Deutsche Telekom (ETR:DTE) raised its 2026 earnings and cash flow outlook after an increase in guidance from T-Mobile US, while proposing a higher dividend and up to EUR 2 billion in share buybacks for 2027.
The telecommunications group said third-quarter organic service revenue rose 4% year over year and adjusted EBITDA increased 8%. Adjusted earnings per share grew almost 12% in the first nine months, CEO Tim Höttges said on the earnings call.
Management also pointed to a return to positive broadband customer additions in Germany and record fiber additions, while acknowledging investor concerns about competition from satellite providers and artificial intelligence.
Higher Outlook and Shareholder Returns
Deutsche Telekom now expects 2026 adjusted EBITDA of around EUR 47.6 billion and free cash flow of approximately EUR 20.1 billion. Höttges said the increases reflected T-Mobile’s higher guidance. The group maintained its adjusted earnings-per-share outlook of EUR 2.20 and its guidance for operations outside the U.S.
The company proposed a dividend of EUR 1.10 per share for 2026, payable in 2027, up EUR 0.10 from the prior year. Together with the proposed buyback, shareholder returns would amount to approximately EUR 7 billion, Höttges said.
CFO Christian Illek said the 2027 buyback would not include any unused portion of the company’s existing program, which allows for purchases of up to EUR 5 billion in 2026. If the share price remained around EUR 25 to EUR 26, he said, the 2026 total would probably be in the vicinity of EUR 3 billion to EUR 3.5 billion.
Illek also said Deutsche Telekom had not discussed the size of a 2027 T-Mobile US buyback program. He said his appetite to sell into such a program was limited at the current share price, which he did not believe reflected T-Mobile’s fair value. Management identified the U.S. C-band spectrum auction as a factor in buyback decisions.
German Broadband Improves
In Germany, third-quarter revenue rose 4.1%, helped by World Cup-related non-service revenue, while adjusted EBITDA grew 1.5%. Illek attributed the slower EBITDA growth to the timing of costs in the prior year and said management expected a stronger growth rate in the fourth quarter.
German mobile service revenue rose 2.9%, fixed service revenue increased 1.5%, and broadband revenue growth accelerated to 2.8%. Illek said the broadband improvement benefited from a more stable customer base and price increases.
The company added 190,000 fiber customers during the quarter, up 23% from a year earlier, and overall fiber penetration approached 18%. Illek said lower-than-expected customer churn following price increases and progress in fiber connections helped return broadband net additions to positive territory.
Höttges said access to multi-dwelling buildings remains a challenge, including obtaining landlord permissions and installing in-building infrastructure. He said proposed legislation could help address the bottleneck.
In the company’s European operations, organic revenue and service revenue each grew more than 4%, while organic EBITDA rose 4.3% in the quarter. Illek cautioned that the end of the Greek European Recovery Fund in the third quarter would weigh on future service revenue.
Satellite Competition and Network Investment
Höttges said Deutsche Telekom takes potential competition from satellite operators seriously but does not expect satellite services to replace terrestrial networks. He argued that a new U.S. wireless competitor would need substantial investment in spectrum and network infrastructure.
Asked about a potential mobile virtual network operator agreement with Starlink, Höttges said it was difficult to see how such an arrangement would fit Deutsche Telekom’s approach to wholesale partnerships. Illek added that the company did not see regulatory pressure in the U.S. to force such access.
Höttges said satellite broadband can serve remote or underserved areas, but that Deutsche Telekom saw no reason to change its German fiber strategy based on current evidence. The company is also exploring a joint bid with other European operators for satellite spectrum, he said.
On costs, Illek said Deutsche Telekom was facing inflation in components including chipsets and optical cables. The company has standardized some purchases and passed on certain price increases, although he said the overall effect remained negative.
Höttges also announced Dhananjay Mirchandani as Illek’s successor as CFO and Jan Hofmeyr, who was hired from AWS, for the product and technology board role.
About Deutsche Telekom (ETR:DTE)
Deutsche Telekom AG, together with its subsidiaries, provides integrated telecommunication services. The company operates through Germany, United States, Europe, Systems Solutions, Group Development, and Group Headquarters and Group Services segments. It offers fixed-network services, including voice and data communication services based on fixed-network and broadband technology; and sells terminal equipment and other hardware products, as well as services to resellers. In addition, the company provides mobile voice and data services to consumers and business customers; sells mobile devices and other hardware products; and sells mobile services to resellers and to companies that purchases and markets network services to third parties, such as mobile virtual network operators.
