As
filed with the Securities and Exchange Commission on March 10, 2009
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
|
Deutsche
Telekom AG
(Exact
name of Registrant as Specified in its Charter)
Federal
Republic of Germany
(State
or Other Jurisdiction of Incorporation or Organization)
Not
Applicable
(I.R.S.
Employer Identification Number)
Friedrich-Ebert-Allee
140
53113
Bonn
Germany
+49
228 181 0
(Address
and Telephone Number of
Registrant's
Principal Executive Offices)
Deutsche
Telekom, Inc.
Attn:
Klaus-Peter Statz
President
& CEO
14
Wall Street, Suite 6B
New
York, New York 10005
+1
212 424 2900
(Name,
Address and Telephone Number of Agent for Service)
|
Deutsche
Telekom International Finance B.V.
(Exact
name of Registrant as Specified in its Charter)
The
Netherlands
(State
or Other Jurisdiction of Incorporation or Organization)
Not
Applicable
(I.R.S.
Employer Identification Number)
Herengracht
124-128
1015
BT Amsterdam
The
Netherlands
+31
20 794 45 00
(Address
and Telephone Number of
Registrant's
Principal Executive Offices)
Deutsche
Telekom, Inc.
Attn:
Klaus-Peter Statz
President
& CEO
14
Wall Street, Suite 6B
New
York, New York 10005
+1
212 424 2900
(Name,
Address and Telephone Number of Agent for
Service)
|
Copies
of Communications to:
|
John
Palenberg, Esq.
Cleary
Gottlieb Steen & Hamilton LLP
Theodor-Heuss-Ring
9
50668
Cologne, Germany
|
Krystian
Czerniecki, Esq.
Sullivan
& Cromwell LLP
Neue
Mainzer Strasse 52
60311
Frankfurt am Main, Germany
|
Approximate
date of commencement of proposed sale to the public: From time to time after the
effective date of this registration statement.
If only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. o
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
please check the following box.x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a registration statement pursuant to General Instruction I.C. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box x
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.C. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
Calculation
of Registration Fee
|
Title
of each class of
securities
to be registered
|
Amount
to be
Registered(1)
|
Proposed
Maximum
Aggregate
Price Per Unit
|
Proposed
Maximum Aggregate Offering Price(1)
|
Amount
of
Registration
Fee(2)
|
||||||||||||
|
Debt
Securities
|
$ | 10,000,000,000 | (3) | $ | 10,000,000,000 | $ | 393,000 | |||||||||
|
Guarantees
of the Debt Securities(4)
|
||||||||||||||||
(1) In
U.S. dollars or their equivalent in foreign currencies.
(2)
Pursuant to Rule 457(p) of the Securities Act of 1933, as amended (the
“Securities Act”), the registration fee of $393,000 relating to the unsold
securities previously registered under our Registration Statement No. 333-118932
is being offset against the total registration fee currently due for this
registration statement. Registration Statement No. 333-118932 was
filed with the Commission on September 13, 2004.
(3) The
proposed maximum aggregate price per unit has been omitted pursuant to the Notes
to the “Calculation of Registration Fee” Table in Form F-3. The registration fee
has been calculated in accordance with Rule 457(o) of the Securities Act and
reflects the offering price rather than the principal amount of any securities
issued at a discount.
(4)
Pursuant to Rule 457(n) of the Securities Act, no separate fee for the
Guarantees is payable.
PART
I
INFORMATION
REQUIRED IN PROSPECTUS
i
PROSPECTUS
Deutsche
Telekom AG
(a
stock corporation organized under the laws
of
the Federal Republic of Germany)
(Deutsche
Telekom)
and
Deutsche
Telekom International Finance B.V.
(a
limited liability company organized under the laws of The
Netherlands)
(Finance)
$10,000,000,000
Debt
Securities
Guarantees
of Debt Securities
We may
from time to time offer and sell debt securities, in amounts, at prices and on
terms to be determined at the time of sale and provided in supplements to this
prospectus. We may sell debt securities having an aggregate initial offering
price of up to U.S. $10,000,000,000. The debt securities will rank equally in
right of payment among themselves and with all our existing and future unsecured
and unsubordinated indebtedness. Debt securities offered and sold by Finance are
unconditionally guaranteed by Deutsche Telekom.
We may
sell the debt securities directly or through underwriters, dealers or agents
designated at a future date. The accompanying prospectus supplement will set
forth the names of any underwriters, dealers or agents and any applicable
commissions or discounts. The prospectus supplement will also set forth the
proceeds we will receive from any sale of debt securities.
You
should read this prospectus and any prospectus supplement carefully. You should
not assume that the information in this prospectus, any prospectus supplement or
any document incorporated by reference in them is current as of any time
subsequent to its date.
Investing
in our securities involves risks. See “Risk Factors” on page 4
of this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is March 10, 2009.
|
Page
|
||||
| 3 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 5 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 7 | ||||
| 16 | ||||
| 19 | ||||
| 19 | ||||
| 20 | ||||
| 26 | ||||
| 26 | ||||
| 26 | ||||
| 26 | ||||
2
This
summary provides you with a brief overview of key information concerning
Deutsche Telekom and Finance and a brief description of the debt securities we
may offer. For a more complete understanding of the terms of the offered debt
securities, and before making your investment decision, you should carefully
read:
|
|
•
|
this
prospectus, which explains the general terms of the debt securities we may
offer;
|
|
|
•
|
the
accompanying prospectus supplement, which (1) explains the specific
terms of the debt securities being offered and (2) updates and
changes information in this
prospectus;
|
|
|
•
|
the
documents referred to below in “Incorporation of Certain Information by
Reference”; and
|
|
|
•
|
the
documents referred to below in “Where You Can Find More
Information”.
|
Deutsche
Telekom AG
Deutsche
Telekom is the largest provider of telecommunications services in Germany and
one of the world’s largest telecommunications companies, measured in terms of
2008 consolidated net revenues. Deutsche Telekom’s consolidated net revenues in
2008 totaled EUR 61.7 billion.
The
registered address for Deutsche Telekom is Friedrich-Ebert-Allee 140, 53113
Bonn, Germany, and its telephone number is +49 228-181-0. Deutsche Telekom’s
agent in the United States is Deutsche Telekom, Inc., 14 Wall Street, Suite 6B,
New York, New York 10005.
Deutsche
Telekom International Finance B.V.
Finance
was incorporated by Deutsche Telekom in The Netherlands on October 30, 1995
and is our wholly-owned subsidiary whose principal purpose is raising funds for
us. Finance’s corporate seat and registered address is Herengracht 124-128, 1015
BT Amsterdam, The Netherlands, and its telephone number is +31 20 794 45 00.
Finance’s agent in the United States is Deutsche Telekom, Inc., 14 Wall Street,
Suite 6B, New York, New York 10005.
The
Debt Securities We May Offer
We may
use this prospectus to offer up to U.S. $10,000,000,000 of debt securities in
U.S. dollars or their equivalent in foreign currencies.
Deutsche
Telekom will issue the debt securities under an indenture dated as of July 6,
2000, as amended and supplemented by the First Supplemental Indenture dated as
of November 9, 2007 among Deutsche Telekom, Finance, Deutsche Bank Trust Company
Americas, as successor trustee, Citibank N.A. and Citibank N.A., London Branch.
In this prospectus, we refer to this indenture, as amended and supplemented, as
the DT indenture.
Finance
will issue the debt securities under an indenture dated as of July 6, 2000, as
amended and supplemented by the First Supplemental Indenture dated as of
November 9, 2007 among Deutsche Telekom, Finance, Deutsche Bank Trust Company
Americas, as successor trustee, Citibank N.A. and Citibank N.A., London Branch.
In this prospectus, we refer to this indenture, as amended and supplemented, as
the Finance indenture.
When we
refer to the indentures in this prospectus, we are referring to the DT indenture
and the Finance indenture. The indentures provide that the debt
securities may be issued at one time, or from time to time, in one or more
series. Deutsche Telekom and Finance may each issue several distinct series of
debt securities. Debt securities offered and sold by Finance are unconditionally
guaranteed by Deutsche Telekom.
The
following table shows the ratios of earnings to fixed charges for Deutsche
Telekom, which are computed based on financial information prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”) for the years ended
December 31, 2008, 2007, 2006, 2005 and 2004.
|
For
the year ended December 31,
|
||||||||||
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||
|
Ratio
of earnings to fixed charges
|
1.9
|
1.6
|
1.7
|
2.7
|
1.8
|
|||||
Other
risks and considerations relevant to debt securities issued under the indentures
are described elsewhere in this prospectus, the prospectus supplements for those
debt securities and documents that we incorporate by reference. In
the discussion below, we refer to debt securities issued under the indentures as
our debt securities. Other debt securities may have other risks or
considerations relevant to them, and may have terms or provisions different from
those described here (including terms or provisions more favorable to their
holders than those of our debt securities issued under the
indentures).
Our
credit ratings may not reflect all risks of an investment in our debt
securities.
The
credit ratings ascribed to us and our debt securities are intended to reflect
our ability to meet the payment obligations under our debt securities, and may
not reflect the potential impact of all risks related to structure and other
factors on the value of our debt securities. These risks are
particularly relevant in the case of debt securities indexed to one or more
interest rates, currencies or other indices or formulae. In addition,
actual or anticipated changes in our credit ratings will generally affect the
market value of debt securities we have issued.
Many
factors may adversely affect the trading market, value or yield of our debt
securities.
There
may not be any trading market for our debt securities; factors beyond our
creditworthiness may affect the trading market for and value of our debt
securities.
We cannot
assure you that a trading market for our debt securities will develop or be
maintained in the United States or elsewhere. A listing on a stock
exchange or other trading market does not imply that a trading market will
develop or continue. If debt securities are not listed, however,
pricing information for them may be more difficult to obtain, which may make
them less liquid.
In
addition to our own creditworthiness, many other factors may affect the trading
market for, and current market value of, our debt securities. These
factors include:
|
·
|
the
method of calculating principal, premium and
interest;
|
|
·
|
the
complexity and volatility of the index or formula (if any) linked to the
debt securities;
|
|
·
|
the
time remaining to the maturity;
|
|
·
|
the
outstanding amount of our debt securities—unless otherwise indicated in a
prospectus supplement, the indentures for our debt securities do not limit
the amount of debt securities we may issue or
guarantee;
|
|
·
|
redemption
or repayment features; and
|
|
·
|
the
level, direction and volatility of market interest rates
generally.
|
In addition,
if you decide to sell our debt securities, there may be a limited number of
buyers (if any) or there may be a surplus of debt securities of other issuers
available with similar credit, maturity and other structural
characteristics. This may affect the price you receive for our debt
securities or your ability to sell them at all. You should not
purchase our debt securities unless you understand and know you can bear the
related investment risks.
The
yield on debt securities linked to interest rates, currencies or other indices
or formulae will be affected by various influences.
If you
invest in debt securities indexed to one or more interest rates, currencies or
other indices or formulae, there will be significant risks not associated with
an investment in a conventional fixed rate debt security. These risks
include fluctuation of indices and formulae and the possibility that you will
receive a lower, or no, amount of principal, premium or interest, or at
different times than you expected. We have no control over a number
of matters, including economic, financial and political events, that are
important in determining the existence, magnitude and longevity of these risks
and their results. In addition, if an index or formula used to
determine any amounts payable of debt securities includes a multiplier or
leverage factor, the effect of any change in that index or formula will be
magnified. In recent years, values of certain indices have been
volatile, and volatility in those and other interest rate indices may continue
in the future.
Redemption
may adversely affect your return on our debt securities.
If debt
securities are or become redeemable at our option, we may choose to redeem them
at times when prevailing market interest rates are lower than the interest rates
on the debt securities being redeemed. In addition, if our debt
securities are subject to mandatory redemption, we may be required to redeem
them at times when prevailing interest rates are relatively low. As a
result, you may not be able to reinvest the redemption proceeds in a comparable
security at an effective interest rate as high as that of the redeemed debt
securities. Our redemption
right may also adversely affect your ability to sell debt securities as their
redemption date approaches.
Direct
creditors of Deutsche Telekom’s subsidiaries will generally have superior claims
to cash flows from those subsidiaries.
In recent
years, an increasing proportion of Deutsche Telekom’s revenues has been
generated by its subsidiaries, particularly in the mobile sector. It
may be that we will increasingly depend upon earnings and cash flow from
Deutsche Telekom’s subsidiaries to meet obligations under our debt securities.
Deutsche Telekom has the ability to restructure its operations to cause
operating assets currently held directly by Deutsche Telekom AG to be held by
one or more subsidiaries. Because the creditors of any subsidiary of
Deutsche Telekom AG would generally have a right to receive payment that is
superior to the parent company’s right to receive payment from the assets of
that subsidiary, holders of our debt securities will be effectively subordinated
to creditors of those subsidiaries insofar as cash flows from those subsidiaries
are relevant to servicing our debt securities. Unless otherwise
indicated in a prospectus supplement, the indentures for its debt securities do
not limit the amount of liabilities that Deutsche Telekom’s subsidiaries may
incur. In addition, certain subsidiaries of Deutsche Telekom are or
may be subject to contractual restrictions or regulatory requirements that would
limit their ability to pay dividends.
Our
debt securities generally do not contain financial covenants, change in control
provisions or similar limitations on our flexibility.
Unless
otherwise specified in a prospectus supplement relating to our debt securities,
the indentures for our debt securities do not contain any covenants or other
provisions designed to protect holders of the debt securities against a
reduction in the creditworthiness of Deutsche Telekom or Finance. They also do
not contain covenants or other provisions that would prohibit us from increasing
our indebtedness or prohibit us or our affiliates from engaging in other
transactions that might adversely affect holders of our debt securities,
including transactions involving a change in control over the relevant issuer or
the guarantor (if any) or a business combination, acquisition or divestiture. We
may at any time be engaged in discussions concerning, or otherwise acting in
furtherance of, such transactions.
This
prospectus and any accompanying prospectus supplements contain or incorporate
statements that are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Forward-looking statements generally are identified by the
words “expect,” “anticipate,” “believe,” “intend,” “estimate,” “aim,” “plan,”
“will,” “will continue,” “seek,” “outlook,” “guidance” and similar
expressions.
Forward-looking
statements are based on current plans, estimates and projections and involve
inherent risks and uncertainties, most of which are difficult to predict and are
generally beyond our control. Our actual results, performance or achievements
could be significantly different from the results expressed in, or implied by,
those forward-looking statements. When considering those forward-looking
statements, you should keep in mind these risks, uncertainties and other
cautionary statements made in this prospectus, the prospectus supplements and
documents incorporated by reference.
You
should not place any undue reliance on any forward-looking statement, which
speaks only as of the date made. We caution you that a number of important
factors could cause actual results or outcomes to differ materially from those
expressed in, or implied by, the forward-looking statements and you should refer
to our periodic and current reports filed with the U.S. Securities and Exchange
Commission, or SEC, for specific risks.
Deutsche
Telekom is a stock corporation (Aktiengesellschaft) organized
under the laws of the Federal Republic of Germany, and Finance is a private
company with limited liability for an unlimited duration, established under the
laws of The Netherlands. None of the members of the Board of Management (Vorstand) of Deutsche Telekom
or the Board of Management (bestuur) of Finance are
residents of the United States. All or a substantial portion of the assets of
these individuals and of Deutsche Telekom and Finance are located outside the
United States. As a result, it may not be possible for you to effect service of
process within the United States upon these individuals or upon Deutsche Telekom
or Finance or to enforce judgments obtained in U.S. courts based on the civil
liability provisions of the U.S. securities laws against Deutsche Telekom or
Finance in Germany or The Netherlands. Awards of punitive damages in actions
brought in the United States or elsewhere may not be enforceable in Germany or
The Netherlands. In addition, actions brought in a German court against Deutsche
Telekom or the members of its Board of Management to enforce liabilities based
on U.S. federal securities laws may be subject to certain restrictions; in
particular, a German court may not award punitive damages. The United States and
The Netherlands do not currently have a treaty providing for recognition and
enforcement of judgments (other than arbitration awards) in civil and commercial
matters. Therefore, a final judgment for the payment of money rendered by any
federal or state court in the United States based on civil liability, whether or
not predicated solely upon United States federal securities laws, would not be
automatically enforceable in The Netherlands and new proceedings on the merits
must be initiated before a Dutch court. However, if the party in whose favor
such final judgment is rendered brings a new suit in a competent court in The
Netherlands such a party may submit to a Dutch court the final judgment that has
been rendered in the United States and such court will have discretion to attach
such weight to that judgment as it deems appropriate. To the extent that the
Dutch court finds that the judgment rendered by a federal or state court in the
United States (a) has not been rendered in violation of elementary
principles of fair trial and (b) does not contravene public policy of The
Netherlands, the Dutch court will, under current practice, in principle, give
binding effect to such final judgment.
This
document is called a prospectus and is part of a registration statement that we
filed with the SEC utilizing the “shelf” registration or continuous offering
process. Under this shelf process, we may sell the debt securities described in
this prospectus in one or more offerings up to a total amount of U.S.
$10,000,000,000 or their equivalent in foreign currencies.
This
prospectus provides you with a general description of the debt securities we may
offer. Each time we sell debt securities, we will provide a prospectus
supplement containing specific information about the terms of the debt
securities. The prospectus supplement may also add to, update or change
information contained in this prospectus. If there is any inconsistency between
the information in this prospectus and any prospectus supplement, you should
rely on the information in that prospectus supplement. You should read both this
prospectus and any prospectus supplement together with the additional
information described under the headings “Incorporation of Certain Information
by Reference” and “Where You Can Find More Information”.
The
registration statement containing this prospectus, including exhibits to the
registration statement, provides additional information about us and the debt
securities offered under this prospectus. The registration statement can be read
at the SEC web site or at the SEC’s Public Reference Room, as described under
the heading “Where You Can Find More Information”.
When
acquiring any debt securities discussed in this prospectus, you should rely on
the information provided in this prospectus and in any prospectus supplement,
including the information incorporated by reference. For more information, see
“Incorporation of Certain Information by Reference”. Neither we, nor any
underwriters, dealers or agents, have authorized anyone to provide you with
different information. We are not offering the debt securities in any
jurisdiction where the offer is prohibited. You should not assume that the
information in this prospectus, any prospectus supplement, or any document
incorporated by reference, is current as of any time subsequent to its
date.
We may
sell the debt securities to underwriters who will sell the debt securities to
the public on terms fixed at the time of sale. In addition, the debt securities
may be sold by us directly or through dealers or agents designated from time to
time. If we, directly or through agents, solicit offers to purchase the debt
securities, we reserve the right to accept and, together with our agents, to
reject, in whole or in part, any of those offers.
The
accompanying prospectus supplement will set forth the names of any underwriters,
dealers or agents and any applicable commissions or discounts. The prospectus
supplement will also set forth the proceeds we will receive from any sale of
debt securities. Any underwriters, dealers or agents participating in the
offering may be considered “underwriters” within the meaning of the Securities
Act.
Unless
otherwise mentioned or unless the context requires otherwise, all references in
this prospectus to “we”, “us”, “our”, or similar references mean Deutsche
Telekom AG and its subsidiaries.
As used
in this prospectus, references to “EUR”, “Euro” or “€” are to the Euro, the
legal currency of certain member states of the European Union, including the
Federal Republic of Germany (the “Federal Republic” or “Germany”). “U.S. dollar”
or “$” refers to the lawful currency of the United States of
America.
Deutsche
Telekom AG
The
following table sets forth, on a consolidated basis, the cash and cash
equivalents, current financial liabilities, non-current financial liabilities,
shareholders’ equity and capitalization of Deutsche Telekom and its consolidated
subsidiaries in accordance with IFRS, as issued by the IASB, as at December 31,
2008.
|
At
December 31, 2008
|
||||
|
(millions
of euro)
|
||||
|
Cash and cash
equivalents
|
3,026 | |||
|
Current
financial liabilities(1)
|
5,540 | |||
|
Non-current
financial liabilities
|
||||
|
Bonds
|
29,210 | |||
|
Liabilities
to banks
|
3,903 | |||
|
Lease
liabilities
|
1,880 | |||
|
Promissory
notes
|
887 | |||
|
Total
non-current financial liabilities(1)(2)(3)
|
35,880 | |||
|
Shareholders’
equity:
|
||||
|
Issued
capital
|
11,165 | |||
|
Capital
reserves
|
51,526 | |||
|
Other
shareholders equity
|
(19,579 | ) | ||
|
Total
shareholders’ equity
|
43,112 | |||
|
Total
capitalization
|
78,992 | |||
(1)
All current and non-current financial liabilities are unsecured.
(2)
In accordance with Postreform II (§ 2 (4) of the Post Transformation Act - Postumwandlungsgesetz), the
Federal Republic is guarantor of all Deutsche Telekom’s liabilities, which were
outstanding at January 1, 1995.
At December 31, 2008, this figure was a nominal EUR 2.1
billion.
(3)
Subsequent to December 31, 2008, Finance issued a EUR 2.0 billion bond and
Deutsche Telekom issued EUR 0.2 billion of promissory notes.
Except as
disclosed in this prospectus, there has been no material change in the
capitalization of Deutsche Telekom since December 31, 2008.
Deutsche Telekom International
Finance B.V.
The
following table shows the capitalization of Finance in accordance with IFRS, as
issued by the IASB, as at December 31, 2008.
|
At
December 31, 2008
|
||||
|
(millions
of euro)
|
||||
|
Cash and cash
equivalents
|
0 | |||
|
Current
financial liabilities(1)
|
5,053 | |||
|
Non-current
financial liabilities (1) (2)
|
28,487 | |||
| Bonds |
27,123
|
|||
| Liabilities to banks | 526 | |||
| Other | 838 | |||
|
Shareholders’
equity:
|
338 | |||
|
Total
capitalization
|
28,825 | |||
(1) All
current and non-current financial liabilities are guaranteed and
unsecured.
(2)
Subsequent to December 31, 2008, Finance issued a EUR 2.0 billion
bond.
Except as
disclosed in this prospectus, there has been no material change in the
capitalization of Finance since December 31, 2008.
Unless
we state otherwise in a prospectus supplement, the net proceeds from the sale of
debt securities offered through this prospectus will be used for general
corporate purposes. Net proceeds received by Finance from the sale of securities
offered through this prospectus will be on-lent to our group companies for their
general corporate purposes.
This
prospectus relates to debt securities issued by Deutsche Telekom and debt
securities issued by Finance. As required by U.S. Federal law for all debt
securities of companies that are publicly offered, the debt securities are
governed by a document called an indenture.
Deutsche
Bank Trust Company Americas acts as the trustee under the indentures. The
trustee has two main roles:
|
|
•
|
First,
it can enforce your rights against us if we default. There are some
limitations on the extent to which the trustee acts on your behalf,
described later beginning on page 15 under “Default and Related Matters —
Events of Default — Remedies If an Event of Default Occurs”;
and
|
|
|
•
|
Second,
the trustee performs administrative duties for us, such as sending you
interest payments, transferring your debt securities to a new buyer if you
sell and sending you notices.
|
Deutsche Telekom is the guarantor of debt securities issued by Finance. The
guarantees are described later on page 8 under “Guarantees”.
The
indentures and their associated documents contain the full legal text of the
matters described in this section. The indentures, the debt securities and the
guarantees are governed by New York law. The indentures are exhibits to our
registration statement. See “Where You Can Find More Information” on
page 26 for information on how to obtain a copy.
Deutsche
Telekom and Finance may each issue as many distinct series of debt securities
under its respective indenture as it wishes. This section discusses all material
terms of the debt securities that may be issued by Deutsche Telekom that are
common to all series, and the debt securities that may be issued by Finance and
the related guarantees that are common to all series, unless otherwise indicated
in the prospectus supplement relating to a particular series.
This
section may not be complete in all respects and is subject to and qualified in
its entirety by reference to all the provisions of the indentures, including
some of the terms used in the indentures. In this section, we describe only the
more important terms of the indentures. We also include references in
parentheses to some sections of the indentures. Whenever we refer to particular
sections or defined terms of the indentures in this prospectus or in the
prospectus supplement, those sections or defined terms are incorporated by
reference here or in the prospectus supplement. This section also is subject to
and qualified by reference to the description of the particular terms of your
series described in the prospectus supplement.
We may
issue the debt securities as original issue discount securities, which are debt
securities that are offered and sold at a substantial discount to their stated
principal amount. (Section
101) The debt securities may also be issued as indexed securities or
securities denominated in foreign currencies or currency units, as well as
composite currencies or composite currency units, as described in more detail in
the prospectus supplement relating to any of these types of debt
securities.
The
specific financial, legal and other terms particular to a series of debt
securities will be described in the prospectus supplement and the pricing
agreement relating to the series. Those terms may vary from the terms described
here. Accordingly, this section also is subject to and qualified by reference to
the description of the terms of the series described in the prospectus
supplement.
The
prospectus supplement relating to a series of debt securities will describe the
following terms of the series:
|
|
•
|
the
title of the series of debt
securities;
|
|
|
•
|
any
limit on the aggregate principal amount of the series of debt
securities;
|
|
|
•
|
any
stock exchange on which we will list the series of debt
securities;
|
|
|
•
|
the
manner in which we will pay interest on the series of debt
securities;
|
|
|
•
|
the
date or dates on which we will pay the principal of the series of debt
securities;
|
|
|
•
|
the
rate or rates, which may be fixed or variable, per annum at which the
series of debt securities will bear interest, if any, and the date or
dates from which that interest, if any, will
accrue;
|
|
|
•
|
the
dates on which interest, if any, on the series of debt securities will be
payable and the regular record dates for the interest payment
dates;
|
|
|
•
|
any
mandatory or optional sinking funds or analogous provisions or provisions
for redemption at the option of the
holder;
|
|
|
•
|
the
date, if any, after which and the price or prices at which the series of
debt securities may, in accordance with any optional or mandatory
redemption provisions that are not described in this prospectus, be
redeemed and the other detailed terms and provisions of those optional or
mandatory redemption provisions, if
any;
|
|
|
•
|
the
denominations in which the series of debt securities will be issuable if
other than denominations of $1,000 and any integral multiple of
$1,000;
|
|
|
•
|
the
currency of payment of principal, premium, if any, and interest on the
series of debt securities if other than the currency of the United States
of America and the manner of determining the equivalent amount in the
currency of the United States of
America;
|
|
|
•
|
any
index used to determine the amount of payment of principal of, premium, if
any, and interest on the series of debt
securities;
|
|
|
•
|
if
other than the principal amount, the portion of the principal amount of
the series of debt securities that shall be payable upon acceleration of
maturity following an event of
default;
|
|
|
•
|
the
applicability of the provisions described later beginning on page 14 under
“Covenants — Defeasance and
Discharge”;
|
|
|
•
|
if
the series of debt securities will be issuable in whole or part in the
form of a global security as described beginning on page 8 under
“Legal Ownership — Global Securities”, and the depository or its nominee
with respect to the series of debt securities, and any special
circumstances under which the global security may be registered for
transfer or exchange in the name of a person other than the depository or
its nominee;
|
|
|
•
|
whether
we may from time to time without the consent of the holders create and
issue further debt securities having the same terms and conditions as the
debt securities so that such further issue is consolidated and forms a
single series with the series of outstanding debt
securities;
|
|
|
•
|
if
the series of debt securities is redeemable at our option, whether the
adjusted treasury yield, which is defined later in this prospectus, is
different from the adjusted treasury yield determined under the
indentures;
|
|
|
•
|
any
addition to or change in the events of default that applies to the series
of debt securities and any change in the rights of the trustee or holders
to declare the principal amount due and payable following an event of
default;
|
|
|
•
|
any
addition to or change in the covenants contained in the indentures;
and
|
|
|
•
|
any
other special features of the series of debt
securities.
|
Guarantees
Deutsche
Telekom will fully, unconditionally and irrevocably guarantee the payment of the
principal of, premium, if any, and interest on the debt securities issued by
Finance, including any additional amounts which may be payable by Finance in
respect of its debt securities, as described under “Payment of Additional
Amounts”. Deutsche Telekom guarantees the payment of such amounts when such
amounts become due and payable, whether at the stated maturity of the debt
securities, by declaration or acceleration, call for redemption or
otherwise.
In the
distribution of the assets of any subsidiary of Deutsche Telekom upon the
subsidiary’s liquidation or reorganization, any creditor of the subsidiary will
have a right to participate in the distribution before the creditors of Deutsche
Telekom, including holders of debt securities issued by Finance. The guarantees
will be unsecured obligations of Deutsche Telekom.
Legal Ownership
Street
Name and Other Indirect Holders
Investors
who hold debt securities in accounts at banks or brokers will generally not be
recognized by us as legal or record holders of debt securities. This is called
holding in street name. Instead, we would recognize only the bank or broker, or
the financial institution the bank or broker uses to hold its debt securities.
These intermediary banks, brokers and other financial institutions pass along
principal, interest and other payments on the debt securities, either because
they agree to do so in their customer agreements or because they are legally
required to do so. If you hold debt securities in street name, you should check
with your own institution to find out:
|
|
•
|
how
it handles debt securities payments and
notices;
|
|
|
•
|
whether
it imposes fees or charges;
|
|
|
•
|
how
it would handle voting if it were ever
required;
|
|
|
•
|
whether
and how you can instruct it to send you debt securities registered in your
own name so you can be a direct holder as described below;
and
|
|
|
•
|
how
it would pursue rights under the debt securities if there were a default
or other event triggering the need for holders to act to protect their
interests.
|
Direct
Holders
Our
obligations, as well as the obligations of the trustee and those of any third
parties employed by us or the trustee, under the debt securities run only to
persons who are registered as holders of debt securities. As noted above, we do
not have obligations to you if you hold in street name or other indirect means,
either because you choose to hold debt securities in that manner or because the
debt securities are issued in the form of global securities as described below.
For example, once we make payment to the registered holder we have no further
responsibility for the payment even if that holder is legally required to pass
the payment along to you as a street name customer but does not do
so.
Global
Securities
What is a Global
Security? A global security is a special type of indirectly held
security, as described above under “Street Name and Other Indirect Holders”. If
we choose to issue debt securities in the form of global securities, the
ultimate beneficial owners of global securities can only be indirect holders. We
require that the global security be registered in the name of a financial
institution we select.
We also
require that the debt securities included in the global security not be
transferred to the name of any other direct holder unless the special
circumstances described below occur. The financial institution that acts as the
sole direct holder of the global security is called the depositary. Any person
wishing to own a security must do so indirectly by virtue of an account with a
broker, bank or other financial institution that in turn has an account with the
depositary. The prospectus supplement indicates whether your series of debt
securities will be issued only in the form of global securities.
Special Investor
Considerations for Global Securities. As an indirect holder, an
investor’s rights relating to a global security will be governed by the account
rules of the investor’s financial institution and of the depositary, as well as
general laws relating to securities transfers. We do not recognize this type of
investor as a holder of debt securities and instead deal only with the
depositary that holds the global security.
If you
are an investor in debt securities that are issued only in the form of global
debt securities, you should be aware of the following.
|
|
•
|
You
cannot get debt securities registered in your own
name.
|
|
|
•
|
You
cannot receive physical certificates for your interest in the debt
securities.
|
|
|
•
|
You
will be a street name holder and must look to your own bank or broker for
payments on the debt securities and protection of your legal rights
relating to the debt securities, as explained earlier under “Street Name
and Other Indirect Holders” on page
8.
|
|
|
•
|
You
may not be able to sell interests in the debt securities to some insurance
companies and other institutions that are required by law to own their
debt securities in the form of physical
certificates.
|
|
|
•
|
The
depositary’s policies will govern payments, transfers, exchange and other
matters relating to your interest in the global security. We and the
trustee have no responsibility for any aspect of the depositary’s actions
or for its records of ownership interests in the global security. We and
the trustee also do not supervise the depositary in any
way.
|
|
|
•
|
The
depositary will require that interests in a global security be purchased
or sold within its system using same-day
funds.
|
Special
Situations When Global Security Will Be Terminated. In a few special
situations described later, the global security will terminate and interests in
it will be exchanged for physical certificates representing debt securities.
After that exchange, the choice of whether to hold debt securities directly or
in street name will be up to the investor. Investors must consult their own bank
or brokers to find out how to have their interests in debt securities
transferred to their own name so that they will be direct holders. The rights of
street name investors and direct holders in the debt securities have been
previously described in the subsections entitled “Street Name and Other Indirect
Holders” and “Direct Holders” on page 8.
The
special situations for termination of a global security are:
|
|
•
|
When
the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary and we do not appoint a successor
within 120 days.
|
|
|
•
|
When
an event of default on the debt securities has occurred and has not been
cured. Defaults are discussed later under “Default and Related Matters —
Events of Default” beginning on page
15.
|
The
prospectus supplement may also list additional situations for terminating a
global security that would apply only to the particular series of debt
securities covered by the prospectus supplement. When a global security
terminates, the depositary (and not us or the trustee) is responsible for
deciding the names of the institutions that will be the initial direct holders.
(Sections 203, 204 and
305.)
In
the remainder of this description “you” means direct holders and not street name
or other indirect holders of debt securities. Indirect holders should read the
previous subsection on page 8 entitled “Street Name and Other Indirect
Holders”.
Overview
of Remainder of This Description
The
remainder of this description summarizes:
|
|
•
|
Additional
mechanics relevant to the debt securities under normal
circumstances, such as how you transfer ownership and where we make
payments.
|
|
|
•
|
Your
rights under several special
situations , such as if we merge with another company, if we want
to change a term of the debt securities or if Finance or Deutsche Telekom
wants to redeem the debt securities for tax
reasons.
|
|
|
•
|
Your
rights to receive payment of
additional amounts due to changes in the withholding requirements
of various jurisdictions.
|
|
|
•
|
Covenants
contained in the indentures that restrict our ability to incur
liens and require us to perform various acts. A particular series of debt
securities may have additional
covenants.
|
|
|
•
|
Your
rights if we default
or experience other financial
difficulties.
|
|
|
•
|
Our
relationship with the trustee.
|
Additional
Mechanics
Exchange
and Transfer
You may
have your debt securities broken into more debt securities of smaller
denominations or combined into fewer debt securities of larger denominations, as
long as the total principal amount is not changed. (Section 305) This is called
an exchange.
You may
exchange or transfer your debt securities at the office of the trustee. The
trustee acts as our agent for registering debt securities in the names of
holders and transferring debt securities. We may change this appointment to
another entity or perform the service ourselves. The entity performing the role
of maintaining the list of registered holders is called the security registrar.
It will also register transfers of the debt securities. (Section 305)
You will
not be required to pay a service charge to transfer or exchange debt securities,
but you may be required to pay for any tax or other governmental charge
associated with the exchange or transfer. The transfer or exchange of a debt
security will only be made if the security registrar is satisfied with your
proof of ownership.
If we
have designated additional transfer agents, they will be named in the prospectus
supplement. We may cancel the designation of any particular transfer agent. We
may also approve a change in the office through which any transfer agent acts.
(Section
1002)
If the
debt securities are redeemable and we redeem less than all of the debt
securities of a particular series, we may block the transfer or exchange of debt
securities during a specified period of time in order to freeze the list of
holders to prepare the mailing. The period begins 15 days before the day we mail
the notice of redemption and ends on the day of that mailing. We may also refuse
to register transfers or exchanges of debt securities selected for redemption.
However, we will continue to permit transfers and exchanges of the unredeemed
portion of any security being partially redeemed. (Section 305)
Payment
and Paying Agents
We will
pay interest to you if you are a direct holder listed in the trustee’s records
at the close of business on a particular day in advance of each due date for
interest, even if you no longer own the security on the interest due date. That
particular day, usually about two weeks in advance of the interest due date, is
called the regular record date and will be stated in the prospectus supplement.
(Section
307)
We will
pay interest, principal and any other money due on the debt securities at the
corporate trust office of the trustee in New York City. That office is currently
located at Deutsche Bank Trust Company Americas, 60 Wall Street, New York, New
York 10005. You must make arrangements to have your payments picked up at or
wired from that office. We may also choose to pay interest by mailing checks.
Interest on global securities will be paid to the holder of the debt securities
by wire transfer of same-day funds.
Holders
buying and selling debt securities must work out between them how to compensate
for the fact that we will pay all the interest for an interest period to the one
who is the registered holder on the regular record date. The
most common manner is to adjust the sales price of the debt securities to pro
rate interest fairly between buyer and seller. This pro rated interest amount is
called accrued interest.
Street
name and other indirect holders should consult their banks or brokers for
information on how they will receive payments.
We may
also arrange for additional payment offices, and may cancel or change these
offices, including our use of the trustee’s corporate trust office. These
offices are called paying agents. We may also choose to act as our own paying
agent. We must notify you of changes in the paying agents for any particular
series of debt securities. (Section 1002)
Notices
We and
the trustee will send notices only to direct holders, using their addresses as
listed in the trustee’s records. (Sections 101 and
106)
Regardless
of who acts as paying agent, all money that we pay to a paying agent that
remains unclaimed at the end of two years after the amount is due to direct
holders will be repaid to us. After that two-year period, you may look only to
us for payment and not to the trustee, any other paying agent or anyone else.
(Section
1003)
Special
Situations
Mergers
and Similar Events
Each of
Deutsche Telekom and Finance is generally permitted to consolidate or merge with
another company or firm. Each of Deutsche Telekom and Finance is also permitted
to sell or lease substantially all of its assets to another firm or to buy or
lease substantially all of the assets of another firm. However, neither Deutsche
Telekom nor Finance may take any of these actions unless all the following
conditions are met:
|
|
•
|
Where
Deutsche Telekom or Finance merges out of existence or sells or leases its
assets substantially as an entirety, the other firm must assume its
obligations on the debt securities or the guarantees. The other firm’s
assumption of these obligations must include the obligation to pay the
additional amounts described later beginning on page 14 under “Payment of
Additional Amounts”. If the other firm is organized under the laws of a
jurisdiction outside the United States, it must indemnify you against any
governmental charge or other cost resulting from the
transaction.
|
|
|
•
|
The
merger, sale or lease of assets or other transaction must not cause a
default on the debt securities, and we must not already be in default. For
purposes of this no-default test, a default would include an event of
default that has occurred and not been cured, as described later on page
15 under “Default and Related Matters — Events of Default — What is An
Event of Default?” A default for this purpose would also include any event
that would be an event of default if the requirements for giving us
default notice or our default having to exist for a specific period of
time were disregarded. (Section
801)
|
It is
possible that a merger or other similar transaction may cause the holders of the
debt securities to be treated for U.S. federal income tax purposes as though
they exchanged the debt securities for new securities. This could result in the
recognition of taxable gain or loss for U.S. federal income tax purposes and
possible other adverse tax consequences.
Modification
and Waiver
There are
three types of changes we can make to the indentures and the debt
securities.
Changes
Requiring Your Approval.
First,
there are changes that cannot be made to your debt securities without your
specific approval. Following is a list of those types of changes:
|
|
•
|
change
the stated maturity of the principal or interest on a debt
security;
|
|
|
•
|
reduce
any amounts due on a debt security;
|
|
|
•
|
change
any obligation of Finance or Deutsche Telekom to pay additional amounts
described later beginning on page 14 under “Payment of Additional
Amounts”;
|
|
|
•
|
reduce
the amount of principal payable upon acceleration of the maturity of a
debt security following a default;
|
|
|
•
|
change
the place or currency of payment on a debt
security;
|
|
|
•
|
impair
any of the conversion rights of your debt
security;
|
|
|
•
|
impair
your right to sue for payment or
conversion;
|
|
|
•
|
reduce
the percentage of holders of debt securities whose consent is needed to
modify or amend the indentures;
|
|
|
•
|
reduce
the percentage of holders of debt securities whose consent is needed to
waive compliance with various provisions of the indentures or to waive
various defaults;
|
|
|
•
|
modify
any other aspect of the provisions dealing with modification and waiver of
the indentures; and
|
|
|
•
|
change
the obligations of Deutsche Telekom as guarantor with respect to payment
of principal, premium, if any, and interest, sinking fund payments or
conversion rights. (Section
902)
|
Changes
Requiring a Majority Vote.
The
second type of change to the indentures and the debt securities is the kind that
requires a vote in favor by holders of debt securities owning a majority of the
outstanding principal amount of the particular series affected. Most changes
fall into this category, except for clarifying changes and other changes that
would not adversely affect holders of the debt securities in any material
respect. The same vote would be required for us to obtain a waiver of all or
part of the covenants described later beginning on page 14, or a waiver of a
past default. However, we cannot obtain a waiver of a payment default or any
other aspect of the indentures or the debt securities listed in the first
category described previously above under “Changes Requiring Your Approval”
unless we obtain your individual consent to the waiver. (Section 513)
Changes
Not Requiring Approval.
The third
type of change does not require any vote by holders of debt securities. This
type of change is limited to clarifications and other changes that would not
adversely affect holders of the debt securities in any material respect. (Section 901)
Further
Details Concerning Voting.
When
taking a vote, we will use the following rules to decide how much principal
amount to attribute to a security:
|
|
•
|
For
original issue discount securities, we will use the principal amount that
would be due and payable on the voting date if the maturity of the debt
securities were accelerated to that date because of a
default.
|
|
|
•
|
For
debt securities whose principal amount is not known (for example, because
it is based on an index), we will use a special rule for that security
described in the prospectus
supplement.
|
|
|
•
|
For
debt securities denominated in one or more foreign currencies or currency
units, we will use the U.S. dollar equivalent determined as of the date of
original issuance.
|
|
|
•
|
Debt
securities will not be considered outstanding, and therefore not eligible
to vote, if we have deposited or set aside in trust for you money for
their payment or redemption. Debt securities will also not be eligible to
vote if they have been fully defeased as described later beginning on page
14 under “Covenants — Defeasance and Discharge”. (Section101)
|
|
|
•
|
We
will generally be entitled to set any day as a record date for the purpose
of determining the holders of outstanding debt securities that are
entitled to vote or take other action under the indentures. In limited
circumstances, the trustee will be entitled to set a record date for
action by holders. If we or the trustee set a record date for a vote or
other action to be taken by holders of a particular series, that vote or
action may be taken only by persons who are holders of outstanding debt
securities of that series on the record date and must be taken within 180
days following the record date or another period that we may specify (or
as the trustee may specify if it set the record date). We may shorten or
lengthen (but not beyond 180 days) this period from time to time. (Section
104)
|
Street
name and other indirect holders should consult their banks or brokers for
information on how approval may be granted or denied if we seek to change the
indentures or the debt securities or request a waiver.
Redemption
at our Option
If the
debt securities are redeemable at our option then, unless otherwise specified in
the prospectus supplement, upon redemption we will pay a redemption price equal
to the greater of (i) 100% of the principal amount of the debt securities
plus accrued interest to the date of redemption or (ii) as determined by
the quotation agent, the sum of the present values of the remaining scheduled
payments of principal and interest on the debt securities (not including any
portion of such payments of interest accrued as of the date of redemption). The
present values will be determined by discounting the remaining principal and
interest payments to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months), using the adjusted treasury
yield.
The
definitions of terms used in the paragraph above are listed below.
|
•
|
“Adjusted
treasury yield” means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the
comparable treasury issue, assuming a price for the comparable treasury
issue (expressed as a percentage of its principal amount) equal to the
comparable treasury price for such redemption date
plus
|
|
•
|
in
the case of a series of debt securities maturing in less than five years
from its initial issue date, 15 basis points;
or
|
|
•
|
in
the case of a series of debt securities maturing in five years or greater
from its initial issue date, 20 basis
points.
|
|
•
|
“Comparable
treasury issue” means the U.S. Treasury security selected by the quotation
agent as having a maturity comparable to the remaining term of the series
of debt securities to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the
remaining term of the debt
securities.
|
|
•
|
“Comparable
treasury price” means, with respect to any redemption date, the average of
the quotation agent’s quotations for the redemption
date.
|
|
•
|
“Quotation
agent” means a reference treasury dealer that is a primary U.S. government
securities dealer in New York City. The trustee will appoint the quotation
agent after first consulting with
us.
|
|
•
|
“Quotation
agent’s quotations” means with respect to any redemption date, the
average, as determined by the trustee, of the bid and asked prices for the
comparable treasury issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the trustee by the quotation agent
at 5:00 p. m. on the third business day before the redemption
date.
|
From and
after the redemption date, if money for the redemption of the series of debt
securities called for redemption is made available as provided in the indentures
and the debt securities called for redemption on the redemption date, the debt
securities will cease to bear interest, and the only right of the holders of the
debt securities will be to receive payment of the redemption price and all
unpaid interest accrued to the date of redemption.
We will
give notice to The Depository Trust Company, or DTC, of any redemption we
propose to make at least 30 days, but not more than 60 days, before the
redemption date. Notice by DTC to participating institutions and by these
participants to street name holders of indirect interests in the series of debt
securities will be made according to arrangements among them and may be subject
to statutory or regulatory requirements.
Optional
Tax Redemption
Other
than as described above under “Redemption at our Option”, we may have the option
to redeem the debt securities in two situations described below. The redemption
price for the debt securities, other than original issue discount debt
securities, will be equal to the principal amount of the debt securities being
redeemed plus accrued interest and any additional amounts due on the date fixed
for redemption. The redemption price for original issue discount debt securities
will be specified in the prospectus supplement for such securities. Furthermore,
we must give you between 30 and 60 days’ notice before redeeming the debt
securities.
|
•
|
The
first situation is where, as a result of a change in, execution of or
amendment to any laws or treaties or the official application or
interpretation of any laws or treaties,
either:
|
|
|
-
|
Deutsche
Telekom or Finance would be required to pay additional amounts as
described later under “Payment of Additional Amounts”;
or
|
|
|
-
|
Deutsche
Telekom or any of its subsidiaries would have to deduct or withhold tax on
any payment to either of the issuers to enable them to make a payment of
principal or interest on a debt
security.
|
This
applies only in the case of changes, executions, amendments, applications or
interpretations that occur on or after the date specified in the prospectus
supplement for the applicable series of debt securities and in the jurisdiction
where Deutsche Telekom or Finance is incorporated. If Deutsche Telekom or
Finance is succeeded by another entity, the applicable jurisdiction will be the
jurisdiction in which the successor entity is organized, and the applicable date
will be the date the entity became a successor.
We would
not have the option to redeem in this case if we could have avoided the payment
of additional amounts or the deduction or withholding by using reasonable
measures available to us.
|
•
|
The
second situation is where a person located outside of Germany or The
Netherlands into which Deutsche Telekom or Finance is merged or to whom it
has conveyed, transferred or leased its property is required to pay an
additional amount. We would have the option to redeem the debt securities
even if we are required to pay additional amounts immediately after the
merger, conveyance, transfer or lease. We are not required to use
reasonable measures to avoid the obligation to pay additional amounts in
this situation.
|
Payment
of Additional Amounts
Germany
or, in the case of debt securities issued by Finance, The Netherlands, may
require Deutsche Telekom or Finance to withhold amounts from payments on the
principal or interest on a debt security or any amounts to be paid under the
guarantees, as the case may be, for taxes or any other governmental charges. If
the relevant jurisdiction requires a withholding of this type, Deutsche Telekom
or Finance, as the case may be, may be required to pay you an additional amount
so that the net amount you receive will be the amount specified in the debt
security to which you are entitled.
Deutsche
Telekom or Finance, as the case may be, will not have to pay additional amounts
in respect of taxes or other governmental charges that are required to be
deducted or withheld by any paying agent from a payment on a debt security, if
such payment can be made without such deduction or withholding by any other
paying agent, or in respect of taxes or other governmental charges that would
not have been imposed but for
|
|
•
|
the
existence of any present or former connection between you and Germany or
The Netherlands, as the case may be, other than the mere holding of the
debt security and the receipt of payments
thereon;
|
|
|
•
|
your
status as an individual resident of a member state of the European
Union;
|
|
|
•
|
a
failure to comply with any reasonable certification, documentation,
information or other reporting requirements concerning your nationality,
residence, identity or connection with Germany or The Netherlands, as the
case may be, if such compliance is required as a precondition to relief or
exemption from such taxes or other governmental charges (including,
without limitation, a certification that you are not resident in Germany
or The Netherlands or are not an individual resident of a member state of
the European Union); or
|
|
|
•
|
a
change in law that becomes effective more than 30 days after a payment on
the debt security becomes due and payable or on which payment thereof is
duly provided for, whichever occurs
later.
|
These
provisions will also apply to any taxes or governmental charges imposed by any
jurisdiction in which a successor to Deutsche Telekom or Finance is organized.
The prospectus supplement relating to the debt securities may describe
additional circumstances in which Deutsche Telekom or Finance would not be
required to pay additional amounts.
Covenants
Restrictions
on Liens
Some of
Deutsche Telekom’s property may be subject to a mortgage or other legal
mechanism that gives our lenders preferential rights in that property over other
lenders, including you and the other direct holders of the debt securities, or
over our general creditors if we fail to pay them back. These preferential
rights are called liens. Each of Deutsche Telekom and Finance promises that it
will not become obligated on any present or future capital market indebtedness,
which is described further below, that is secured by a lien on the whole or any
part of its present or future assets, unless an equivalent or higher-ranking
lien on the same property is granted to you and the other direct holders of the
debt securities. (Section
1009)
As used
here, capital market indebtedness means any obligation to repay money that is
borrowed through the issuance of bonds, notes or other debt securities, which
are capable of being listed or traded on a stock exchange or other recognized
securities market. It does not include any off-balance sheet assets and
obligations.
Defeasance
and Discharge
The
following discussion of full defeasance and discharge will apply to your series
of debt securities only if we choose to have them apply to that series. If we do
so choose, we will state that in the prospectus supplement. (Section 403)
We can
legally release ourselves from any payment or other obligations on the debt
securities, except for various obligations described below, if we, in addition
to other actions, put in place the following arrangements for you to be
repaid:
• We
must deposit in trust for your benefit and the benefit of all other direct
holders of the debt securities a combination of money and U.S. government or
U.S. government agency notes or bonds that will generate enough cash to make
interest, premium, if any, principal and any other payments on the debt
securities on their various due dates.
|
|
•
|
We
must deliver to the trustee a legal opinion of our counsel confirming that
there has been a change in U.S. Federal income tax law, and under then
current U.S. law we may make the above deposit without causing you to be
taxed on the debt securities any differently than if we did not make the
deposit and just repaid the debt securities ourselves. We would not have
to deliver this opinion if we received from, or there has been published
by, the U.S. Internal Revenue Service a ruling that states the same
conclusion.
|
|
|
•
|
If
the debt securities are listed on the New York Stock Exchange, we must
deliver to the trustee a legal opinion of our counsel confirming that the
deposit, defeasance and discharge will not cause the debt securities to be
delisted.
|
However,
even if we take these actions, a number of our obligations relating to the debt
securities will remain. These include the following obligations:
|
|
•
|
to
register the transfer and exchange of debt
securities;
|
|
|
•
|
to
replace mutilated, destroyed, lost or stolen debt
securities;
|
|
|
•
|
to
maintain paying agencies; and
|
|
|
•
|
to
hold money for payment in trust.
|
Default
and Related Matters
Ranking
The debt
securities are not secured by any of our property or assets. Accordingly, your
ownership of debt securities means you are one of our unsecured creditors. The
debt securities are not subordinated to any of our other debt obligations and
therefore they rank equally with all our other unsecured and unsubordinated
indebtedness.
Events
of Default
You will
have special rights if an event of default occurs and is not cured, as described
later in this subsection.
What Is an Event
of Default? The term event of default means any of the
following:
|
|
•
|
We
fail to pay principal or interest on a debt security within 30 days from
the relevant due date. We fail to perform any other obligation under a
debt security or Deutsche Telekom fails to perform any obligation under
its guarantee and such failure continues for more than 60 days after the
trustee has received notice of it from the affected holder of debt
securities. We do not deposit any sinking fund payment on its due date.
Our capital market indebtedness has to be repaid prematurely due to a
default under its terms.
|
|
|
•
|
We
fail to fulfill any payment obligation exceeding EUR 25,000,000 or its
equivalent under any capital market indebtedness or under any guarantee
provided for any capital market indebtedness of others, and this failure
remains uncured for 30 days.
|
|
|
•
|
Any
security or guarantee relating to capital market indebtedness provided by
us is enforced by the lenders. We are unable to meet our financial
obligations. A court opens insolvency proceedings against us. We go into
liquidation or file for bankruptcy under applicable law. The passage of
any governmental order, decree or enactment in The Netherlands or Germany
due to which Finance or Deutsche Telekom is unable to perform its
obligations under its indenture and this situation remains uncured for 90
days. Deutsche Telekom’s guarantee relating to any debt securities issued
by Finance ceases to be valid or legally binding for any
reason.
|
|
|
•
|
Any
other event of default described in the prospectus supplement occurs.
(Section
501)
|
Remedies If an
Event of Default Occurs. If an event of default has occurred and has not
been cured, the trustee or the holders of 25% in principal amount of the debt
securities of the affected series may declare the entire principal amount of all
the debt securities of that series to be due and immediately payable. This is
called a declaration of acceleration of maturity. A declaration of acceleration
of maturity may be canceled by the holders of at least a majority in principal
amount of the debt securities of the affected series. (Section 502) Except in cases
of default, where the trustee has some special duties, the trustee is not
required to take any action under the indentures at the request of any holders
unless the holders offer the trustee reasonable protection from expenses
and
liability. This protection is called an indemnity. (Section 603) If reasonable
indemnity is provided, the holders of a majority in principal amount of the
outstanding debt securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee. These majority holders may also direct the
trustee in performing another action under the indentures. (Section 512)
Before
you bypass the trustee and bring your own lawsuit or other formal legal action
or take other steps to enforce your rights or protect your interests relating to
the debt securities, the following must occur:
|
|
•
|
You
must give the trustee written notice that an event of default has occurred
and remains uncured. The holders of 25% in principal amount of all
outstanding debt securities of the relevant series must make a written
request that the trustee take action because of the default, and must
offer reasonable indemnity to the trustee against the cost and other
liabilities of taking that action.
|
|
|
•
|
The
trustee must have not taken action for 60 days after receipt of the above
notice and offer of indemnity. (Section
507)
|
Street
name and other indirect holders should consult their banks or brokers for
information on how to give notice or direction to or make a request of the
trustee and to make or cancel a declaration of acceleration.
We will
furnish to the trustee every year a written statement from some of our
designated officers certifying that, to their knowledge, we are in compliance
with the indentures and the debt securities, or else specifying any default.
(Section
1005)
Regarding
the Trustee
Deutsche
Telekom and several of its subsidiaries maintain banking relations with the
trustee in the ordinary course of their business.
If an
event of default occurs, or an event, that would be an event of default if the
requirements for giving us default notice or our default having to exist for a
specific period of time were disregarded occurs, the trustee may be considered
to have a conflicting interest with respect to the debt securities for purposes
of the Trust Indenture Act of 1939. In that case, the trustee may be required to
resign as trustee under the applicable indenture and we would be required to
appoint a successor trustee.
Debt
securities we issue may be held through one or more international and domestic
clearing systems. The principal clearing systems we will use are the book-entry
systems operated by DTC in the United States, Clearstream Banking, société anonyme, in
Luxembourg (“Clearstream”) and Euroclear SA/NV in Brussels, Belgium
(“Euroclear”). These systems have established electronic securities and payment
transfer, processing, depositary and custodial links among themselves and
others, either directly or through custodians and depositaries. These links
allow securities to be issued, held and transferred among the clearing systems
without the physical transfer of certificates.
Special
procedures to facilitate clearance and settlement have been established among
these clearing systems to trade securities across borders in the secondary
market. Where payments for registered securities in global form will be made in
U.S. dollars, these procedures can be used for cross-market transfers and the
securities will be cleared and settled on a delivery against payment basis.
Cross-market transfers of debt securities that are not in global form may be
cleared and settled in accordance with other procedures that may be established
among the clearing systems for these securities. Investors in debt securities
that are issued outside of the United States, its territories and possessions
must initially hold their interests through Euroclear, Clearstream or the
clearance system that is described in the applicable prospectus
supplement.
The
policies of DTC, Clearstream and Euroclear will govern payments, transfers,
exchange and other matters relating to the investor’s interest in securities
held by them. This is also true for any other clearance system that may be named
in a prospectus supplement.
We have
no responsibility for any aspect of the actions of DTC, Clearstream or Euroclear
or any of their direct or indirect participants. We have no responsibility for
any aspect of the records kept by DTC, Clearstream or Euroclear or any of their
direct or indirect participants. We also do not supervise these systems in any
way. This is also true for any other clearing system indicated in a prospectus
supplement.
DTC,
Clearstream, Euroclear and their participants perform these clearance and
settlement functions under agreements they have made with one another or with
their customers. You should be aware that they are not obligated to perform
these procedures and may modify them or discontinue them at any time. The
description of the clearing systems in this section reflects our understanding
of the rules and procedures of DTC, Clearstream and Euroclear as they are
currently in effect. These systems could change their rules and procedures at
any time.
The
Clearing Systems
DTC
DTC has
advised us as follows:
DTC
is:
|
|
•
|
a
limited purpose trust company organized under the laws of the State of New
York;
|
|
|
•
|
a
“banking organization” within the meaning of the New York Banking
Law;
|
|
|
•
|
a
member of the Federal Reserve
System;
|
|
|
•
|
a
“clearing corporation” within the meaning of the Uniform Commercial Code;
and,
|
|
|
•
|
a
“clearing agency” registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of
1934.
|
|
|
•
|
DTC
was created to hold securities for its participants and to facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entry changes to accounts of its participants.
This eliminates the need for physical movement of
certificates.
|
|
|
•
|
Participants
in DTC include securities brokers and dealers, banks, trust companies,
clearing corporations and may include certain other
organizations.
|
|
|
•
|
DTC
is a wholly-owned subsidiary of The Depositary Trust & Clearing
Corporation (“DTCC”). DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing
Corporation, all of which are registered clearing
agencies. DTCC is owned by the users of its regulated
subsidiaries.
|
|
|
•
|
Access
to DTC’s book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or
indirectly.
|
|
|
•
|
The
rules applicable to DTC and DTC participants are on file with the
SEC.
|
Clearstream
Clearstream
has advised us as follows:
| • | Clearstream is a duly licensed bank organized as a société anonyme incorporated under the laws of Luxembourg and is subject to regulation by the Luxembourg Commission for the Supervision of Financial Sector (Commission de Surveillance du Secteur Financier). | |
|
|
•
|
Clearstream
holds securities for its customers and facilitates the clearance and
settlement of securities transactions among them. It does so
through electronic book-entry changes to the accounts of its
customers. This eliminates the need for physical movement of
certificates.
|
|
|
•
|
Clearstream
provides other services to its participants, including safekeeping,
administration, clearance and settlement of internationally traded
securities and lending and borrowing of securities. It interfaces with the
domestic markets in over 30 countries through established depositary and
custodial relationships.
|
|
|
•
|
Clearstream’s
customers include worldwide securities brokers and dealers, banks, trust
companies and clearing corporations and may include professional financial
intermediaries. Its U.S. customers are limited to securities brokers and
dealers and banks.
|
|
|
•
|
Indirect
access to the Clearstream system is also available to others that clear
through Clearstream customers or that have custodial relationships with
its customers, such as banks, brokers, dealers and trust
companies.
|
Euroclear
Euroclear
has advised us as follows:
|
|
•
|
Euroclear
is incorporated under the laws of Belgium as a bank and is subject to
regulation by the Belgian Banking, Finance and Insurance Commission (Commission Bancaire et
Financiére et des Assurances) and the National Bank of Belgium
(Banque Nationale de
Belgique).
|
|
|
•
|
Euroclear
holds securities for its customers and facilitates the clearance and
settlement of securities transactions among them. It does so through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of
certificates.
|
|
|
•
|
Euroclear
provides other services to its customers, including credit custody,
lending and borrowing of securities and tri-party collateral management.
It interfaces with the domestic markets of several other
countries.
|
|
|
•
|
Euroclear
customers include banks, including central banks, securities brokers and
dealers, trust companies and clearing corporations and may include certain
other professional financial intermediaries. Indirect access to the
Euroclear system is also available to others that clear through Euroclear
customers or that have relationships with Euroclear
customers.
|
|
|
•
|
All
securities in Euroclear are held on a fungible basis. This means that
specific certificates are not matched to specific securities clearance
accounts.
|
Other
Clearing Systems
We may
choose any other clearing system for a particular series of debt securities. The
clearance and settlement procedures for the clearing system we choose will be
described in the applicable prospectus supplement.
Primary
Distribution
The
distribution of the debt securities will be cleared through one or more of the
clearing systems that we have described above or any other clearing system that
is specified in the applicable prospectus supplement. Payment for debt
securities will be made on a delivery versus payment or free delivery basis.
These payment procedures will be more fully described in the applicable
prospectus supplement.
Clearance
and settlement procedures may vary from one series of debt securities to another
according to the currency that is chosen for the specific series of debt
securities. Customary clearance and settlement procedures are described
below.
We will
submit applications to the relevant system or systems for the debt securities to
be accepted for clearance. The clearance numbers that are applicable to each
clearance system will be specified in the applicable prospectus
supplement.
Clearance
and Settlement Procedures - DTC
DTC
participants that hold debt securities through DTC on behalf of investors will
follow the settlement practices applicable to United States corporate debt
obligations in DTC’s Same-Day Funds Settlement System. Debt securities will be
credited to the securities custody accounts of these DTC participants against
payment in same-day funds, for payments in U.S. dollars, on the settlement date.
For payments in a currency other than U.S. dollars, debt securities will be
credited free of payment on the settlement date.
Clearance
and Settlement Procedures - Euroclear and Clearstream
We
understand that investors who hold their debt securities through Euroclear or
Clearstream accounts will follow the settlement procedures that are applicable
to conventional Eurobonds in registered form. Debt securities will be credited
to the securities custody accounts of Euroclear and Clearstream participants on
the business day following the settlement date, for value on the settlement
date. They will be credited either free of payment or against payment for value
on the settlement date.
Secondary
Market Trading
Trading
Between DTC Participants
We
understand that secondary market trading between DTC participants will occur in
the ordinary way in accordance with DTC’s rules. Secondary market trading will
be settled using procedures applicable to United States corporate debt
obligations in DTC’s Same-Day Funds Settlement System for debt
securities.
If
payment is made in U.S. dollars, settlement will be in same-day funds. If
payment is made in a currency other than U.S. dollars, settlement will be free
of payment. If payment is made other than in U.S. dollars, separate payment
arrangement outside of the DTC system must be made between the DTC participants
involved.
Trading
between Euroclear and/or Clearstream Participants
We
understand that secondary market trading between Euroclear and/or Clearstream
participants will occur in the ordinary way following the applicable rules and
operating procedures of Euroclear and Clearstream. Secondary market trading will
be settled using procedures applicable to conventional Eurobonds in registered
form, or such other procedures as are applicable for other
securities.
Trading
between a DTC Seller and a Euroclear or Clearstream Purchaser
A
purchaser of debt securities that are held in the account of a DTC participant
must send instructions to Euroclear or Clearstream at least one business day
prior to settlement. The instructions will provide for the transfer of the debt
securities from the selling DTC participant’s account to the account of the
purchasing Euroclear or Clearstream participant. Euroclear or Clearstream, as
the case may be, will then instruct the common depositary for Euroclear and
Clearstream to receive the debt securities either against payment or free of
payment.
The
interests in the debt securities will be credited to the respective clearing
system. The clearing system will then credit the account of the participant,
following its usual procedures. Credit for the debt securities will appear on
the next day, European time. Cash debit will be back-valued to, and the interest
on the debt securities will accrue from, the value date, which would be the
preceding day, when settlement occurs in New York. If the trade fails and
settlement is not completed on the intended date, the Euroclear or Clearstream
cash debit will be valued as of the actual settlement date instead.
Euroclear
participants or Clearstream participants will need the funds necessary to
process same-day funds settlement. The most direct means of doing this is to
preposition funds for settlement, either from cash or from existing lines of
credit, as for any settlement occurring within Euroclear or Clearstream. Under
this approach, participants may take on credit exposure to Euroclear or
Clearstream until the debt securities are credited to their accounts one
business day later.
As an
alternative, if Euroclear or Clearstream has extended a line of credit to them,
participants can choose not to preposition funds and will instead allow that
credit line to be drawn upon to finance settlement. Under this procedure,
Euroclear participants or Clearstream participants purchasing debt securities
would incur overdraft charges for one business day (assuming they cleared the
overdraft as soon as the debt securities were credited to their accounts).
However, interest on the debt securities would accrue from the value date.
Therefore, in many cases, the investment income on securities that is earned
during that one business day period may substantially reduce or offset the
amount of the overdraft charges. This result will, however, depend on each
participant’s particular cost of funds.
Because
the settlement will take place during New York business hours, DTC participants
will use their usual procedures to deliver debt securities to the depositary on
behalf of Euroclear participants or Clearstream participants. The sale proceeds
will be available to the DTC seller on the settlement date. For the DTC
participants, then, a cross-market transaction will settle no differently than a
trade between two DTC participants.
Special
Timing Considerations
You
should be aware that investors will only be able to make and receive deliveries,
payments and other communications involving debt securities through Clearstream
and Euroclear on days when those systems are open for business. Those systems
may not be open for business on days when banks, brokers and other institutions
are open for business in the United States.
In
addition, because of time-zone differences, there may be problems with
completing transactions involving Clearstream and Euroclear on the same business
day as in the United States. U.S. investors who wish to transfer their interests
in debt securities, or to receive or make a payment or delivery of the debt
securities, on a particular day, may find that the transactions will not be
performed until the next business day in Luxembourg or Brussels, depending on
whether Clearstream or Euroclear is used.
Deutsche
Telekom or Finance may sell the debt securities offered by this prospectus
through agents, underwriters or dealers, or directly to one or more purchasers.
In addition, third parties may sell debt securities under the registration
statement for their own account.
The
prospectus supplement relating to any offering will identify or
describe:
|
|
•
|
any
underwriters, dealers or agents; their
compensation;
|
|
|
•
|
the
net proceeds to us;
|
|
|
•
|
the
purchase price of the debt
securities;
|
|
|
•
|
the
initial public offering price of the debt securities;
and
|
|
|
•
|
any
exchange on which the debt securities will be
listed.
|
Underwriters
If we use
underwriters for the sale of debt securities, they will acquire the debt
securities for their own account. The underwriters may resell the debt
securities from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Unless we otherwise state in the applicable prospectus
supplement, various conditions will apply to the underwriters’ obligation to
purchase the debt securities, and the underwriters will be obligated to purchase
all of the debt securities contemplated in an offering if they purchase any of
such debt securities. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Dealers
If we use
dealers in connection with the sale of debt securities, unless we otherwise
indicate in the applicable prospectus supplement, we will sell the debt
securities to the dealers as principals. The dealers may then resell the debt
securities to the public at varying prices that the dealers may determine at the
time of resale.
Agents
We may
designate agents who agree to use their reasonable efforts to solicit purchases
of the debt securities during the term of their appointment to sell debt
securities on a continuing basis.
Direct
Sales
We may also
sell debt securities directly without using underwriters, dealers or
agents.
Securities
Act; Indemnification
Underwriters,
dealers and agents that participate in the distribution of the debt securities
may be underwriters as defined in the Securities Act, and any discounts and
commissions they receive from us and any profit on their resale of debt
securities may be treated as underwriting discounts and commissions under the
Securities Act. Agreements that we will enter into with underwriters, dealers or
agents may entitle them to indemnification by us against various civil
liabilities. These include liabilities under the Securities Act. The agreements
may also entitle them to contribution for payments, which they may be required
to make as a result of these liabilities. Underwriters, dealers and agents may
be customers of, engage in transactions with, or perform services for, us in the
ordinary course of business.
Market
Making
In the event
that we do not list debt securities of any series on a U.S. national securities
exchange, various broker-dealers may make a market in the debt securities, but
will have no obligation to do so, and may discontinue any market making at any
time without notice. Consequently, it may be the case that no broker-dealer will
make a market in debt securities of any series or that the liquidity of the
trading market for the debt securities will be limited.
The
following is a statement of expenses in connection with this registration
statement. All amounts shown are estimates except the Securities and Exchange
Commission registration fee.
|
Amount to be paid
|
||||
|
Securities
and Exchange Commission Registration Fee(1)
|
$ | 393,000 | ||
|
Legal
Fees and Expenses
|
$ | 60,000 | ||
|
Accounting
Fees and Expenses
|
$ | 10,000 | ||
|
Total
|
$ | 463,000 | ||
(1) The
total registration fee is $393,000, which has been offset by the registration
fee relating to the unsold securities previously registered under our
registration statement on Form F-3, File No. 333-118932.
German
Tax Considerations
The
following is a discussion of certain German tax considerations that may be
relevant to you as a holder of the debt securities. The discussion does not
purport to be a comprehensive description of all the tax considerations that may
be relevant to you. The discussion is based on the law as it stands on the date
of this prospectus and may be subject to change. You should consult your own
advisor regarding the tax consequences of the purchase, ownership and
disposition of the debt securities in a light of your particular circumstances,
including the aspect of any state, local or other applicable tax
laws.
Income
Taxation
The
German Business Tax Reform Act 2008 resulted in significant changes with respect
to the taxation on income from the debt securities, in particular for German
Private Investors (as defined below). The new legislation generally entered into
effect on January 1, 2009.
If you
are not a resident of Germany and do not otherwise have a connection with
Germany other than the mere purchase, holding and disposition of, or the receipt
of payments on, the debt securities, you will not be subject to income taxation
in Germany with your income from the debt securities.
If you
are an individual and a resident of Germany and the income from the debt
securities constitutes investment-type income to you (a “German Private
Investor”), interest payments received by you with respect to the debt
securities as well as the gain from the sale or other disposition of the debt
securities (i.e., the
difference between the proceeds from the sale or disposition of the debt
securities, after deduction of the expenses that are directly connected with the
sale or disposition, and the cost of acquisition), will be subject to income tax
at a flat rate of 25% (plus 5.5% solidarity surcharge thereon and, if
applicable, church tax).
Subject
to an annual lump-sum allowance for savers (Sparer-Pauschbetrag) in the
amount of € 801 (€ 1,602 for married couples filing jointly) for
investment-type income, you will not be entitled to deduct any other expenses
incurred in connection with your investment in the debt securities. In addition,
you will not be able to offset losses from the investment in the debt securities
against other types of income (e.g., employment
income).
Collection
of the tax (including, if applicable, the church tax) by way of withholding
through a Disbursing Agent (as described under the caption – “Withholding Tax”
below) will satisfy your tax liability with respect to the aforementioned
interest payments and gains (Abgeltungssteuer). If a
Disbursing Agent has not withheld the tax, you must include the interest
payments and the gain from the sale or other disposition of the debt securities
in your annual income tax return filing; the tax will then be collected by way
of assessment.
Upon
request, your income from the debt securities (together with any other
investment-type income) will be taxed at your individual progressive tax rates
(in lieu of the flat tax rate) if this leads to a lower income tax than the
application of the flat tax rate to your investment-type income. But
even then, you will not be allowed a deduction of expenses actually incurred in
connection with your investment in the debt securities.
If you
are a resident of Germany or otherwise have a connection with Germany other than
the mere purchase, holding and disposition of, or the receipt of payments on,
the debt securities, e.g., because the debt
securities from part of the business property of a permanent establishment or
fixed base maintained in Germany, but are not a German Private Investor (e.g., because you hold the
debt securities as business assets), the flat tax regime does not apply to you.
In this case, your income from the debt securities will be subject to personal
income tax at individual progressive tax rates of up to 45% (plus 5.5%
solidarity surcharge on such personal income tax and, if applicable, church tax)
or, as the case may be, corporate income tax at a rate of 15% (plus 5.5%
solidarity surcharge on such corporate income tax). When computing your income,
you will be allowed to deduct your expenses incurred in connection with your
investment in the debt securities under general rules. Income derived from the
debt securities will also be subject to trade tax on income at the applicable
municipal rate if the debt securities form part of the property of a German
business establishment for trade tax purposes.
Withholding
Tax
If you
are not a resident of Germany and do not otherwise have a connection with
Germany other than the mere purchase, holding and disposition of, or the receipt
of payments on, the debt securities, interest payments to you under the debt
securities as well as gains realized by you on the sale or other disposition of
the debt securities will not be subject to German withholding tax.
If you
are a resident of Germany or otherwise have a connection with Germany other than
the mere purchase, holding and disposition of, or the receipt of payments on,
the debt securities, e.g., because the debt
securities from part of the business property of a permanent establishment or
fixed base maintained in Germany, and you
keep the debt securities in Germany in a custodial account with a Disbursing
Agent (as defined below), the Disbursing Agent will be required to withhold tax
at a rate of 25% (plus 5.5% solidarity surcharge thereon, resulting in an
aggregate withholding rate of 26.375%) from the gross amount of the interest
payments to be disbursed or credited to you with respect to the debt securities.
Upon request, the Disbursing Agent will also withhold the church
tax.
The term
“Disbursing Agent” relates to a bank, a financial services institution, a
securities trading enterprise or a securities trading bank, each as defined in
the German Banking Act, (and, in each case, including a German branch of a
foreign enterprise, but excluding a foreign branch of a German enterprise) that
holds the debt securities in custody for you or conducts their sale or other
disposition and disburses or credits the income from the debt securities to
you.
In the
event that you sell or otherwise dispose of the debt securities, the Disbursing
Agent will generally be required to withhold tax, too. If you have kept the debt
securities in a custodial account with the same Disbursing Agent since their
acquisition or, in the event of a transfer of the debt securities, your
acquisition cost of the debt securities has been evidenced to the Disbursing
Agent (as described below), the tax is withheld at the above-mentioned rate from
the gain (i.e., the
difference between the proceeds from the sale or the disposition of the debt
securities, after deduction of the expenses that are directly connected with the
disposition or redemption, and the acquisition cost). When the debt securities
are denominated in a currency other than the Euro, the difference is determined
in such other currency.
When you
transfer the debt securities to another custodial account within Germany, the
releasing Disbursing Agent has to inform the accepting Disbursing Agent of your
acquisition cost. When you transfer the debt securities to a
Disbursing Agent from a bank or financial services institution that has its seat
in another member state of the European Union or the European Economic Area or
in another contracting state pursuant to Article 17 (2) (i) of
the directive adopted by the Council of the European Union on June 3, 2003
on the taxation of savings income in the form of interest payments, or from a
branch of a German bank or financial services institution established in such
state, you can provide evidence of the acquisition cost through certification by
such non-German institution. In all other cases, the evidence of the
acquisition cost is not permissible.
If, in
the event of a transfer of the debt securities, the acquisition cost of the debt
securities has not been evidenced to the Disbursing Agent, the Disbursing Agent
has to withhold tax at the above-mentioned rate from an amount equal to 30% of
the proceeds from the sale or other disposition of the debt
securities.
If you
transfer debt securities that you keep in Germany in a custodial account with a
Disbursing Agent to another holder, the Disbursing Agent must treat the transfer
as a sale or disposition for withholding tax purposes, unless you inform the
Disbursing Agent that the transfer is without consideration. If the Disbursing
Agent is not so informed, the exchange price of the debt securities plus any
accrued interest (Stückzinsen) are considered
proceeds from the sale or disposition and the cost of the custodial account
transfer is considered expense that is directly connected with the sale or
disposition. If an exchange price is not available, the tax has to be withheld
at the above-mentioned rate from an amount equal to 30% of the acquisition cost
of the debt securities.
If you
are a German Private Investor, you can take advantage of the Sparer-Pauschbetrag
(as described above) by completing an exemption order (Freistellungsauftrag) for the
Disbursing Agent. In this case, the Disbursing Agent will not
withhold tax on your investment income (including income derived from the debt
securities) up to the amount of the exemption order. Furthermore, the Disbursing
Agent will not withhold any tax, if you submit to the Disbursing Agent a
certificate of non-assessment (Nichtveranlagungsbescheinigung)
issued by the local tax office.
If you
are subject to personal or corporate income taxation in Germany with your income
from the debt securities, but the flat tax regime does not apply to you (i.e., because you are not a
German Private Investor), the tax withheld by a Disbursing Agent will be
credited against your final liability for personal or corporate income tax or,
if in excess of such final tax liability, refunded. You should consult your tax
advisor about ways to avoid or limit withholding by a Disbursing Agent, in
particular in the event of a sale or other disposition of the debt
securities.
Gift
or Inheritance Taxation
The
gratuitous transfer of debt securities by you as a gift or by reason of your
death will be subject to German gift or inheritance tax if you are or the
recipient is a resident, or deemed to be a resident, of Germany under German
gift or inheritance tax law at the time of the transfer. If neither you nor the
recipient is a resident, or deemed to be a resident, of Germany at the time of
the transfer, no German gift or inheritance tax will be levied unless the debt
securities form part of the property of a permanent establishment or a fixed
base maintained by you in Germany. Tax treaties concluded by Germany with
respect to gift and inheritance taxes generally permit Germany to tax the
transfer in this situation.
Netherlands
Tax Considerations
The
following is a discussion of the material Netherlands tax consequences regarding
your investment in the debt securitites if you are not a citizen or
resident of The Netherlands for Netherlands tax purposes.
Withholding
Tax
All
payments by Finance of interest and principal under the debt securities may be
made free of withholding or deduction of any taxes of whatsoever nature imposed,
levied, withheld or assessed by The Netherlands, unless the debt
securities qualify as debt that effectively functions as equity for tax
purposes as meant in article 10, paragraph 1, sub d of the Corporate Tax Act
(Wet op de
vennootschapsbelasting 1969). According to Supreme Court case
law, the debt securities effectively function as equity if (a) the debt
securities are subordinated to all other creditors of Finance, (b) the debt
securities do not have a fixed maturity or have a maturity of more than 50
years, and (c) payments under the debt securities are entirely or almost
entirely dependent on the Finance's profits.
Taxes
on Income and Capital Gains
A holder
of a debt security who derives income from a debt security or who
realizes a gain on the disposal or redemption of a debt security will not
be subject to Netherlands taxation on such income or capital gains
unless:
(a) the
holder is, or is deemed to be, a resident in The Netherlands, or, where the
holder is an individual, such holder has elected to be treated as a resident of
The Netherlands; or
(b) such
income or gain is attributable to an enterprise or part thereof which is either
effectively managed in The Netherlands or carried on through a permanent
establishment (vaste
inrichting) or permanent representative (vaste vertegenwoordiger) in
The Netherlands; or
(c) the
holder has, directly or indirectly, a substantial interest (aanmerkelijk belang) or a
deemed substantial interest in Finance as defined in the Dutch Income Tax Act
2001 (Wet op de
inkomstenbelasting 2001) and, if the holder is not an individual, such
interest does not form part of the assets of an enterprise; or
(d) the
holder is an individual and the income or capital gain qualifies as income from
miscellaneous activities (belastbaar resultaat uit overige
werkzaamheden) in The Netherlands as defined in the Income Tax Act (Wet inkomstenbelasting 2001),
including, without limitation, activities that exceed normal, active asset
management (normaal, actief
vermogensbeheer).
A holder
of a debt security will not be treated as a resident of The
Netherlands by reason only of the holding of a debt security or the execution,
delivery, or enforcement of the debt securities or the performance by Finance or
Deutsche Telekom of its obligations under the debt securities.
Gift,
Estate or Inheritance Taxes
Netherlands
gift, estate or inheritance taxes will not be levied on the occasion of the
transfer of a debt security by way of gift by, or on the death of, a holder,
unless:
(a) the
holder is, or is deemed to be, resident in The Netherlands for the purpose of
the relevant provisions; or
(b) the
transfer is construed as an inheritance or as a gift made by, or on behalf of, a
person who, at the time of the gift or death, is, or is deemed to be, resident
in The Netherlands for the purpose of the relevant provisions; or
(c) such
debt security is attributable to an enterprise or part thereof, which is either
effectively managed in The Netherlands or carried on through a permanent
establishment or a permanent representative in The Netherlands.
Other
Taxes and Duties
There is
no Netherlands registration tax, stamp duty or any other similar tax or duty
payable in The Netherlands by a holder of a debt security in respect of or in
connection with the execution, delivery and/or enforcement by legal proceedings
(including any foreign judgment in the courts of The Netherlands) of the debt
securities or the performance of the Finance’s or Deutsche Telekom’s obligations
under the debt securities.
European
Union Savings Directive
On
June 3, 2003, the Council of the European Union adopted a directive on the
taxation of savings income. Pursuant to the directive, a member state of the
European Union will be required to provide to the tax authorities of other
member states information regarding payments of interest (or other similar
income) paid by a person within its jurisdiction to individual residents of such
other member states, except that, for a transitional period, Belgium, Luxembourg
and Austria may instead operate a withholding system in relation to such
payments, deducting
tax at rates rising over time to 35%. The provisions of the directive entered
into effect as of July 1, 2005. A number of non-EU countries and
territories have adopted or agreed to adopt similar measures.
United
States Federal Income Tax Considerations
The following
discussion summarizes certain U.S. federal income tax considerations that may be
relevant if you are a U.S. holder. You will be a U.S. holder if you are an
individual who is a citizen or resident of the United States, a U.S. domestic
corporation, or any other person that is subject to U.S. federal income tax on a
net income basis in respect of an investment in the debt securities. This
summary does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to any particular investor, including tax
considerations that arise from rules of general application or that are
generally assumed to be known by investors. This summary deals only with U.S.
holders that hold debt securities as capital assets. It does not address
considerations that may be relevant to you if you are an investor that is
subject to special tax rules, such as a bank, thrift, real estate investment
trust, regulated investment company, insurance company, dealer in securities or
currencies, trader in securities or commodities that elects mark to market
treatment, person that will hold debt securities as a hedge against currency
risk or as a position in a “straddle” or conversion transaction, tax-exempt
organization or a person whose “functional currency” is not the U.S. dollar. Any
special U.S. federal income tax consequences relevant to a particular issue of
debt securities will be discussed in the prospectus supplement. This summary is
based on laws, regulations, rulings and decisions now in effect, all of which
may change. Any change could apply retroactively and could affect the continued
validity of this summary.
You
should consult your tax adviser about the tax consequences of holding debt
securities, including the relevance to your particular situation of the
considerations discussed below, as well as the relevance to your particular
situation of state, local or other tax laws.
Payments
or Accruals of Interest
Payments
or accruals of “qualified stated interest” (as defined below) on a debt security
will be taxable to you as ordinary interest income at the time that you receive
or accrue such amounts (in accordance with your regular method of tax
accounting). If you use the cash method of tax accounting and you receive
payments of interest pursuant to the terms of a debt security in a currency
other than U.S. dollars (a “foreign currency”), the amount of interest income
you will realize will be the U.S. dollar value of the foreign currency payment
based on the exchange rate in effect on the date you receive the payment,
regardless of whether you convert the payment into U.S. dollars. If you are an
accrual-basis U.S. holder, the amount of interest income you will realize will
be based on the average exchange rate in effect during the interest accrual
period (or with respect to an interest accrual period that spans two taxable
years, at the average exchange rate for the partial period within the taxable
year). Alternatively, as an accrual-basis U.S. holder, you may elect to
translate all interest income on foreign currency-denominated debt securities at
the spot rate on the last day of the accrual period (or the last day of the
taxable year, in the case of an accrual period that spans more than one taxable
year) or on the date that you receive the interest payment if that date is
within five business days of the end of the accrual period. If you make this
election, you must apply it consistently to all debt instruments from year to
year and you cannot change the election without the consent of the Internal
Revenue Service. If you use the accrual method of accounting for tax purposes,
you will recognize foreign currency gain or loss on the receipt of a foreign
currency interest payment if the exchange rate in effect on the date the payment
is received differs from the rate applicable to a previous accrual of that
interest income. This foreign currency gain or loss will be treated as ordinary
income or loss, but generally will not be treated as an adjustment to interest
income received on the debt security.
Purchase,
Sale and Retirement of Debt Securities
Initially,
your tax basis in a debt security generally will equal the cost of the debt
security to you. Your basis will increase by any amounts that you are required
to include in income under the rules governing original issue discount and
market discount, and will decrease by the amount of any amortized premium and
any payments other than qualified stated interest made on the debt security.
(The rules for determining these amounts are discussed below.) If you purchase a
debt security that is denominated in a foreign currency, the cost to you (and
therefore generally your initial tax basis) will be the U.S. dollar value of the
foreign currency purchase price on the date of purchase calculated at the
exchange rate in effect on that date. If the foreign currency debt security is
traded on an established securities market and you are a cash-basis taxpayer (or
if you are an accrual-basis taxpayer that makes a special election), you will
determine the U.S. dollar value of the cost of the debt security by translating
the amount of the foreign currency that you paid for the debt security at the
spot rate of exchange on the settlement date of your purchase. The amount of any
subsequent adjustments to your tax basis in a debt security in respect of
foreign currency-denominated original issue discount, market discount and
premium will be determined in the manner described below. If you convert U.S.
dollars into a foreign currency and then immediately use that foreign currency
to purchase a debt security, you generally will not have any taxable gain or
loss as a result of the conversion or purchase. When you sell or exchange a debt
security, or if a debt security that you
hold is retired, you generally will recognize gain or loss equal to the
difference between the amount you realize on the transaction (less any accrued
qualified stated interest, which will be subject to tax in the manner described
above under “Payments or Accruals of Interest”) and your tax basis in the debt
security. If you sell or exchange a debt security for a foreign currency, or
receive foreign currency on the retirement of a debt security, the amount you
will realize for U.S. tax purposes generally will be the dollar value of the
foreign currency that you receive calculated at the exchange rate in effect on
the date the foreign currency debt security is disposed of or retired. If you
dispose of a foreign currency debt security that is traded on an established
securities market and you are a cash-basis U.S. holder (or if you are an
accrual-basis holder that makes a special election), you will determine the U.S.
dollar value of the amount realized by translating the amount at the spot rate
of exchange on the settlement date of the sale, exchange or
retirement.
The
special election available to you if you are an accrual-basis taxpayer in
respect of the purchase and sale of foreign currency debt securities traded on
an established securities market, which is discussed in the two preceding
paragraphs, must be applied consistently to all debt instruments from year to
year and cannot be changed without the consent of the Internal Revenue
Service.
Except as
discussed below with respect to market discount and foreign currency gain or
loss, the gain or loss that you recognize on the sale, exchange or retirement of
a debt security generally will be capital gain or loss. The gain or loss on the
sale, exchange or retirement of a debt security will be long-term capital gain
or loss if you have held the debt security for more than one year on the date of
disposition. Net long-term capital gain recognized by an individual U.S. holder
generally will be subject to tax at a lower rate than net short-term capital
gain or ordinary income. The ability of U.S. holders to offset capital losses
against ordinary income is limited.
Despite
the foregoing, the gain or loss that you recognize on the sale, exchange or
retirement of a foreign currency debt security generally will be treated as
ordinary income or loss to the extent that the gain or loss is attributable to
changes in exchange rates during the period in which you held the debt security.
This foreign currency gain or loss will not be treated as an adjustment to
interest income that you receive on the debt security.
Original
Issue Discount
If we
issue debt securities at a discount from their stated redemption price at
maturity, and the discount is equal to or more than the product of one-fourth of
one percent (0.25%) of the stated redemption price at maturity of the debt
securities multiplied by the number of full years to their maturity, the debt
securities will be “Original Issue Discount Debt Securities”.
The
difference between the issue price and the stated redemption price at maturity
of the debt securities will be the “original issue discount.” The “issue price”
of the debt securities will be the first price at which a substantial amount of
the debt securities are sold to the public (i.e., excluding sales of debt
securities to underwriters, placement agents, wholesalers, or similar persons).
The “stated redemption price at maturity” will include all payments under the
debt securities other than payments of qualified stated interest. The term
“qualified stated interest” generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments issued
by the relevant issuer) at least annually during the entire term of a debt
security at a single fixed interest rate or, subject to certain conditions,
based on one or more interest indices.
If you
invest in an Original Issue Discount Debt Security, you generally will be
subject to the special tax accounting rules for original issue discount
obligations provided by the Internal Revenue Code and certain U.S. Treasury
regulations. You should be aware that, as described in greater detail below, if
you invest in an Original Issue Discount Debt Security, you generally will be
required to include original issue discount in ordinary gross income for U.S.
federal income tax purposes as it accrues, although you may not yet have
received the cash attributable to that income.
In
general, and regardless of whether you use the cash or the accrual method of tax
accounting, if you are the holder of an Original Issue Discount Debt Security
with a maturity greater than one year, you will be required to include in
ordinary gross income the sum of the “daily portions” of original issue discount on that debt security for all days during the taxable year that
you own the debt security. The daily portions of original issue discount on an
Original Issue Discount Debt Security are determined by allocating to
each day in any accrual period a ratable portion of the original issue
discount allocable to that period. Accrual periods may be any length and may
vary in length over the term of an Original Issue Discount
Debt Security, so long as no accrual period is longer than one year and each
scheduled payment of principal or interest occurs on the first or last day of an
accrual period. If you are the initial holder of the debt security, the amount
of original issue discount on an Original Issue Discount Debt Security allocable
to each accrual period is determined by:
|
|
•
|
multiplying the “adjusted issue price” (as defined below)
of the debt security at the beginning of the accrual period by a fraction,
the numerator of which is the annual yield to maturity (defined below) of
the debt security and the denominator of which is the number of accrual
periods in a year;
and
|
• subtracting from that product the
amount (if any) payable as qualified stated interest allocable to that accrual
period.
In the
case of an Original Issue Discount Debt Security that is a floating rate debt
security, both the “annual yield to maturity” and the qualified stated interest
will be determined for these purposes as though the debt security will bear
interest in all periods at a fixed rate generally equal to the rate that would
be applicable to interest payments on the debt security on its date of issue or,
in the case of some floating rate debt securities, the rate that reflects the
yield that is reasonably expected for the debt security. (Additional rules may
apply if interest on a floating rate debt security is based on more than one
interest index.) The “adjusted issue price” of an Original Issue Discount Debt
Security at the beginning of any accrual period will generally be the sum of its
issue price (including any accrued interest) and the amount of original issue
discount allocable to all prior accrual periods, reduced by the amount of all
payments other than any qualified stated interest payments on the debt security
in all prior accrual periods. All payments on an Original Issue Discount Debt
Security (other than qualified stated interest) will generally be viewed first
as payments of previously accrued original issue discount (to the extent of the
previously accrued discount), with payments considered made from the earliest
accrual periods first, and then as a payment of principal. The “annual yield to
maturity” of a debt security is the discount rate (appropriately adjusted to
reflect the length of accrual periods) that causes the present value on the
issue date of all payments on the debt security to equal the issue price. As a
result of this “constant yield” method of including original issue discount
income, the amounts you will be required to include in your gross income if you
invest in an Original Issue Discount Debt Security denominated in U.S. dollars
generally will be lesser in the early years and greater in the later years than
amounts that would be includible on a straight-line basis.
You
generally may make an irrevocable election to include in income your entire
return on a debt security (i.e., the excess of all
remaining payments to be received on the debt security, including payments of
qualified stated interest, over the amount you paid for the debt security) under
the constant yield method described above. If you purchase debt securities at a
premium or market discount and if you make this election, you will also be
deemed to have made the election (discussed below under the “Premium” and
“Market Discount”) to amortize premium or to accrue market discount currently on
a constant yield basis in respect of all other premium or market discount bonds
that you hold.
In the
case of an Original Issue Discount Debt Security that is also a foreign currency
debt security, you should determine the U.S. dollar amount includible as
original issue discount for each accrual period by (i) calculating the
amount of original issue discount allocable to each accrual period in the
foreign currency using the constant yield method described above and
(ii) translating that foreign currency amount at the average exchange rate
in effect during that accrual period (or, with respect to an interest accrual
period that spans two taxable years, at the average exchange rate for each
partial period). Alternatively, you may translate the foreign currency amount at
the spot rate of exchange on the last day of the accrual period (or the last day
of the taxable year, for an accrual period that spans two taxable years) or at
the spot rate of exchange on the date of receipt, if that date is within five
business days of the last day of the accrual period, provided that you have made
the election described above under “Payments or Accruals of Interest.” Because
exchange rates may fluctuate, if you are the holder of an Original Issue
Discount Debt Security that is also a foreign currency debt security, you may
recognize a different amount of original issue discount income in each accrual
period than would be the case if you were the holder of an otherwise similar
Original Issue Discount Debt Security denominated in U.S. dollars. Upon the
receipt of an amount attributable to original issue discount (whether in
connection with a payment of an amount that is not qualified stated interest or
the sale or retirement of the Original Issue Discount Debt Security), you will
recognize ordinary income or loss measured by the difference between the amount
received (translated into U.S. dollars at the exchange rate in effect on the
date of receipt or on the date of disposition of the Original Issue Discount
Debt Security, as the case may be) and the amount accrued (using the exchange
rate applicable to such previous accrual).
If you
purchase an Original Issue Discount Debt Security outside of the initial
offering at a cost less than its remaining redemption amount (i.e., the total of all future
payments to be made on the debt security other than payments of qualified stated
interest), or if you purchase an Original Issue Discount Debt Security in the
initial offering at a price other than the debt security’s issue price, you
generally will also be required to include in gross income the daily portions of
original issue discount, calculated as described above. However, if you acquire
an Original Issue Discount Debt Security at a price greater than its adjusted
issue price, you will be required to reduce your periodic inclusions of original
issue discount to reflect the premium paid over the adjusted issue
price.
Floating
rate debt securities generally will be treated as “variable rate debt
instruments” under the OID Regulations. Accordingly, the stated interest on a
Floating Rate Debt Security generally will be treated as “qualified stated
interest” and such a Debt Security will not have OID solely as a result of the
fact that it provides for interest at a variable rate. If a floating rate debt
security does not qualify as a “variable rate debt instrument”, the debt
security will be subject to special rules that govern the tax treatment of debt
obligations that provide for contingent payments. We will provide a detailed
description of the tax considerations relevant to U.S. holders of any such Debt
Securities in the prospectus supplement.
Certain
Original Issue Discount Debt Securities may be redeemed prior to maturity,
either at the option of the Company or at the option of the holder, or may have
special repayment or interest rate reset features as indicated in the prospectus
supplement. Original Issue Discount Debt Securities containing these features
may be subject to rules that differ from the general rules discussed above. If
you purchase Original Issue Discount Debt Securities with these features, you
should carefully examine the prospectus supplement and consult your tax adviser
about their treatment since the tax consequences of original issue discount will
depend, in part, on the particular terms and features of the debt
securities.
Short-Term
Debt Securities
The rules
described above will also generally apply to Original Issue Discount Debt
Securities with maturities of one year or less (“short-term debt securities”),
but with some modifications. First, the original issue discount rules treat none
of the interest on a short-term debt security as qualified stated interest, but
treat a short-term debt security as having original issue discount. Thus, all
short-term debt securities will be Original Issue Discount Debt Securities.
Except as described below, if you are a cash-basis holder of a short-term debt
security and you do not identify the short-term debt security as part of a
hedging transaction you will generally not be required to accrue original issue
discount currently, but you will be required to treat any gain realized on a
sale, exchange or retirement of the debt security as ordinary income to the
extent such gain does not exceed the original issue discount accrued with
respect to the debt security during the period you held the debt security. You
may not be allowed to deduct all of the interest paid or accrued on any
indebtedness incurred or maintained to purchase or carry a short-term debt
security until the maturity of the debt security or its earlier disposition in a
taxable transaction. Notwithstanding the foregoing, if you are a cash-basis U.S.
holder of a short-term debt security, you may elect to accrue original issue
discount on a current basis (in which case the limitation on the deductibility
of interest described above will not apply). A U.S. holder using the accrual
method of tax accounting and some cash method holders (including banks,
securities dealers, regulated investment companies and certain trust funds)
generally will be required to include original issue discount on a short-term
debt security in gross income on a current basis. Original issue discount will
be treated as accruing for these purposes on a ratable basis or, at the election
of the holder, on a constant yield basis based on daily
compounding.
Second,
regardless of whether you are a cash-basis or accrual-basis holder, if you are
the holder of a short-term debt security you may elect to accrue any
“acquisition discount” with respect to the debt security on a current basis.
Acquisition discount is the excess of the remaining redemption amount of the
debt security at the time of acquisition over the purchase price. Acquisition
discount will be treated as accruing ratably or, at the election of the holder,
under a constant yield method based on daily compounding. If you elect to accrue
acquisition discount, the original issue discount rules will not
apply.
Finally, the
market discount rules described below will not apply to short-term debt
securities.
As
discussed above, certain of the debt securities may be subject to special
redemption features. These features may affect the determination of whether a
debt security has a maturity of one year or less and thus whether the debt
security is a short-term debt security. If you purchase debt securities with
these features, you should carefully examine the prospectus supplement and
consult your tax adviser about these features.
Premium
If you
purchase a debt security at a cost greater than the debt security’s remaining
redemption amount, you will be considered to have purchased the debt security at
a premium, and you may elect to amortize the premium as an offset to interest
income, using a constant yield method, over the remaining term of the debt
security. If you make this election, it generally will apply to all debt
instruments that you hold at the time of the election, as well as any debt
instruments that you subsequently acquire. In addition, you may not revoke the
election without the consent of the Internal Revenue Service. If you elect to
amortize the premium, you will be required to reduce your tax basis in the debt
security by the amount of the premium amortized during your holding period.
Original Issue Discount Debt Securities purchased at a premium will not be
subject to the original issue discount rules described above. In the case of
premium on a foreign currency debt security, you should calculate the
amortization of the premium in the foreign currency. Premium amortization
deductions attributable to a period reduce interest income in respect of that
period, and therefore are translated into U.S. dollars at the rate that you use
for interest payments in respect of that period. Exchange gain or loss will be
realized with respect to amortized premium on a foreign currency debt security
based on the difference between the exchange rate computed on the date or dates
the premium is amortized against interest payments on the debt security and the
exchange rate on the date the holder acquired the debt security. If you do not
elect to amortize premium, the amount of
premium will be included in your tax basis in the debt security. Therefore, if
you do not elect to amortize premium and you hold the debt security to maturity,
you generally will be required to treat the premium as capital loss when the
debt security matures.
Market
Discount
If you
purchase a debt security at a price that is lower than the debt security’s
remaining redemption amount (or in the case of an Original Issue Discount Debt
Security, the debt security’s adjusted issue price), by 0.25% or more of the
remaining redemption amount (or adjusted issue price), multiplied by the number
of remaining whole years to maturity, the debt security will be considered to
bear “market discount” in your hands. In this case, any gain that you realize on
the disposition of the debt security generally will be treated as ordinary
interest income to the extent of the market discount that accrued on the debt
security during your holding period. In addition, you may be required to defer
the deduction of a portion of the interest paid on any indebtedness that you
incurred or continued to purchase or carry the debt security. In general, market
discount will be treated as accruing ratably over the term of the debt security,
or, at your election, under a constant yield method. You must accrue market
discount on a foreign currency debt security in the specified currency. The
amount that you will be required to include in income in respect of accrued
market discount will be the U.S. dollar value of the accrued amount, generally
calculated at the exchange rate in effect on the date that you dispose of the
debt security.
You may
elect to include market discount in gross income currently as it accrues (on
either a ratable or constant yield basis), in lieu of treating a portion of any
gain realized on a sale of the debt security as ordinary income. If you elect to
include market discount on a current basis, the interest deduction deferral rule
described above will not apply. If you do make such an election, it will apply
to all market discount debt instruments that you acquire on or after the first
day of the first taxable year to which the election applies. The election may
not be revoked without the consent of the Internal Revenue Service. Any accrued
market discount on a foreign currency debt security that is currently includible
in income will be translated into U.S. dollars at the average exchange rate for
the accrual period (or portion thereof within the holder’s taxable
year).
Indexed
Debt Securities and Other Debt Securities Providing for Contingent
Payments
Special
rules govern the tax treatment of debt obligations that provide for contingent
payments (“contingent debt obligations”). These rules generally require accrual
of interest income on a constant yield basis in respect of contingent debt
obligations at a yield determined at the time of issuance of the obligation, and
may require adjustments to these accruals when any contingent payments are made.
We will provide a detailed description of the tax considerations relevant to
U.S. holders of any contingent debt obligations in the prospectus
supplement.
Information
Reporting and Backup Withholding
The
paying agent must file information returns with the United States Internal
Revenue Service in connection with debt security payments made to certain United
States persons. If you are a United States person, you generally will not be
subject to United States backup withholding tax on such payments if you provide
your taxpayer identification number to the paying agent. You may also be subject
to information reporting and backup withholding tax requirements with respect to
the proceeds from a sale of the debt securities. If you are not a United States
person, you may have to comply with certification procedures to establish that
you are not a United States person in order to avoid information reporting and
backup withholding tax requirements.
The SEC
allows us to “incorporate by reference” the information we file with the SEC in
other documents, which means:
|
·
|
incorporated
documents are considered part of this
prospectus;
|
|
·
|
we
can disclose important information to you by referring you to those
documents; and
|
|
·
|
information
in this prospectus automatically updates and supersedes information in
earlier documents that are incorporated by reference in this prospectus,
and information that we file with the SEC after the date of this
prospectus automatically updates and supersedes this
prospectus.
|
We
incorporate by reference our Annual Report on Form 20-F for the year ended
December 31, 2008, which was filed with the SEC on February 27, 2009.
We also
incorporate by reference each of the following documents that we will file with
the SEC after the date of this prospectus from now until we terminate the
offering of the debt securities:
|
·
|
Annual
Reports filed on
Form 20-F; and
|
|
·
|
any
future reports filed on Form 6-K that indicate that they are
incorporated by reference in this
prospectus.
|
Upon
request, we will provide to each person, including any beneficial owner, to whom
a prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference in the prospectus but not delivered with the
prospectus.
You may
obtain a copy of any of the documents referred to above at no cost by contacting
us at the following address or telephone number:
Deutsche
Telekom AG
Friedrich-Ebert-Allee
140
53113
Bonn, Germany
Tel: +49
228 181 88880 (Investor Relations)
Deutsche
Telekom International Finance B.V.
Herengracht
124-128
1015 BT
Amsterdam
The
Netherlands
+31 20
794 45 00
Finance is
our wholly-owned, consolidated subsidiary. Finance does not, and will not, file
separate reports with the SEC.
This
prospectus is part of a registration statement on Form F-3 that we filed with
the SEC. This prospectus does not contain all of the information provided in the
registration statement. For further information, you should refer to the
registration statement, including its exhibits.
We file
annual and periodic reports and other information with the SEC. You may read and
copy any materials we file with the SEC at the SEC’s Public Reference Room at
100 F Street, N.E., Washington, DC 20549. You may obtain information
on the operation of the Public Reference Room in the United States by calling
the SEC at 1-800-SEC-0330.
Both
Deutsche Telekom and Finance are electronic filers. The SEC maintains an
Internet site that contains certain filings of electronic filers at
http://www.sec.gov.
Certain
matters of United States and German law relating to the debt securities offered
through this prospectus will be passed upon for Deutsche Telekom and Finance by
Cleary Gottlieb Steen & Hamilton LLP.
Certain matters of Dutch law relating to the debt securities offered through
this prospectus will be passed upon for Deutsche Telekom and Finance by Clifford
Chance LLP.
The
consolidated financial statements of Deutsche Telekom AG and management’s
assessment of the effectiveness of internal control over financial reporting
(which is included in management's annual report on internal control over
financial reporting) incorporated in this prospectus by reference to the Annual
Report on Form 20-F of Deutsche Telekom AG for the year ended December 31,
2008 have been so incorporated in reliance on the reports of
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftspruefungsgesellschaft and
Ernst & Young AG Wirtschaftspruefungsgesellschaft
Steuerberatungsgesellschaft, independent registered public accounting firms,
given on the authority of said firms as experts in auditing and
accounting.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification
of Directors and Officers
Under
German law, a stock corporation may indemnify its officers, and, under certain
circumstances, German labor law requires a stock corporation to do so. However,
a stock corporation may not, as a general matter, indemnify members of the
Management Board or the Supervisory Board. Certain limited exceptions may apply
if the indemnification is in the legitimate interest of the stock corporation.
Deutsche Telekom’s articles of incorporation do not contain provisions regarding
the indemnification of its directors and officers. A German stock corporation
may, however, purchase directors’ and officers’ insurance. Deutsche Telekom has
obtained liability insurance for members of its Supervisory Board and its
Management Board and certain of its officers. This includes insurance against
liabilities under the Securities Act.
The laws
of the Netherlands make no compulsory provision for the indemnification of
members of the Supervisory or Management Boards of a Dutch limited liability
company. Finance’s articles of incorporation do not contain provisions
regarding the indemnification of its directors and officers. Deutsche
Telekom has obtained liability insurance for members of Finance's Supervisory
Board and its managing directors, including insurance against liabilities under
the Securities Act.
Item 9. Exhibits
EXHIBIT
INDEX
|
1.1
|
Form
of Underwriting Agreement for the debt securities
|
|
4.1
|
Indenture
among Deutsche Telekom, Finance and the Trustee (incorporated by reference
to Exhibit 4.1 of Deutsche Telekom’s registration statement on
Form F-3 (Reg. No. 333-118932) filed with the SEC on
September 13, 2004)
|
|
4.2
|
Indenture
between Deutsche Telekom and the Trustee (incorporated by reference to
Exhibit 4.2 of Deutsche Telekom’s registration statement on
Form F-3 (Reg. No. 333-118932) filed with the SEC on
September 13, 2004)
|
|
4.3
|
First
Supplemental Indenture and Resignation and Appointment of Paying Agent and
Security Registrar dated as of November 9, 2007 (incorporated by reference
to Exhibit 2.3 of Deutsche Telekom’s Annual Report on Form 20-F for
the year ended December 31, 2007 filed with the SEC on February 28,
2008)
|
|
4.4
|
Forms
of Note (global registered form) and Guarantee (included in Exhibits 4.1
and 4.2)
|
|
5.1
|
Opinion
of Cleary Gottlieb Steen & Hamilton LLP, special German and U.S.
counsel to Deutsche Telekom and Finance
|
|
5.2
|
Opinion
of Clifford Chance LLP, special Dutch counsel to
Finance
|
|
12.1
|
Computation
of Ratios of Earnings to Fixed Charges
|
|
23.1
|
Consent
of Cleary Gottlieb Steen & Hamilton LLP (included in Exhibit
5.1)
|
|
23.2
|
Consent
of Clifford Chance LLP (included in Exhibit 5.2)
|
|
23.3
|
Consent
of Independent Registered Public Accounting Firms
|
|
24.1
|
Powers
of attorney (included as part of the signature pages)
|
|
25.1
|
Form
T-1 Statement of Eligibility of Trustee for debt securities issued by
Deutsche Telekom and Finance
|
Item
10. Undertakings
The
undersigned registrants hereby undertake:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration statement;
and
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided,
however, that paragraphs (i), (ii) and (iii) of this section do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
Deutsche Telekom AG pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) In
the case of Deutsche Telekom AG, to file a post-effective amendment to the
registration statement to include any financial statements required by Item 8.A.
of Form 20-F at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise required by
Section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided, that Deutsche
Telekom AG includes in the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph (4) and other
information necessary to ensure that all other information in the prospectus is
at least as current as the date of those financial
statements. Notwithstanding the foregoing, a post-effective amendment
need not be filed to include financial statements and information required by
Section 10(a)(3) of the Securities Act of 1933 or Item 8.A. of Form 20-F if
such financial statements and information are contained in periodic reports
filed with or furnished to the Commission by Deutsche Telekom AG pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(5) That,
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) Each
prospectus filed by a registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by Section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be
deemed to be the initial bona
fide offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date.
(6) That,
for the purpose of determining liability of a registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities, each
undersigned registrant undertakes that in a primary offering of securities of
such undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser
by means of any of the following communications, such undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of such undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of
such undersigned registrant or used or referred to by such undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about such undersigned registrant or its securities
provided by or on behalf of such undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by such undersigned
registrant to the purchaser.
(b) Each
of the undersigned registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Deutsche Telekom AG’s annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrants
pursuant to the foregoing provisions, or otherwise, the Registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, Deutsche Telekom AG certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Bonn,
Germany, on this 10th day of March 2009.
DEUTSCHE
TELEKOM AG
By: /s/ René Obermann
Name:
René Obermann
Title:
Chief Executive Officer
By: /s/ Timotheus Höttges
Name:
Timotheus Höttges
Title:
Chief Financial Officer
Know all
persons by these present that each officer or director whose signature appears
below constitutes and appoints each of the directors named below, jointly and
severally, his or her true lawful attorneys-in-fact and agents with full and
several power of substitution for and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments, including post-effective
amendments, supplements to this registration statement and any registration
statements pursuant to Rule 462(b) under the Securities Act relating thereto,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities indicated on March
10, 2009.
|
Name
|
Title
|
| /s/ René Obermann |
Member
of the Management Board
|
|
René
Obermann
|
Chief
Executive Officer
|
| /s/ Timotheus Höttges |
Member
of the Management Board
|
|
Timotheus
Höttges
|
For
Finance (Chief Financial Officer and Principal Accounting
Officer)
|
| /s/ Hamid Akhavan |
Member
of the Management Board
|
|
Hamid
Akhavan
|
For
T-Mobile, Product Development, Technology and IT
Strategy
|
| /s/ Dr. Manfred Balz |
Member
of the Management Board
|
|
Dr.
Manfred Balz
|
For
Data Privacy, Legal Affairs and Compliance
|
| /s/ Reinhard Clemens |
Member
of the Management Board
|
|
Reinhard
Clemens
|
For
Business Customers
|
| /s/Guido Kerkhoff |
Member
of the Management Board
|
|
Guido
Kerkhoff
|
For
South Eastern Europe
|
| /s/ Thomas Sattelberger |
Member
of the Management Board
|
|
Thomas
Sattelberger
|
For
Human Resources
|
| /s/ Niek Jan van Damme |
Member
of the Management Board
|
|
Niek
Jan van Damme
|
For
T-Home, Sales & Service
|
SIGNATURE
Pursuant
to the requirements of Section 6(a) of the Securities Act of 1933, as amended,
the undersigned has signed the registration statement, solely in the capacity of
the duly authorized representative of Deutsche Telekom AG in the United States,
in the City of New
York, State of New York, U.S.A., on March 10, 2009.
|
DEUTSCHE
TELEKOM INC.
|
|
|
By:
/s/ Klaus-Peter
Statz
Name:
Klaus-Peter Statz
Title: President and CEO
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, Deutsche Telekom
International Finance B.V. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form F-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Amsterdam, The Netherlands, on this 10th day of
March 2009.
|
DEUTSCHE
TELEKOM INTERNATIONAL
FINANCE
B.V.
|
|
|
By:
/s/ Stephan
Wiemann
Name:
Stephan Wiemann
Title: Managing Director
|
|
|
By: /s/ Robin Sheridan
Name:
Robin Sheridan
Title: Managing Director
|
Know all persons by these presents that
each officer or director whose signature appears below constitutes and appoints
each of the directors named below, jointly and severally, his or her true lawful
attorneys-in-fact and agents with full and several power of substitution for and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments, including post-effective amendments, supplements to this
registration statement and any registration statements pursuant to Rule 462(b)
under the Securities Act relating thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to
the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities indicated on March 10,
2009.
|
Signatures
|
Capacity
|
|
/s/ Stephan
Wiemann
Stephan
Wiemann
|
Managing
Director
|
|
/s/ Robin
Sheridan
Robin
Sheridan
|
Managing
Director
|
SIGNATURE
Pursuant
to the requirements of Section 6(a) of the Securities Act of 1933, as amended,
the undersigned has signed the registration statement, solely in the capacity of
the duly authorized representative of Deutsche Telekom International Finance
B.V. in the United States, in the City of New York,
State of New York, U.S.A., on March 10, 2009.
|
DEUTSCHE
TELEKOM INC.
|
|
|
By:
/s/ Klaus-Peter
Statz
Name:
Klaus-Peter Statz
Title: President and CEO
|
EXHIBIT
INDEX
|
4.4
|
Forms
of Note (global registered form) and Guarantee (included in Exhibits 4.1
and 4.2)
|
|
24.1
|
Powers
of attorney (included as part of the signature pages)
|