(Bloomberg) — Deutsche Telekom AG, Europe’s largest telecommunications operator, increased profitability in the third quarter through cost discipline and a strong performance in the US and Germany.
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Adjusted earnings before interest, taxes, depreciation and amortization after leases rose 6.4% from a year earlier to €11.1 billion ($11.7 billion) in the third quarter, the carrier said in a statement on Thursday. Analysts had forecast €11.05 billion, according to the average of estimates compiled by Bloomberg.
The German carrier is outperforming its peers in Europe, largely driven by its majority holding in US carrier T-Mobile US Inc., which earlier reported strong subscriber growth for the quarter and raised its 2024 earnings outlook. That stake, along with cost-cutting measures, has allowed the company to improve cash flow, raise its dividend, and invest in technologies such as artificial intelligence. US service revenue rose 4.2% to €15.2 billion.
In Germany, the company has been investing heavily in fiber networks and customer service, including a loyalty program for residential customers that’s helped reduce the churn rate. Service revenue in the country grew 2.1% to €5.65 billion for the quarter.
“The growth momentum continues unabated on both sides of the Atlantic,” said Christian Illek, chief financial officer of Deutsche Telekom. “At the same time, we have successfully brought our leverage ratio back down to below our target value.”
Organic net revenue for the quarter was up 3.6% to €28.5 billion compared to the same quarter last year.
What Bloomberg Intelligence Says:
Deutsche Telekom’s better-than-expected 3Q ex-US Ebitdaal performance across Germany, Europe and T-Systems — a 4.3% organic gain — underscores its 23-bp upgrade to full-year Ebitda, along with the robust US, boosting conviction in its midterm 4-6% group Ebitdaal annual-gain goal. Consensus is 36 bps above the upgraded 2024 group-Ebitda target after adjusting for currency, and 27 bps below the reiterated FCF aim.
— Erhan Gurses, BI telecoms analyst
Deutsche Telekom raised its 2024 adjusted Ebitdaal outlook slightly to €43 billion, up from €42.9 billion. It expects the same metric to grow by 4% to 6% a year through 2027, Chief Executive Officer Tim Höttges told investors at its capital markets day last month. It also proposed a share buyback program of as much as €2 billion in 2025 and a record dividend of 90 cents per share next year for the current financial year.
