DEUTSCHE TELEKOM : 1Q26 Conf. Call Feedback

Research evidence excerpt

DEUTSCHE TELEKOM : 1Q26 Conf. Call Feedback

Refinitiv

Investment case, valuation and risks

Deutsche Telekom (Outperform, Target Price EUR37)

Investment case

Our DT Outperform thesis continues to be driven by T-Mobile USA (~80% of DT's equity

value). Both DT and TMUS shares have been hit by a stream of perceived negative

headlines (CEO change, Starlink spectrum acquisition etc.) and persistent concerns

about the competitiveness of the US wireless market. However, recent results show

that postpaid net add momentum remains solid, our STAMP consumer survey

highlights that TMUS retains a leading brand position, and latest US wireless pricing

trends have also been inflationary. All that said we do see downside risk in the German

market as mobile competition remains fierce and the broadband market runs out of sub

growth (with that which remains going mostly to the altnets).

Valuation methodology

We value Telekom using a sum-of-the-parts (SOTP) approach based on a DCF for the

main constituent parts and multiples for the long tail of assets. From the resultant EV we

deduct 2025 net debt. Lastly, we deduct future spectrum costs, liabilities for future

restructuring and unfunded pension liabilities to arrive at our Group valuation.

Risks

To the upside:

A stronger dollar could push the shares higher. DT could also benefit from concessions

around Housing Association contracts as part of the announced Vodafone/LBTYA deal

in Germany. Sale of towers and/ or other European businesses could also be near term

catalysts.

To the downside:

Higher than expected spectrum costs or commercial underperformance in the US. In

Europe, increased FTTH capex in Germany (as a result of political/ regulatory pressure)

is the biggest risk to cash flow. Finally, we continue to see downside risk in B2B and