Markus Göddertz René Obermann - Chairman of the Management Board and Chief Executive Officer Timotheus Hottges - Chief Financial Officer and Member of Management Board

Timothy Boddy - Goldman Sachs Group Inc., Research Division Dominik Klarmann - HSBC, Research Division Simon Weeden - Citigroup Inc, Research Division Matthew Bloxham - Deutsche Bank AG, Research Division Hannes Wittig - JP Morgan Chase & Co, Research Division Frederic Boulan - Nomura Securities Co. Ltd., Research Division Robin Bienenstock - Sanford C.

Bernstein & Co., LLC., Research Division Ulrich Rathe - Jefferies & Company, Inc., Research Division Peter Kurt Nielsen - CA Cheuvreux, Research Division Justin Funnell - Crédit Suisse AG, Research Division Lawrence J. Sugarman - Liberum Capital Limited, Research Division

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Good afternoon, everyone. Good morning to all of you from the United States, and welcome to our Q4 conference call.

Unfortunately, Stephan Eger is down with the flu since 2 days and asked me to send greetings to all of you. I think we can directly start with the presentation followed by the Q&A session afterwards.

We have roughly 1 hour and need to finish in time at approximately 2 p.m. German time.

That said, I would like to hand over to our CEO.

Thanks, Markus. Let's start by reviewing the key achievements in 2012.

An adjusted EBITDA of EUR 18 billion and a free cash flow of EUR 6.2 billion. With that we achieved the objectives for the group, and I think it's fair to say against the industry trend.

In terms of dividend policy, we delivered on our 3-year dividend guidance for the proposal of EUR 0.70 dividend for the full year 2012, and we will propose that to the AGM. We have also introduced a prudent and a sustainable dividend policy for the years '13, '14, with a dividend of EUR 0.50 per share each.

In Germany, the revenue trend improved further to minus 2% after minus 4% in 2011. The adjusted EBITDA margin remained at 40%.

We had a strong market result with 1.3 million mobile contract net adds. That's significantly better than in previous periods, 2 million Entertain customers by year-end 2012 and almost 300,000 new fiber customers.

As outlined at our Capital Markets Day, we implemented the future integrated network strategy, and we also introduced a new fiber wholesale model. In the Europe division, we managed to slow down the historical revenue decline, adjusted for ForEx to minus 4% from minus 5.5% in 2011, while keeping the underlying adjusted EBITDA margin roughly stable at 34%.

Over the past 12 months, Europe increased its mobile contract customer base by almost 1 million, gained almost 300,000 new TV customers and 200,000 additional broadband customers. Importantly, OTE was able to safeguard its refinancing well beyond 2014 now.

LTE network is up and running in 4 countries. In the U.S., key financial trends remained challenging with a revenue decline of 4.1% and a decline in adjusted EBITDA of 7.5%.

Operationally, T-Mobile U.S. was able to return to customer growth of more than 200,000 in 2012, following a loss of 550,000 customers in 2011.

However, we still lost more than 2 million branded contract customers, representing a 6% improvement over 2011, but it's still a painful loss. Encouragingly, branded contract churn was reduced by 30 basis points to 2.4%, and we did lay the groundwork for improved future performance with the agreement with Apple, the proposed merger with MetroPCS and the sale of our tower assets.

Systems Solutions had a satisfactory result with a small growth of 0.6% and a growth in adjusted EBITDA of over 11%. Order entry was strong with the growth of more than 18% to close to EUR 9 billion, mainly driven by new contract with Shell, but also with other significant companies.

We established Telekom IT to support group IT cost savings. Looking at the key figures for 2012, let me just make a few remarks.

Revenue was almost stable with a decline of 8% -- of 0.8%, 0.8%. This is quite different from most peers in Europe.

In terms of adjusted EBITDA, we delivered on our EUR 18 billion guidance. However, EBITDA was impacted by higher market invest in Germany and the U.S., especially in Q4, and I will get back to this in a minute.

Net profit, both adjusted and reported, turned positive again in Q4. For the full year, reported net income was impacted by the impairment in the U.S., while adjusted net income was at EUR 2.5 billion.

The highlight, clearly, was a free cash flow of EUR 6.2 billion better than the EUR 6 billion guidance and down just slightly from the prior year. This is even more impressive considering that we maintained stable cash CapEx of EUR 8.4 billion.

In terms of net debt, we achieved a solid reduction of EUR 3.3 billion to below EUR 37 billion despite a EUR 3.4 billion dividend payout, including minority dividends. In this context, let me briefly review how we did against our targets for the last 3 years, which we set ourselves in 2010.

We delivered on the following: group-wide fixed broadband retail customers, mobile Internet revenues, Save for Service, free cash flow and importantly, our dividend commitment. On the other hand, we missed the mark with regards to stabilized the German revenues totally, that's not yet done; return on capital employed; and partially, on our share buyback commitment.

I think it's fair to say that our performance in delivery on commitment overall compares favorably to most of our European peers. Let us take a closer look at the EBITDA development in Q4.

As we have flagged earlier, the EBITDA in Germany and the U.S. was impacted by higher market invest.

In Germany, with the market invest, we achieved a solid revenue trend, down just 1.4%. Record smartphone sales of 1.5 million devices and high branded contract customer net additions of 226,000 in Q4, up more than 50% year-on-year.

In the U.S., we said all along that we would increase market invest, especially advertising in the second half of the year and especially Q4. This development was incorporated into a EUR 4.9 billion EBITDA guidance for the year on which we delivered.

In turn, we achieved positive net adds in Q4, a reduction in branded contract customer churn by 50 basis points and strong smartphone sales of 2.8 million devices. Based on our Q4 results, we reiterate our 2013 guidance and also our midterm ambition presented at the Capital Markets Day.

For 2013, we are guiding an adjusted EBITDA of EUR 18.4 billion, including MetroPCS and a free cash flow of approximately EUR 5 billion. In terms of shareholder remuneration, we intend to pay dividend of EUR 0.50 per share for both 2013 and 2014.

Our midterm ambition, including MetroPCS includes a return to growth in revenues and adjusted EBITDA by 2014, a free cash flow of approximately EUR 6 billion in 2015, an improvement in the earnings per share to approximately EUR 0.8 in 2015 and an improvement in the group ROCE to 5.5% in 2015. We will review our 2015 dividend later in light of developments up to then.

Let me turn it over to Tim who will take you through the divisions and much more detailed financials. Thank you.

Thank you, René. Good morning, good afternoon, everybody.

Let's start with Germany. In Germany, the revenues declined by just 1.4% year-on-year, very similar to the development we have seen in the third quarter.

The mobile revenues grew by 3.2%, driven by very strong terminal equipment revenues. Core fixed line revenues declined by 2.9%, very much in-line with the developments in the third quarter.

Wholesale revenues at minus 4.6% were somewhat weaker than in Q3 due, in particular, to some provisioning in Q4. Adjusted EBITDA, as already highlighted, declined by close to 10% mainly due to higher market invest in mobile.

In Germany, we've -- the fixed line business we saw a number of encouraging developments. In particular, I would like to highlight the following topics.

First, we had a further reduction on our line losses by 20% year-on-year to just 236,000. We saw a continued growth in the average revenues per access, driven by the continued migration to double play and triple play.

And we saw a very strong growth in fiber retail customers, now by close to 50% increase to more than 900,000 customers on this double play VDSL offerings. It is worthwhile mentioning that also VDSL wholesale finally is gaining traction.

The customer base grew by 47,000 in Q4. On the other hand, we generated just 3,000 broadband net adds.

Given the slow overall growth of the German broadband market, this still implied a broadband market share of close to 45%. The broadband net adds and the comparative strong growth by our cable competition underline once again the importance of our future integrated network strategy for Germany.

Turning to mobile. German mobile market service revenues decreased by 0.4% in Q4.

Similar to other carriers, we also saw a slowdown in service revenue trends. Excluding the MTR effect of EUR 10 million, our mobile service revenues decreased by 2.2%.

Specifically, this was driven by the following developments: a worsening trend in voice revenues, and accelerating decline in SMS revenues, driven by volumes and IP substitution; a weaker revenue development in business, driven by a continued tough competitive and pricing environment; and a weaker revenue trend in consumer, still impacted by the loss of Drillisch and the voice and SMS trends adjustments. On the other hand, we saw strong commercial results with 437,000 mobile contract net adds.

Record smartphone sales of 1.5 million, including strong sales of Android and IOS devices and strong growth in double play customers, now accounting for 60% of branded contract customers, up from 42% a year ago. Let me highlight that the fourth quarter, especially here in the German environment, was driven by strong market investments.

We were able to put more money into the market due to, let's say, the good EBITDA performance we have seen over the first 3 quarters. While the service revenue developed in Q4 was, frankly, disappointing to us, we intend to return to underlying service revenue growth in 2013.

Our confidence to return on the mobile business to growth is based on the following developments: growing ARPU of new branded contract customers; our strong smartphone sales and strong increase in the contract customer base; our best network positioning in the market resulting in the highest customer satisfaction in German mobile and the best mobile data proposition; and the fact that certain effect in 2012, in particular the loss of Drillisch, won't recur in 2013. On the other hand, we will have the continuing impact of the MTR cut and roaming regulation and the still decreasing ARPU in the existing customer base due to tariff optimization.

I think it is worthwhile to mention that it is good to keep the customers with Deutsche Telekom here in Germany and giving them a better -- and better fitting tariffs, which we did as well in the fourth quarter. But our ambition is, I repeat, to return to underlying service revenue growth in 2013.

Let's move to the U.S. In the U.S., we saw essentially stable total revenues for the third quarter in a row.

While the trend in service revenues weakened further slightly due to the continuing migration to Value plans, this was offset by higher equipment revenues, also driven by the Value plans. Accordingly, total revenues declined by 5.2%.

This compares to a decline of 5.9% in the third quarter. The decline in service revenue as well as higher advertising spend impacted adjusted EBITDA in Q4 as already highlighted by René.

This was, however, in line with our full year guidance of $4.9 billion on which we delivered. In terms of customer results, we achieved a significant reduction in branded contract customer losses, which improved by 27% year-on-year.

Growth in branded no contract customers continued, though at a slower pace than in Q3, primarily due to higher churn. On the other hand, the growth in wholesale customers was very strong, driven by strong MVNO net adds in particular.

Turning to ARPU. The trends already seen in previous quarter continued, namely: a continued reduction in branded contract ARPU, driven by the customer migration to Value plans; and the continued growth in branded no-contract ARPU, driven by the continued success of our monthly 4G rate plans.

Data ARPU remained robust, exceeding $20 for branded contract customers for the first time. In this context, let me briefly update you on the MetroPCS merger approval process, our un-carrier strategy and the progress achieved with the network monetization.

I would also like to reiterate the tremendous benefits of the combination with MetroPCS. First, I'm pleased to say that the definitive proxy was filed on February 25 and the MetroPCS shareholder meeting has been scheduled for March 28.

All other regulatory approval processes are also on track, so that we currently anticipate closing in early April. The combination with MetroPCS has tremendous benefits.

It significantly expands our spectrum position in key markets, for example [ph], by more than 20% in the top 25 markets on average. The combination is very significant cost synergies, with an NPV of $6 billion to $7 billion.

And NewCo is projected to have a very attractive growth profile as we have highlighted before. With regard to our un-carrier strategy, you know about our Apple partnership and our plan to transition to 100% Value plans.

While I can't provide you with additional details today, expect to hear more on these topics in the near future. We are making excellent progress with regards to our network modernization.

Thanks to the pending merger with MetroPCS, we have a path to an at least 2x20 megahertz LTE network in 90% of the top 25 markets starting in 2014. This year, 2013, we are on track to launch 4G LTE in hundred million POPs by midyear and 200 million by year end, mostly with 2x10 megahertz initially.

We are also making progress with regards to rolling our HSPA+ on 1,900 megahertz spectrum, with already 142 million POPs. This is key to enabling bring your own device, for which T-Mobile U.S.

already has an excellent track record, gaining approximately 100,000 iPhone customers per month over the last few months. Turning to Europe.

Our pockets of growth contributed to slowing down the historical revenue decline. Revenues declined in Q4.

This quarter was marked by the highest negative regulatory impact in 2012. Across the year in '12, out of 13 countries, MTRs were cut at least once.

In Greece and Romania, MTR even were cut twice. The one-off at T-Mobile Netherlands, which benefited Q4 '11 negatively impacted the year-over-year comparison.

With our growth areas, we managed to partially compensate the environment, driven decline of traditional telco revenues. We slightly improved the underlying revenue developments versus Q3.

In terms of adjusted EBITDA, besides negative effects from a lower contribution margin, we were impacted by the new usage-based tax in Hungary, which is the second special tax in the country impacting us in second half of the year 2012. Due to our indirect cost savings, we were able to partially compensate for the above effects.

From the commercial perspective, our Connected Home revenues were supported by growth of broadband base now exceeding 5 million access and growth for our TV base now approaching 3 million customers. Our mobile contract customer base grew by almost 1 million year-on-year and exceeded 28 million subscribers.

The mobile data growth was supported by growth of the smartphone share that exceeded 60% of the specialty devices in the fourth quarter. Comparing our revenue performance with our main peers, we improved our performance significantly year-on-year.

While in Q4 2011, we have outperformed 4 out of 9 main national competitors, in Q4 2012, we outperformed 7 of 9. We improved our total mobile revenue performance versus Orange in Poland and Slovakia significantly.

In addition, let me highlight some other key developments concerning the Europe division. Post various refinancing measures in Q4 such as syndicated loan at the level of OTE's Bulgarian subsidiary, Globul, and in Q1 when OTE raised EUR 700 million on the debt market, OTE's cash position, together with anticipated free cash flow, is expected to be fully sufficient to cover all repayments in 2013.

Together with the intended disposal of Hellas Sat, Globul and Galmonoth [ph] Bulgaria, liabilities becoming due in 2014 and beyond are also deemed covered given no major unforeseeable disruptions, for instance, on macroeconomic or political scale. The rating agency Standard & Poor's has reacted and has increased the rating of OTE by 2 notches to B+.

I think it's very important to let you know, OTE is fully refinanced without any support of Deutsche Telekom's money. OTE has a very attractive deal on selling the Hellas Sat at a multiple of 7x.

They have improved their LTE coverage significantly in the country, and they have not lost market share at the same point in time. And for the first time in history, the company was able to improve its cost position by laying off more than 1,000 people year-over-year in this area.

So this company has improved significantly and this is even, by the way, reflected on the share price. We pride ourselves at our technology leadership with LTE rollout in Greece, Hungary, Croatia and Austria.

In the first 3 mentioned countries, iPhone 5 customers can now, as in Germany, use our superior 4G LTE network. We are pioneering the all-IP migration in Croatia and Macedonia.

We launched a TeraStream pilot in Croatia, and we have already 128,000 homes connected with FTTH, driven by Slovakia and Hungary. Turning to System Solutions.

Q4 results were quite strong. Revenues grew by 5%, driven by 2.1% growth at the market unit and expected recovery in Telekom IT revenues, which were up by 15%.

Order entry in Q3 -- 4 was strong with deals like Presbyterian Healthcare in the U.S. and the State of Lower Saxony.

The increase of almost 90% was mainly driven by the prolongation of the big Shell deal. Importantly, external revenues increased by 2.6%.

Adjusted EBITDA and adjusted EBIT also grew nicely by 9% and 24%, respectively. The underlying EBIT margin at the market unit improved to 3.1%, up 50 basis points from Q4.

Turning to the financial KPIs. The free cash flow we have over-delivered on our guidance and over-delivered by EUR 200 million at the EUR 6 billion target.

Actual free cash flow at EUR 6.2 billion was only slightly lower than last year. Fourth quarter free cash flow came in line with expectation.

The reduction versus Q4 2011 was driven by higher CapEx and the reduction in EBITDA due to higher market invest. Adjusted net income for the full year amounted to EUR 2.5 billion.

The reduction versus 2011 was driven by the decline in EBIT, to some extent, offset by lower finance costs. Reported net income was dominated by the U.S.

impairment that impacted our Q3 results in connection with the combination with MetroPCS. I already explained that effect in detail last quarter, but it was driven essentially by accounting rules which mandated the impairment based on the market price of MetroPCS at the time of the announcement of the combination.

In reality, we strongly believe that the combination with MetroPCS will actually increase the value of our U.S. asset due to much stronger spectrum position, in particular.

In addition to the impairment, reported net income was also impacted by a positive impact from asset sales and a negative impact from restructuring. These 2 effects essentially offset each other.

Based on the strong free cash flow, we achieved a significant reduction in net debt by EUR 3.3 billion, or we reduced our net debt base by 8.1% to now EUR 37 billion, and this despite a dividend paid out in 2012 of EUR 3.4 billion, EUR 0.8 billion in pension funding and EUR 0.4 billion in spectrum purchases. The sale of our U.S.

towers, which closed in Q4, reduced our net debt base by EUR 1.9 billion. Turning to our balance sheet ratios.

Net debt to adjusted EBITDA, our leveraged KPI remains stable year-on-year at 2.1x. The equity ratio at 28.3% improved slightly from Q3.

The year-on-year decrease was caused by the reduction in shareholders equity due to the U.S. impairment, in particular.

With regard to our comfort zone ratios, we are in the green with regard to all ratios, and our ratings remain stable at BBB+ ratings with the major agencies and stable outlooks from all of them. As a result, we continue to get excellent funding conditions in the debt capital markets.

With this, René and I are now ready for your questions.

Thank you very much, Tim. Now we can start with the Q&A part.

[Operator Instructions] And now we can start with the first one. Thank you.

Yes, I just wanted to ask about some of the competitive intensity that we see or competitive dynamics we see changing in the German mobile market and your conviction about the return to underlying growth. Could you just talk a bit about your outlook for your tariff plans, whether you think it's right to respond to some of your competitors' latest changes?

Just give us more color about your ambition there.

I think the situation in Germany structurally is somewhat better than in most other European markets, not only because the economic environment is healthy, but because there is also quite a bit of upside on upgrade selling from single to double play and to higher tariff plans and buckets. On the other side, there is, of course, some price pressure -- continued price pressure on voice and on text messaging, but there's a nice and healthy growth in the opportunity for wireless data packages and wireless data services.

So I think we're -- it's not too optimistic to say we can go back to growth in Germany despite the pressure on tax and on voice. There is more opportunities in wireless data.

We're only scratching the surface of this. Data traffic is growing so fast, and that will offer opportunities also to design new tariffs and also U.S.

[ph] differentiation, service-based tariff differentiation is an opportunity.

On the theme of creating a stronger European telecom sector, just interested in your takeaways from Barcelona in terms of getting political support for broader consolidation. I'd say surely Neelie Kroes is a big supporter, but how do you view DTEGY competitions position, Nuñez [ph] position?

And then linked to that, in the light of that improving climate towards consolidation, at what stage would you consider reviewing your M&A policy?

Look, we will not comment on M&A speculation, Dominik, but I think the first part of the question is very valid. I come back from Barcelona with a strong reiteration of Neelie Kroes' position.

I mean, she even said it publicly that she's willing to take -- to do what it takes to stimulate the investments and frame conditions for the wireless sector. She has articulated her agenda in July, and she is now pushing for this to be implemented with the means she has, which of course means every country by country, it will have to be implemented in the national regulation.

Here in Germany, we had a hearing at the end of January on the new topic, new network proposals we've made including vectoring, and a couple of further weeks, were given to, I don't know, hundreds smaller, midsized and bigger parties to comment. So I expect that the Bundesnetzagentur, the national regulator, will take a decision fairly soon.

And probably this decision would -- I guess, the decision should be positive, but including an obligation to resell what we call bitstream access on the basis of non-discriminatory terms and conditions. So I think that -- and may be the obligation to -- for all those street cabinets where our competitors have invested into already.

I think we're talking about a few percent only, not to touch them, but leave them to the competition. So bottom line, Dominik, I do expect the framework from Neelie to be implemented into the European markets and Germany being, hopefully, one of the first markets.

The discussion is ongoing. My view is that the Netzagentur, the regulator, has an open mind because they consider this would be a good solution and a good lead to a more equal playing field between telcos and the cable guys.

A couple of questions, tech ones, very quick, I think. Just on broadband performance in Germany, could you elaborate a little bit on where the pressure is coming from and whether or not you think that your sort of market share of net additions is going to remain under pressure during 2013.

We're particularly keen to hear the extent to which...

Simon, you also realize that the market growth, as such, has slowed. And that within the players, 3 years ago, 4 years ago, what we talked about were dozens of players were all picking from our bones, flesh from our bones.

And as far as I can tell, it is pretty much bifurcating now to the cable guys and ourselves. Everybody else doesn't seem to pick much of the share.

And if you look at the overall picture, we kept our number fairly stable. We even grew it a little bit.

We are not in a position to -- I don't think it would be smart for us to push on the price side even more aggressively. So we're not trying to position us here as the price leader in order to pick a few thousand more net adds, but instead, trying to defend our share as much as we can by holding a reasonable price policy and not kill too much value for us and for the rest of the market.

But clearly, the cable guys come from a lower base, and they seem to grow as the number suggests. But look at our numbers.

They are not so bad. We're defending our position currently very well without screwing up the margins totally.

Just kind of wondering if you could clarify a bit more the comments made about Everything Everywhere. I think there were some comments you gave [ph] this morning that seems to suggest we need to focus on an IPO and that it might be at the back end of this year.

But just kind of wondering if you're exclusively looking at that or other options are on the table.

Matthew, by the way, first, let me start. The developments which we have seen even in the fourth quarter and even now in the first quarter towards Everything Everywhere are quite encouraging.

I'd like to mention 3 points. First, our LTE network is coming on air quite faster than we already expect it.

We have more POPs covered than anybody else, as you know. So we're making good progress here.

Second, in the fourth quarter, we only had, let's say customers 5, 6 weeks for the LTE deployment, for the LTE sales in to the market. Now with the developments in -- the current development we see that the uptick is very high.

1 out of 4 customers are taking an LTE option. So it seems to me that this high bandwidth is well accepted from the customer.

Thirdly, we are very happy with the outcome of the auction, not from a price perspective, but from a spectrum perspective. Because we have clearly defended our leadership on the spectrum position in this environment by getting 2x, in fact, on the 800 spectrum and 35 megahertz on the 2.6 spectrum base here.

So therefore, the thing is moving, moving in the right direction. Now with regards to the potential IPO, yes, we always said that our preferred solution is an IPO.

The earliest timing of that is, what I've said earlier, today could be, let's say, the fourth quarter because we need a lot of preparation for this kind of work, together with our partner, France Telecom. And we even want to show the market that not only our LTE proposition is selling well, but even the brand is getting more accepted and even our margins have improved.

So therefore, this is the earliest. You know that we do not have any kind of time pressure on that one.

We want to take some value off the table. We still both want to hold, let's say, control of this entity.

But talking about, let's say, the best timing is always something to do with the market environment. And therefore, let's see how this develops throughout the year, and then we will learn about more it.

But you'll find us encouraged about the track we are taking here.

On the German mobile market stabilization, you did not mention LTE, which obviously now should create an additional boost from your ability to sell the iPhone LTE version in Germany exclusively. So I wondered if you could comment a little bit on LTE momentum, what percentage of your German mobile additions generates right now and whether that represents any change from the fourth quarter.

And related to this, I wonder looking at the trends whether you are still confident that you can keep the margin at 40% in Germany given the outlays you had in the fourth quarter to sustain your momentum.

Sorry, yes, Hannes, so let me first answer the question, our challenge on the service revenue adds were -- they're not coming from LTE nor they're coming from a good positioning of our products at High Street. We had very strong gross adds in the fourth quarter, especially on smartphone sales.

And we sold 1.5 million smartphones in Germany only in the fourth quarter. So this was, let's say, a record number compared to the previous years.

So the acceptance for data offerings and even automatic with this, let's say the need for more bandwidth, is definitely a market we foresee. We sold almost twice as many iPhones as in Q3.

And therefore, on the 1,800 megahertz spectrum, our network perception is significantly better than from anybody else. Even our LTE speed options, and that is your question, they increased.

In Q3, we had in the vicinity of 22,000 options. In the fourth quarter, we had close to 100,000.

So we have more than tripled our sales in this regard. So I would say we should even strengthen our efforts towards sales on the LTE offerings, but this is taking time and I think the focus from our sales force is on it.

Two quick ones from my side. First of all, if you could come back on the economics of VDSL, even back in the significant spending program in the second.

But so far we're seeing pretty big [ph] broadband additions and still even if there was some progress in Q4, the very slow adoptions of VDSL. So what can you change this time around to reduce time to money or make sure you don't roll out if demand isn't there?

And second, if you could come back a bit on the reasons specifically driving the slowdown we saw in mobile service revenue growth in Q4 versus Q3. When you talk about voice and SMS pressure, should we expect this to carry on or even accelerate in 2013?

So if you could give us a bit more granularity on what happened precisely in the quarter?

Let me first answer the question, I missed one part of Hannes' question, which was about let's say the confidence with regard to the margin in Germany. The first is there's no need and even nothing we expect that we are going away from our guidance doubts [ph] for the round of the year, EUR 18.4 billion including Metro.

So therefore, that is, let's say, the commitment we have given, and you know that we always want to stick to our commitments. We -- if there is more growth on LTE and if we would see more investments into the market, we have to substitute in our indirect cost base.

And you maybe have seen that we have announced a new program, which is called Lean admin. So we are already in the execution of that program, reducing our overhead in the German organization big time, and this will give us more headroom for investments into the market place.

So therefore, I do not have a worry that we are not able to keep the margin at this level around the 40s -- 14s area. With regards to the slowdown of revenue growth in Q4, will they continue to accelerate in 2013?

I think we were quite clear on that one. No, we expected, on the mobile side, we're going to return to growth.

And we are doing a lot of, let's say, efforts, and you've seen that in the high activity on the marketplace in the fourth quarter already. We're doing everything, turning back to growth in this area.

And with regard to the overall revenue commitment, I think we have said we are returning back to growth in 2014 for the group, and there's no new news since we have -- hold our Investor Day here, that we are shying away from this commitment.

I guess I have a slightly different question about service revenue growth in Germany, which is that if you think about declining handset innovation and some more aggressive wireless offers from cable, why should you focus on service revenue growth at all and not instead on EBITDA growth? And separately, I'm just curious, you got a contingent deal with O2 Deutschland and United Internet.

I'm wondering whether you have one with Vodafone and if not, whether that's something you're discussing with them?

Vodafone, not. Let me just double check before I say something wrong, Robin.

I don't think Vodafone is concluded yet, but we'll find out. There were a couple of other companies where it was concluded with, NetCologne for instance.

I'll find out in a second. The service revenue growth, look, the overall market maybe stagnating, or it's hard to say whether it will be slightly growing or slightly stagnating or slightly lower.

But I don't see any decline in innovation on the device side. I mean, if you saw Barcelona, I was actually stunned by the number of manufacturers who are now making another big attempt.

And I saw devices which are all poised to take more data volume and more data services. I mean, the screens get bigger.

The capabilities of these devices, multimedia capabilities grow. There are really good innovation stuff coming from the audio side to how to deal with pictures and small video clips and so forth, all kind of stuff designed to lead to consumer data growth.

And also on the productivity side, on the business side as well, there are many innovations coming and even the hybrid between tablet smartphone. All of that, to me, indicates there is more momentum, cameras with a direct interface and so forth.

So maybe I'm too optimistic, Robin, but I do think that the wireless piece -- wireless data piece is still the biggest chance to grow, and the growth will not slowdown. So I think we should really focus on grabbing our fair share in the wireless data space as opposed to being too conservative.

Because once the market is -- the market shares are, how do you say it, distributed and people have positioned themselves, it's more tough to gain them back. So therefore, I think it's now much smarter to keep also a focus on growing the share in the wireless data piece and keeping the network leadership up and go for smartphones and data package plan and data bundles.

Okay. What is the answer?

We have NetCologne. We have United Internet, our good friends.

And we have Telefónica signed up for the contingent model, and that model seems to develop some good traction, Robin. Not Vodafone yet.

It's Ulrich Rathe actually at Jefferies. Coming back to German mobile, and at the Capital Markets Day, you said that you're planning EUR 200 million of incremental investments in 2013 compared to the level of market investments in 2012 in Germany and also said this would be mainly in the mobile market.

I was wondering, with this significant step-up of market investments we've seen in the fourth quarter, does that still apply? So do you still sort of have this plan to actually step it up another EUR 200 million on top of the 2012 sort of total now?

And the other question I have is, I mean, I understand a large part of the service revenue decline is actually the repricing of the back book. This has been going on for quite some time now.

Can you give us a sense of how far this has proceeded and to what extent you really feel that the largest part of the back book is now on the front book tariffs, or is there really a lot more to work through? If there's any way you could quantify that, that would be helpful.

The EUR 200 million marketing, campaign and promotional money, Ulrich, is baked into our plan. Our plans haven't changed since December, and we would stick to our plans and we will deliver.

So I don't know whether that answers your question, but EUR 200 million -- the whole plan you are familiar with, EUR 17.4 million, excluding an EUR 18.4 million including Metro, is what we want to accomplish and all of that is unchanged. And with back book and front book, I guess, you mean the number of customers who have optimized their tariff plans, I suppose, right, and how many are still to come?

Is that what you mean, Ulrich?

Yes, correct.

Look, I think the biggest part is finished. Now this is what we foresee.

It's always depending on how fast the high speed prices are going down. But what we see with the -- on the current levels and with the old, let's say, the first generation of iPhone users, the biggest part is finished.

What we saw in the fourth quarter was, let's say, a down swing on the -- which was higher than -- a little bit higher than what we expected on the SMS side, on the SMS cannibalization from over-the-top services and from applications. We are -- you are aware that most of our tariffs are already, let's say, including big SMS bundles.

So there was, let's say, a bigger deviation than expected on the SMS side. But with regard to the main part, let's say, back book is front book.

Sorry, my question is along -- built on the same line as Ulrich's. There seems to have been incremental pressure on the business market in German mobile in this quarter, certainly also if you look at ARPU development.

May I ask where -- has it accelerated in this quarter? Where is it coming from?

Has there been a specifically high number of contracts renegotiated in this quarter? And is there more to come, so to speak?

I mean, will this continue to work through the numbers all through next year?

Yes, Peter Kurt, the Q4 usually is an aggressive quarter with regards to everybody tries to capture decent share of the Christmas sales. And in this quarter, we have the launch of iPhone 5.

And we have overall -- I mean, iPhone 5 stood for, if I'm -- I think it's about 1/3 -- even more than 1/3 of our total sales in smartphones. We had -- overall, we had 600,000, so it's even more than that.

So we had very strong smartphone sales. That wasn't intent.

But then when you have your campaigns set up in a quarter like that, whether you sell 1.1 million or 1.4 million, it's kind of hard to steer because once the dynamic is there and customers want it, you cannot stop a campaign right in the midst of November or December because those campaigns tend to be planned and prepared over several months prior to the Christmas season beginning. So the Q4 is very aggressive anyway.

This one was particularly catalyzed by a very high smartphone acceptance in the market and by iPhone 5. And as I said, and maybe it doesn't go down well with you, but I do believe that it's the right thing to do to be aggressive when there is so much room now to grab the data tariffs and the new customers or retain your existing customers and upgrade sell to them into data packages.

And therefore, okay, on the one side, it's sad to have some EBITDA sacrification [ph] -- or sacrifice on the other side. It's good to have the customer growth, and we had unprecedented growth over the last -- this last quarter.

That only happened some years ago into that extent. So I see it, to be honest, with 2 sides, positive and difficult.

Yes, a couple of questions, please. Just in terms of German fixed line, with your line losses just coming down; service, smaller numbers.

And just sort of raising the question as to whether you can start, I think, putting fixed line pricing up or at least cutting the size of discounts. I think your annual [ph] year rate also gets reviewed middle of this year.

And the commission in Brussels have said that annual [ph] year rates could actually go up in nominal terms. Just wondering if we're going to start moving to a better phase for fixed line pricing into the second half of this year and beyond?

Secondarily, on the U.S., just wondering if you can give an update as to how many of your churn in the quarter was, in your view, iPhone-driven? I think in the past you've given figures of between about 1/4 and 1/3 of your churn being iPhone-driven, whether that's changing or that's pretty steady number?

Before we go into that, Justin, quick come back to Peter Kurt because honestly, I misunderstood the question and I apologize, Peter Kurt. Because you ask for pressure on mobile business segment and not on mobile business and you meant the customer segment business.

And the decline was worse than previous quarter at almost 2.7%. There was a regulatory effect from MTR and roaming.

Then there was a large customer contract loss, which we lost quite a while ago but which, in comparison to year-on-year, put pressure on the revenue side. And we had quite a number of higher discounts for customers to be retained because we realized we were, in some big customer accounts, not competitive, and we had to improve our conditions.

And we did that in order to prevent those customers from churning, and that led to another EUR 16 million. So the business segment, which you were asking for, overall turned in worse because of these -- particularly because of these reasons.

I hope that answers your question. And so Tim, I think, is answering to Justin's question.

Yes, I think, Justin, it's 2 questions, the first one is the line losses in Germany and what we're expecting for 2013 in this regard. I think the line losses, somewhere particularly around 2012 levels, we do not expected the line loss to fall below the magic range of 1 million.

But we believe that it's going to happen then in 2014. So the low churn rate in this area and the good opportunities of up-selling to double and triple play is giving us confidence that we are able to reduce it slightly further.

So U.S. was still not answered.

I think you asked for the churn question U.S. in Q4, how much iPhone-driven, is it changing, stable.

So we would expect the good churn trend to continue. We're taking actions to further improve the retention, such as targeted offers to existing customers.

And some of the high-churn groups within branded contract, FlexPay contract, E-Plus, they are almost churned out. So in Phase 2 of our churn program, we will continue the successful program which we started in Phase 1 and also tackle some of the bigger issues, for instance, improving in-home coverage, addressing network-related churn with the network modernization program, aligning spectrum with the big players and so forth.

So yes, as the bottom line answer, we would expect on the churn side to see some further progress.

3 questions, please. Firstly, just on GHS set, EBITDA losses have increased, so slightly ahead of the previous run rate.

Could you give a little bit of color on that and also talk, going forward, if the run rate we're seeing this year is something that is likely to persist, particularly in light of what I believe has been a focus on controlling costs in the headquarters? And secondly, more of a hypothetical question, obviously there's been a lot of discussion around potential changes in the competitive dynamics in the German market and talk of potential major deals.

Could you give us an indication as to whether if most of those likely deals, and those were revolving around Vodafone KG, DTE [ph], were to happen, how that would impact on your thinking around the marketplace?

Lawrence, first question with regard to GHS and EBITDA development here, let's remind ourselves, in Q4 2011, we got a EUR 97 million compensation payment from France Telecom related to the BUYIN joint venture. So that was a onetime gain, which we haven't had this year.

So that is one of the reasons. The second reason is, for enabling our new digital growth initiative, we have increased our cost at the DBU.

So that is, let's say, coming with additional cost. By the way, in line with what we have seen already in Q3, marketing recruitment of specialists and other things, so there were additional costs coming from that one.

With regard to, let's say, shared headquarter initiative, so let's say the savings, we are very well on track. Only for the headquarter, we have reduced in 2012 our headcount yet -- the headcount by 540 people, and there is more gross reduction coming from people but there [indiscernible] is costs.

So therefore, overall I think a very complex issue, but mainly coming from this onetime in 2011.

In terms of the change in dynamics of the German market, any deal. Look, in general, I believe that in Europe, including in Germany, market consolidation is needed.

We still can make sense. We still have somewhat around 150 small, midsized and larger competitors on the service and infrastructure side.

So consolidation makes sense in general and a reduction in the number of players is useful for the market because the market is -- needs some, needs to be -- continue to be very healthy. And if everybody competes for the same customer, it's going to be very unhealthy.

So I would welcome a general consolidation. On the specific thing you're referring to, I don't know what to believe, I don't know what to think because rumors are coming in and out of the market.

Wherever they come from, I don't know, and I do not participate in those kind of speculations. I'm not scared.

I think this would offer at least short to midterm opportunities for us if it was ever to happen, but I do not participate in this speculation.

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Thank you, and goodbye.