Deutsche Telecom Shares Rise on Plans to Boost Revenue and Earnings Growth

Shares of Deutsche Telekom experienced an increase following the company’s announcement of plans to accelerate revenue and earnings growth, supported by a strategy that includes a share buyback program of up to €2 billion set for 2025.

As of 6:44 am (1044 GMT), shares were trading 1.3% higher at €27.085. The buyback initiative is intended to complement the existing shareholder return policy, which allocates 40 to 60% of adjusted earnings per share to dividends. This approach is expected to enhance shareholder value by decreasing the number of outstanding shares, which could lead to an increase in earnings per share.

This buyback program is part of Deutsche Telekom’s broader strategy to generate over €15 billion by 2027, providing flexibility for future acquisitions, including a potential increase in its stake in T-Mobile US. The company is also concentrating on key growth areas such as artificial intelligence and data-driven operations to drive consistent revenue and profit increases.

Analysts at Citi have indicated that Deutsche Telekom’s service revenue and EBITDA AL targets for 2023-2027 are generally in line with or slightly above market expectations. However, the projected Free Cash Flow After Leases, excluding T-Mobile US, is expected to be marginally lower than consensus estimates due to higher interest rates, pension contributions, and leasing costs.

Citi has set a target price of €28.3 for Deutsche Telekom, based on a sum-of-the-parts analysis using 2024 estimates. While potential risks from competition, regulation, and technological changes have been noted, the brokerage highlighted Deutsche Telekom’s robust investment strategy and strong commitment to shareholder returns.

The company aims to achieve €21 billion in free cash flow by 2027, driven by growth in both its European and U.S. operations. Tim Höttges, Deutsche Telekom’s chief executive, remarked, “We have achieved or even exceeded nearly all of our targets and are now worth more than all our peers on our domestic continent combined.”