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Value Catalyst Fund Limited (T (VCF)

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Thursday 02 November, 2006

Value Catalyst Fund Limited (T

Letter to Chairman of Deutsche Telekom AG

The Value Catalyst Fund Limited ("VCF" or "the Company")

Letter to the Chairman of the Supervisory Board of Deutsche Telekom AG

The  Value  Catalyst  Fund Limited (AIM: VCF) and its investment  manager  Laxey
Partners  Limited ("Laxey Partners") wish to announce that on  25  October  2006
Laxey  Partners  sent  a  letter to the Chairman of  the  Supervisory  Board  of
Deutsche Telekom AG ("DTAG"), copied to the members of the Supervisory Board and
Executive Management of DTAG.

Colin Kingsnorth, Director of Laxey Partners and VCF, said today:

"We  have invested in DTAG attracted by its strong market position and its  vast
portfolio of highly attractive assets, which we believe are valued by the market
at a substantial discount to their real worth. We are concerned that the ongoing
strategic review is not sufficiently addressing the value of the single parts of
DTAG  and how the various parts fit into a coherent strategy, which would ensure
the  maximisation of value for shareholders and other stakeholders. We urge  the
company  to rethink focus and in particular its ambitions in the USA as well  as
the  need to retain certain assets such as its property portfolio and other non-
core activities."

The text of the letter is as follows:

"Dear Dr. Zumwinkel,

Laxey  Partners  is a global value investment management company  that  promotes
shareholder engagement and sound corporate governance to close the valuation gap
between  the share price at which a company trades and its intrinsic  value.  We
have  a  substantial shareholding in Deutsche Telekom AG ("DTAG" or the "Group")
and  have invested in the Group attracted by its strong market position and  its
vast  portfolio of highly attractive assets, which we believe are valued by  the
market at a substantial discount to their real worth.

In  our  view, this situation will not correct itself piecemeal and a  concerted
and  far  reaching approach is required. We clearly welcome and  support  DTAG's
ambition  to become the leading telecoms operator in Europe not only by  revenue
but  also  by  profit, as stated as the key aim of the "Telekom  2010"  strategy
which  has  already  been presented in outline by Management.  However,  we  are
concerned  that the ongoing strategic review does not sufficiently  address  the
value  of  the single parts of the Group and how the various parts  fit  into  a
coherent strategy, which would ensure the maximisation of value for shareholders
and other stakeholders.

We  are also concerned that, without an unbiased review of all strategic options
to  maximise shareholder value, including a potential disposal or separation  of
certain  non-core assets, management will fail to achieve any significant  value
creation. The telecoms market is and will remain highly competitive and requires
clear  focus of resources in terms of management time and capital. We fear  that
DTAG  is currently spread too thinly outside Europe and partially within Europe,
to be able to create superior value with each of its assets in the long-term. We
urge Management to rethink focus and in particular:

  -           its  ambitions  in  the USA: although T-Mobile USA  is  delivering
     attractive growth and the US market presently remains favourable, the value
     of  the asset is not properly reflected in the DTAG share price. Nor do the
     synergies with the rest of the Group appear to be substantial; and
  -           the  need  to retain certain assets such as its property portfolio
     and other non-core activities.

It  is  important  to emphasise that the measures we think the Management  Board
should now examine would not concern any cuts within the domestic operations. On
the contrary, such measures would free up management and financial resources  to
invest into the core domestic activities and strengthen these.

We would be keen to discuss our views and expectations prior to the finalisation
of  the  current strategic review and would be available for a meeting  at  your
earliest  convenience. However, if you believe that the annual  general  meeting
would  be  a  more appropriate setting for such a discussion, as it would  allow
other shareholders to voice their opinions, we would be happy to initiate such a
debate.  Under section 122 clause 2 of the German Companies Act, a  shareholding
with a par value of only €500,000 is sufficient to add an item to the agenda  of
the  next annual general meeting. We would be happy to propose a resolution with
the  aim to nominate a representative of the minority institutional shareholders
to  the Supervisory Board. This representative would have the mandate to promote
such  a strategic review, if that was considered a helpful initiative by various
shareholders.

We  are  sure that the Supervisory Board, the Management, the German government,
the  institutional  and retail shareholders and other stakeholders  all  have  a
common  aim: for DTAG to fulfil its undoubted potential and for the share  price
to reflect that success.

With best regards,
Colin Kingsnorth
Director"


Laxey  Partners is the investment manager of VCF, a shareholder in  DTAG.  Laxey
Partners   is  a  global  value  investment  management  company  that  promotes
shareholder engagement and sound corporate governance to close the valuation gap
between the share price at which a company trades and its intrinsic value.

Further   information  on  Laxey  Partners  can  be  found   on   its   website:
www.laxeypartners.com.

2 November 2006