Deutsche Telekom Reports Strong Growth, Boosts Dividend, But Buyback Disappoints

Deutsche Telekom reported a 7.5% year-over-year increase in revenue to over €31 billion in the latest quarter, fueled by robust growth from its U.S. subsidiary, T-Mobile US, and subsequently raised its full-year forecast. This performance, which exceeded analyst expectations, is coupled with a planned 10% increase in the company’s dividend to €1.10.

However, the announcement of a share buyback program, valued at up to €2 billion, was met with disappointment in the market, contributing to a roughly 3% decrease in Deutsche Telekom’s stock price on Thursday. While investors welcomed the dividend increase, the buyback volume fell short of the average analyst expectation of €3 billion, according to Citigroup.

The positive earnings report comes amidst growing concerns regarding potential competition in the U.S. mobile market, as SpaceX, controlled by Elon Musk, has acquired mobile frequencies that could establish it as a new competitor – a development that has pressured the share price of T-Mobile US, in which Deutsche Telekom holds a majority stake of just over 50%. Despite these concerns, the value of Deutsche Telekom’s stake in T-Mobile US is approximately €80 billion, and the company itself has a market capitalization of around €127 billion, solidifying its position as a major player in the DAX index.

Deutsche Telekom’s strong Q3 performance, with adjusted EBITDA increasing by nearly 10% to around €12.2 billion, demonstrates continued momentum in its core business. The increase in adjusted EBITDA outpaced the initial expectations, and the slight revision of the full-year forecast suggests continued confidence in the company’s trajectory. The dividend increase, while anticipated by analysts, reinforces the company’s commitment to returning value to shareholders, though the relatively modest share buyback program suggests a more cautious approach to capital allocation.