Deutsche Telekom AG

Overview Key strengths Key risks Incumbent position in the fixed and mobile segments in the domestic market, characterized by rational pricing and relatively predictable conditions in fixed broadband. Deutsche Telekom has exceeded the upper limit of its 2.25x-2.75x net debt to EBITDA corridor since the acquisition of Sprint in 2020. A controlling 50.4% stake in T-Mobile U.S. (TMUS) as of March 31, 2024, the second-largest wireless service provider in the U.S. with strong spectrum holdings. Continued increase in ownership of TMUS, shareholder distributions, spectrum payments, and acquisitions will limit deleveraging over the next two years. High-quality mobile network in Germany and a widespread super-vectoring fixed-line broadband network that is gradually complemented with the fiber-to-the-home (FTTH) roll-out. Potential pressure on capital

...Deutsche Telekom AG's (DT) solid operational performance remains supported by strong mobile service revenue growth across regions, and fixed wireless access (FWA) growth in the U.S. We expect that DT will continue to monetize on its well-invested mobile networks and strong brand recognition, leading to an annual growth rate of about 2% in 2024-2025. Its 5G network now covers 96.5% of the population in Germany, and is a key enabler behind the 3.4% service revenue growth in its domestic market during the first quarter of 2024. Furthermore, DT showed strong revenue growth of 6.3% in its European segment during the same quarter, primarily attributable to mobile service revenue growth and its expanding 5G network coverage (68.2% of the population in the European segment at March 31, 2024). Additionally, we expect solid service revenue growth for DT's controlled subsidiary, TMUS, benefiting from higher postpaid average revenue per user and 0.5 million postpaid phone net adds during first-quarter...

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