Deutsche Telekom: Positive catalysts can drive share price recovery

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Deutsche Telekom: Positive catalysts can drive share price recovery

IdeaMrather about securing >10% IRRs when bringing fiber to poorly-serviced broadband

markets. ii. Both TMUS and Telekom management confirmed that US wireless

competition has subsided, since January. TMUS management acknowledged that

competition was particularly heavy in January 2026, in terms of subsidies & offers.

This trend has cooled off in Feb-Apr. TMUS believes it continues to enjoy a

competitive edge, via Best Network, best value and customer experience. iii. DT

Germany has raised prices for its broadband offering. For many years, DT has

been very hesitant to raise German broadband pricing, even during the c19

pandemic, when its fixed-line services transitioned from utility to necessity. DT cited

competition, and German consumer rights (subscribers could exercise break clauses

& disconnect). Encouragingly, DT Germany recently raised prices on its broadband

offering, by +€2/mth.

A number of disconnects remain (share price vs financials). i. Impressive TMUS

FCF/sh growth vs share price. Our estimates suggest that TMUS will have

increased FCF per share by +40% between Dec 2024 and 2026 (2024a: $11.8/sh,

2026: $16.6/sh). Meanwhile its share price has declined by -15% (since 1 Jan 2025),

implying a disconnect of ca -55%. We believe such a de-rating is unjustified - notably

as accelerating EBITDA growth suggests US competition has not increased that

meaningfully. ii. DT's single-digit P/E multiple, by 2028e. At its Q4 2024 CMD,

Telekom outlined an EPS target of €2.50 for 2027e. We see that target as

achievable (MSe: €2.55, despite US$ weakness), with EPS rising a further +16% in FY

2028e. This implies a 2-year forward P/E of just 9.8x, in single-digit territory (as per

Exhibit 2 ).