Germany-headquartered telecoms operator Deutsche Telekom AG (DT) continues to show a solid operating performance, particularly in the U.S. and its domestic market. We expect that good operating prospects for the next 24 months will enable DT to maintain leverage at levels consistent with the rating, despite potentially significant cash outflows for spectrum in the U.S. We are therefore affirming our ratings on DT at 'BBB+/A-2'. The stable outlook reflects our expectation that DT will maintain adjusted debt to EBITDA at about 3.5x in 2016 and restrengthen debt to EBITDA and funds from operations (FFO) to debt to sustainably below 3.5x and above 23%, respectively, in 2017, owing to continued EBITDA growth. On May 18, 2016, S&P Global Ratings affirmed its
