The ratings on Germany's largest telecommunications services provider Deutsche Telekom AG (DT) primarily reflect the group's solid business position in a number of markets. These operations constitute a diversified base of strong underlying free cash flow generation, with a weighting toward Germany and the U.S. The ratings also benefit from DT's continuing substantial market position in Germany, supported by growth of the broadband market. In addition, the group operates a measured financial policy that includes tightened guidance for leverage--to a range of 2.0x-2.5x reported net debt to EBITDA, from 2.0x to 3.0x previously. However, the ratings on DT do not have the headroom to sustain full use of this leverage guidance. The ratings are constrained by the challenges of overhauling
