Deutsche Telekom Raises EBITDA Forecast After T-Mobile US Drives Double-Digit Service Revenue Growth – Shares Stay Subdued

Deutsche Telekom's Q1 beat expectations with T-Mobile US driving growth, full-year EBITDA raised to €47.5B, yet shares trade below key moving averages amid cautious market reception.

The gap between operational performance and market reception is widening at Deutsche Telekom. The group delivered a solid first quarter, boosted by its American subsidiary, and nudged its full-year profit target higher, yet the stock continues to trade under technical pressure. Investors are rewarding the underlying strength only grudgingly, leaving the shares stuck well below key moving averages.

Revenue for the three months came in at €29.87 billion, slightly ahead of consensus, with organic growth of 4.7% all but swallowed by adverse currency movements to leave a reported gain of just 0.4%. The real engine was T?Mobile US, where service revenues jumped 11.3% organically, helping to push group adjusted EBITDA AL up 7.5% on an organic basis to €11.5 billion. Free cash flow AL inched 0.7% higher to €5.7 billion, underpinning the group’s ability to keep investing while rewarding shareholders.

Management responded to the solid start by lifting its full?year outlook. Adjusted EBITDA AL is now expected to reach approximately €47.5 billion, up from the previous €47.4 billion, while free cash flow AL is forecast to exceed €19.8 billion. Chief executive Tim Höttges described the business as stable and resilient, a tone that fits the numbers: no fireworks, but a dependable quarter backed by the US arm. The forecast for adjusted earnings per share was left unchanged at around €2.20, with the annual growth target of 10% still in place.

Beneath the headline strength, reported net profit fell to €2.04 billion from €2.845 billion a year earlier. The drop was caused by the disappearance of positive valuation effects from equity holdings, not by any deterioration in the core telecom business. Finance chief Christian Illek pointed to strong organic momentum and the contribution from the acquisition of U.S. Cellular, which added an extra layer of growth for the US unit.

On the technical side, the share price remains under pressure. At the close on Thursday it stood at €27.76, a loss of 1.7% on the day, and over the past twelve months the stock has shed 12.57%. It trades 8.28% below its 50?day moving average and also below the 200?day line. Goldman Sachs recently trimmed its price target from €42 to €40, though it kept a “Buy” rating – a sign that the analyst sees value, but that the market needs a clearer catalyst to re?rate the equity.

Capital expenditure on fibre remains a strategic priority, and one that is gradually becoming more efficient. In Europe, Deutsche Telekom added 3.6 million fibre?to?the?home households during the quarter, bringing the total in Germany to 13 million. The group plans to connect an additional 2.5 million German households each year, even as it boosts annual fibre investment by €800 million. Artificial intelligence is being deployed to streamline planning and quality control, helping to cut expansion costs by 10?15%. If T?Mobile US can sustain its momentum and cash flow stays on track, the shares may eventually catch up with the operating story. Until the stock reclaims its 50?day line, however, the market will keep demanding more proof.