is let's say, our first areas on the site and then we will see whether there is additional subsidies coming for other ones or rural ones but it's too early to say at that point in time and anyhow our capacities are fully loaded on these areas.

Yes, maybe then on the CapEx and 5G question. So first of all is fiber – sorry 5G plan due to automotive sector developments and an announcement.

No, it isn't. It is driven by a very simple thought.

We are the network leader in Germany on mobile and we are on 4G and we will stay that on 5G and even increase the gap to competition and that means we are starting basically now with a lot of preparations for 5G. We will make sure that we have the site densification.

So all the sites are in place. We have the fiber beck in place.

By the way as you know vectoring, vectoring rollout are delivering to huge extent the densification of fiber you need to do to get to a really good 5G infrastructure. So that is driving us and yes there is a potential application which is related to automotive sector in there but as Tim mentioned there is also potential application to deliver higher bandwidth via 5G in not so dense areas and so on and so on so yes there are various applications in 5G.

We can talk about at length and that those obviously driving our thoughts and our investments on 5G but not just one single industry sector or application of that but in essence it's quite simple. We are the leader in terms of quality to the customer and we will state that in 5G and that's how our investment profile is set up.

So it’s backend loaded it's just a normal ramp you see in it in a new technology. And as before we think that the consensus, current consensus covers what Tim has mentioned related to the B2B build-out or residual if FTTC roll-outs and various other things that we've mentioned as well as the 5G investments that we expect over to start is at least how we look at this point in time.

So the next question from Guy Peddy please at Macquarie.

Yes. Hi, just two very quick questions.

Towards the end of the quarter since then we have seen quite a substantial changes in tariffs by telephone Deutschland and 101 I am just wondering what you thought of those given you’re now to substantial premium for that sort of higher volumes in the German market and secondly on the broadband space clearly there has been a strong in-sell of your vectoring products, but the overall growth in the industry does seem to be sort of a big lackluster for yourselves and still very much focused on cable. Is there anything you can do to continue to stimulate the broadband growth or do you think we are sort of starting to max out the appetite for broadband in Germany?

Thank you.

Yes, first of all I don't see any significant change on the mobile side telephone out there with tariff since with their structures since May 101 is just know it's was a certain delayed it's clear that there will be a similar follow-up of that. So I don't think there was any substantial change in dynamics other than normal promotional activities in the last quarter on the mobile side.

What's always good and that we love to see the data usage going up. We are driving that.

I think there are various ways to do it. Tariff is more in terms of big buckets.

We almost stream on like, we like more the way to give the customer the clear message you use as much as you want and you don't worry on applications like mobile video and mobile music but other than this principle dynamics of increase of data you see the +55% in the usage of the increase I think there's no fundamental changes. On the B2B side, the growth if you look at, I think if you look at the not at the net numbers but the gross numbers you see that we are pretty much on our fair share in the market.

If you exclude the headwind we have on the IP hard migrations it was by the way the same vicinity like last quarter, so mid-20s. If you add them back you see that we are on the nets as well as on the gross that's easy on our fair share.

So I think that's no reason to worry on that side as well.

Yes. Thank you.

Just one following up your support, you have commented from [indiscernible] investment strategy and looking at around sticking your, surely different angle, but there is still a bold move with banking. Do you have any appetite and identify possibly new field of investment outside of the classic silicones and CBC, in let's say a more medium to long term approach?

Thank you.

Look the first thing is, I said it last year in Barcelona if you really want to buy a pure network provider who is very clean in the way of focusing his investment into a superior integrated IP network you are, that's on the profile of Deutsche Telekom. That's the DNA that's why investing more than the rest of the team we are not spending our money around all places.

We have very much focus in the way. The network is the basis for whatever we do.

Mobile integrated networks, mobile fixed line had nets. Now do we have intention to go into banking?

No we don't. This is something where we believe it's better to partner.

So when somebody has let's say a solution in the space and we will establish the partnerships. We have 150 partners already around our infrastructure network here which is working very, very nicely and if you want to – and money with that one we even have an vehicle which is doing even very nicely which is the DT capital partners where we have invested a lot of companies over the last year's always in the magnitude of 10 million to 20 million investments in this company is a possibility that we commit to some new businesses, vertical solutions at the moment we deploy into our customer base and into our infrastructure.

There are some areas which are helping us to create an excess close. So a kind of covering pure access, platform services and the like and this is something which we all should consider for instance entertain our TV services something which is helping us to sell connectivity in added value way.

This is something we are pursuing on and we will not change the strategy. I think we are very much focused.

We have few bets around. TV is one of it.

Big IoT is another one but even here we will not go into the vertical solutions anymore into and providing a platform service.

Thanks Tim and I have a question, email from John Dan at RBC. So he asked regarding the group excluding the U.S.

whether we have now reached inflation point this quarter we were up 2% and he specifically asked if the EU anti-system track has peaked and whether this is now a sustainable gross performance?

And the answer is yes. As we said we should expect to higher SUX EBITDA this year and you should expect another growth next year, yes.

The last question is from Walt Piecyk at BTIG, if you're still on the call? Okay so he has left the call.

And with that I think we went through all the questions. If you have any more questions, please contact us at the IR department.

We promise you there will not be a pot for the time being although Thomas is working on it and I know somebody actually contacted me and said we should not get the pot, and they still prefer real people and with that I would like to hand back to the operator. If any final words, no, okay.

I had back to the operator.