BONN (dpa-AFX) - Deutsche Telekom once again benefited in the third quarter from the strong performance of its US subsidiary, T-Mobile US. Revenue increased year-on-year between July and September, with growth in line with analysts' expectations. Additionally, management slightly raised its annual forecast as anticipated. However, growth in revenue reported in euros was dampened by a weak US dollar. The dividend for 2025 is set to be raised from 0.90 euros to a record level of 1.00 euro. Furthermore, management is planning share buybacks of up to 2 billion euros in 2026.
On the stock exchange, the share price initially rose at the start of trading, but later retreated from the day's high of 27.74 euros. Most recently, it was little changed at 27.32 euros. So far this year, the stock has lost about five percent in value.
For expert Paul Sidney from the analysis firm Berenberg, both revenue and adjusted operating profit (Ebitda AL) met expectations, though this was thanks to the already known business development in the US. It is for this reason that the Bonn-based company also raised its outlook. However, German service revenues disappointed.
Akhil Dattani of JPMorgan pointed out that while Deutsche Telekom performed weaker than expected in its home market, this was largely offset by positive surprises elsewhere.
Group revenue rose by 1.5 percent to 28.9 billion euros in the third quarter, the DAX-listed company announced Thursday in Bonn. The weak US dollar weighed on results. Adjusted for currency effects and company acquisitions and disposals, growth stood at 3.3 percent. For service revenues--excluding device sales--organic growth was 3.6 percent.
Deutsche Telekom now generates over three-quarters of its revenue abroad, primarily in the United States. As previously reported, its US subsidiary T-Mobile US saw robust growth in the third quarter.
In its domestic market, however, revenue fell by 1.8 percent to 6.3 billion euros, as additional income related to the 2024 UEFA European Football Championship could not be offset this time. In the third quarter, Telekom gained 314,000 new contract mobile customers in Germany under its own brands. Service revenues rose organically by a modest 0.4 percent. The broadband business, meanwhile, declined slightly, attributed to strong competition. However, the Bonn-based company made some gains in the TV segment.
Adjusted operating profit (Ebitda AL) at group level improved by 0.2 percent to 11.1 billion euros. Organically, growth was 2.9 percent.
Deutsche Telekom posted an adjusted net profit of around 2.7 billion euros--a 14.3 percent increase. Analysts had expected less. Without adjustments, profit fell by 17.9 percent to around 2.4 billion euros. The company cited a positive effect from special items in the previous year--this time, these had a negative impact.
Free cash flow (Free Cashflow AL) declined by 9.2 percent to 5.6 billion euros in the third quarter.
For the current year, the management team led by Telekom CEO Timotheus Hottges now expects operating profit at constant exchange rates from the previous year (1.08 dollars per euro) to reach around 45.3 billion euros, and free cash flow (Free Cashflow AL) of around 20.1 billion euros. Previously, the DAX group had projected more than 45 billion euros in operating profit and over 20 billion euros in cash flow. The important US subsidiary T-Mobile US had earlier slightly raised its outlook.
However, the targets assume last year's average exchange rate of 1.08 dollars per euro. The euro has since appreciated significantly and now stands above 1.15 dollars. This means that, when converting US business figures, the stronger euro is likely to have a dampening effect over the full year./err/men/stk
