Digital Agenda: Broadband Strategy in Germany 31.10.2019

1. Digital Agenda: • Broadband Strategy in Germany • 31.10.2019

2. Detecon Company Presentation • Detecon is the leading consulting company that unites management with great digital technology expertise. We merge business & technology perspectives into a consistent digital change journey for our clients. Industry | Services | Telco • More than 20.000 projects realized worldwide • 1.200 associatesin our offices worldwide • Clients in more than 165 countries • Colleagues from over 40 countries

3. Detecon Company Presentation • Our Consulting Fields and Expertise. Our Consulting Portfolio Our Clients IndustryCompanies TelcoCompanies Service Companies • Strategy, Innovation & Products • Financial Management • CRM Sales & Services • Wholesale & Regulation • IT Strategy • IT Efficiency & IT Infrastructure Optimization • Network • Transformation, Organization, People Management • Enterprise Architecture Management • Business Process Management • Supply Management • Application Management & Advisory • Risk, Security & Compliance

4. Heading • Detecon Company Presentation Detecon’s strategy and management consulting services enhance the value creation chain at Deutsche Telekom. Deutsche Telekom: your first choice for networked living and working Deutsche Telekom in Numbers • Present in 50 countries and employing 225,000 worldwide • No. 1 on the German market: TC, mobile, IT • Own computer centers and networks worldwide • €69.2bn in turnover • About 1.6m marketed workplace systems • > 156m mobile services customers • > 29m fixed network customers • > 18m broadband customers • About 6.6m TV customers (IPTV) ICT solutions for the Deutsche Telekom key accounts Detecon, the management consulting unit of the DTAG Group

5. Impact of Broadband on GDP and Economy • Empiricalstudiesrevealthat 10% increase in broadbandpenetrationresults in 0.25% to 1.38 % increase in GDP. Broadband Penetration Effect - Universal Fibreglass Investment Effect - Universal & in Germany 600 MnEuro Employment 10% 0.25% - 1.38 % 0,02% 1%* Broadband Penetration GDP - Universal GDP - Universal FibreglassInvestment GDP - Germany Productivity 1%* = 3500 connections in Germany Telecom Investment Effect – Universal & in Germany Remarks • 10% increase in broadband penetration results in from 0.25% up to 1.38 % increase in GDP as well as increase employment and productivity. • 1% increase in telecommunication investments result in 1.2 BnEuro increase in Germany‘s GDP. • 1% increase in fiberglass investment result in 0,02% increase in GDP  600 Million Euro increase in Germany’s GDP. 1.2 Bn Euro 1% 0.04 % GDP - Universal Telecom Investment GDP - Germany Source: Institut der deutschenWirtschaft Köln Consult GmbH, “Der Weg in die Gigabit Gesellschaft”, 2016.

6. Positive Externalities are Challenging Micro-Economic Optimization BB investments showing strong GDP growth effects, mainly in non-telecom sectors is the economic rationale for the state to subsidize the sector. Broadband Invest and Effects on GDP Growth in Germany (m €) Remarks • German Broadband Strategy targets: • DSL access above 1MB offered to all German households from 2010 onwards. • 75% of all households to be served by access with more than 50Mbps until 2014, and 100% should be served in the long run. • Necessary investments are about €36bn until 2020. • Calculated economic effects are creation of 968.000 jobs and 171bn € growth in GDP. • However, major effects will be externalities. Therefore it is unlikely that operators will invest to this extent and speed on commercial terms, without state subsidies. • The state could use the additional tax income for intervention. 170,9 FTTC&B Invest Externalities Network construction 23% GDP tax rate Invest 2010- 2020  GDP 2010- 2020  Tax  * Externalities may include productivity improvement by cloud computing, more effective energy use, service innovations, improvements in health services, etc. Source: Katz et al., Macroeconomic Input-Output Analysis, 2009

7. Broadband Strategy in Germany • Germany’s ICT strategy, aligned with EU Digital Agenda, built on 3 phase, aiming at ubiquitous broadband coverage of minimum 50Mbps by 2018. EU Digital Agenda Three Phase Approach in Germany’s National Broadband Strategy Europe 2020 Digital Strategy 1st Phase 2nd Phase 3rd Phase “Digital Agenda” 2020 2010 2014 Adopted in 2010 Adopted in 2009 2018 • 10 yearstrategy • Oneitssevenflagship initiatives : • A digital agenda for Europe: to speed up the roll-out of high-speed internet for households and firms. • By the end of 2013, basic broadband should be available to Europeans. • By 2020, all Europeans to have higher Internet speeds ≥30 Mbps. • by 2020, at least 50% of European households should subscribe to Internet connections ≥ 100 Mbps. • Elimination of „whitespots“ w/o BB connectivity. • Wireless and mobile broadband available by end of 2010 • 75% of householdshave access to a broadband connection with download speeds of at least 50 Mbps by 2014 Digital Agenda 2014 – 2017: • Ubiquitous broadband coverage of at least 50Mbps by 2018 • Encourage investment, reduce investment barriers and bring appropriate regulatory frameworks • Boost public Wi-Fi availability 75% 50Mbps Source: European CommissionArticle at https://ec.europa.eu/digital-single-market/en/our-goals/pillar-iv-fast-and-ultra-fast-internet-access, https://ec.europa.eu/digital-single-market/en/country-information-germany .

8. Broadband Strategy in Germany • German government funding over EUR2.7 billion to support local authorities to subsidize telecoms operatorsin broadband. Third Phase towards 2018: Strategies Third Phase towards 2018: Measures for structural funds Structural Funds • 700 MhZ Auction: Germany, as the first nation in the EU, provisioning of 700 MHz spectrum range • Winning bidders to provide at least 50 Mbps (download) to a minimum 97% of all households in federal states and 98% of homes nationwide. • The government provisioned EUR 2.7 Bn funding (including EUR1.33 bn. generated by 700 MHz auction) allowing local authorities to subsidize telecoms operators. • By April 2016 336 grant applications from communities approved nationwide. 700 MHz Auction & Govt. Funds Banks & Federal State Funds Structural Funds • LandwirtschaftlicheRentenbankoffers loans with cap at 10 Mio EUR annually to improve broadband networks in rural areas. • 208 IKK: The German government-owned development bank KfW offers investment credit to municipalities to support investments in broadband infrastructure capped at 150 Mio EUR annually • State Aid: A federal scheme aimed at the provision of reserve conduits for NGA networks in areas where the existing demand will not be satisfied within three years if left to private operators. Regulatory Measures • Revision of Telecommunications Act in 2012 supplements the Government’s broadband strategy. Structural Funds • Two programmes, GAK* and GRW** combine funds from EU, federal states and Government *Improvement of Agricultural Structures and Coastal Protection **Improvement of Regional Economic Structures Source: European CommissionArticleat https://ec.europa.eu/digital-single-market/en/country-information-germany

9. Current State in Germany • In Germany current broadband and NGA coverage is above the European average with DSL being the most common broadband access technology. Germany’s Goals for Broadband Germany approaching mid of 3rd phase in its National Broadband Strategy • Target for 2018: Ubiquitous broadband coverage of at least 50Mbps by 2018. • Status as of mid 2016: 71,2%of all households at ≥50 Mbps (CAGR End of 2010 – mid 2016: 80,3 %) 1st Phase 2nd Phase 3rd Phase 2016 Current BB availability % of household 2016 Broadband availability > 50Mbps ≥50 Mbps ≥16Mbps ≥1 Mbps Speed* DSL / VDSL: 97,1% > 95 Cable TV: 63,7 % DSL / VDSL: 78,5% DSL / VDSL: 28,5% > 75 - 95 FTTH/B: 7,1 % Cable TV: 63,7 % Cable TV: 63,5 % > 50 - 75 LTE**: 95,7% FTTH/B: 7,1 % FTTH/B: 7,1 % > 10 - 50 UMTS**: 91,9% > 0 – 10 Broadband Availability in % of the Household *At minimumdownloadbandwidth, ** Data based on 2015 Source: BundesministeriumfürVerkehr und DigitaleInfrastruktur, 2015 and 2016, Digitale Strategie 2025 @ www.bmvi.de, www.zukunft-breitband.de, 2016

10. Bottlenecks in FibreDeployment in Germany • High costs in migrationtonext generation (FTTH/B) broadbandnetwork in Germany forcesthemarkettofocus on Vectoring and High Quality Copper. Fiber installation costs in Germany Germany’s step-wise approach towards FTTH Fibre related infrastructure costs in Germany are high due to: • Equally spread population • High costs of public works / construction • In total, construction works make about 80-90% of total costs in Germany: • Long term goal FTTH: This will be reached step-wise. • Since 2014 Deutsche Telekom focuses on VDSL and Vectoring which provides up to 100 Mbit/s Down- und 40 Mbit/s Up-stream. • High quality copper cable access network is the reason. Fibre-to-the-Road“: Passive Network 40€ and 200€ / Meter Street to Building 30 € per Meter Access to Bulidng 200 € per building Source: Deutsche Telekom, 2015

11. Deutsche Telekom‘s Fixed Broadband Strategy • DT legally commits to build faster internet connection through Vectoring nationwide. This will allow copper cable download speed up to 100 Mbps. DT’s fixed broadband strategy DT’s focus on vectoring and high quality copper • In September 2016: BzA (The Federal Network Agency) has given green light to Deutsche Telekom vectoring plans. • Stufe 4 • Aufgabenbeschreibung • FTTC / Vectoring and Super- Vectoring from 2017 • Vectoring + Hybrid for high bandwidth • FTTB/H as the long term goal Evolution in Fixed Network • ADSL 2 + “classic” ≥16 Mbit/s ADSL 2 + • DTAG Germany builds≈80% „real“ 50Mb • Coverageuntil EoY2018 Customer Premise • FTTC + VDSL–Vectoring ≥100 Mbit/s Cabinet CuDA • FTTC + Super VDSL-Vectoring ≥300 Mbit/s FTTC Customer Premise • FTTB/FTTdp*+ Gfast≥500 Mbit/s Cabinet • Until EoY2016: • 65% VDSL (≥17 Mbit/s) Coverage • VDSL-Vectoring Swap in the completed areas CuDA Fiberglass • FTTH ≥1000 Mbit/s FTTB/dp* Customer Premise Cabinet Fiberglass • Broadband-Coverage ≥50 Mbit/s in Germany • At ≈ 80% (EoY2018) FTTH Fiberglass * Distribution point, not deployed by Telekom Germany yet. Source: Deutsche Telekom, EpochTimes, September 2016 @ http://www.epochtimes.de/technik/bundesnetzagentur-gibt-gruenes-licht-fuer-vectoring-technologie-a1354637.html

12. Recommendations on Broadband • German and EU BB targets are hardly achievable w/o a strong increase in subsidies for uneconomic regions. This also holds for Uzbekistan. National broadband policy Better broadband speed & availability Economic growth and development Role of State National Strategy Alternative Investment Strategies

13. Summary • Key Takeaways • Broadband increases the national growth rate and has positive effects on GDP in all sectors The Government should lead the nation’s ICT transformation by defining an National Broadband Strategy and a corresponding implementation plan Operators should implement this National Broadband Strategy – with a clear business and implementation plan The Broadband Solution should reflect national conditions and the specific environment. For example in Germany, fiber connection cost are rather high while the quality of the existing copper access network is excellent. Hence FTTC and reusing copper is the good solution in the short and medium term. In Uzbekistan, construction costs are and fiber connection cost is rather cheap due to lower labor cost low, lower costs for construction and connecting buildings while copper quality is poor. FTTH might be a good solution for Uzbekistan and will leapfrog the country into the digital broadband age.