Tear Sheet: Deutsche Telekom AG

During its Capital Markets Day in October 2024, DT announced a revised financial policy, introducing a target of at or below 2.75x (translating to an S&P adjusted leverage of about 3.0x), replacing its prior leverage corridor of between 2.25x-2.75x. At the same time, the company said its defined leverage target was reached in third-quarter 2024 after being outside of its targeted leverage since the Sprint acquisition in 2020. In our view, this means DT has reached its leverage comfort level, and it will not prioritize further deleveraging. We expect the company will prioritize its available cash flow toward investments, shareholder returns, and a continued T-Mobile U.S. (TMUS) ownership increase. DT has indicated a desired stake of between 50% and the

...November 11, 2024 Deutsche Telekom AG's (DT) revised financial policy should result in leverage at around 3.0x on an S&P Global Ratings adjusted basis. During its Capital Markets Day in October 2024, DT announced a revised financial policy, introducing a target of at or below 2.75x (translating to an S&P adjusted leverage of about 3.0x), replacing its prior leverage corridor of between 2.25x- 2.75x. At the same time, the company said its defined leverage target was reached in third- quarter 2024 after being outside of its targeted leverage since the Sprint acquisition in 2020. In our view, this means DT has reached its leverage comfort level, and it will not prioritize further deleveraging. We expect the company will prioritize its available cash flow toward investments, shareholder returns, and a continued T-Mobile U.S. (TMUS) ownership increase. DT has indicated a desired stake of between 50% and the high 50s; it owns 50.5% currently. With annual free operating cash flow (FOCF) after...

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