Deutsche Telekom's Fibre Conundrum: Fastest Build in Years Meets Lukewarm Customer Take-Up

Deutsche Telekom Q1: organic rev +4.7%, 200k mobile adds, fibre take-up 17.1%. AI 1M calls. Net profit -28.2% on FX. Stock down 2.66% monthly.

Deutsche Telekom's first-quarter numbers tell two stories at once. On one side, the group added 200,000 mobile contract customers in Germany, posted organic revenue growth of 4.7%, and saw adjusted EBITDA AL climb 7.5% on an organic basis to €11.5bn. On the other, the take-up rate on its rapidly expanding fibre network stood at just 17.1% – a modest improvement of 1.6 percentage points from a year earlier – leaving CEO Tim Höttges visibly unsatisfied with the utilisation of the group's most capital-intensive domestic project.

The tension is rooted in scale. During the first quarter alone, Telekom built 370,000 new fibre-to-the-home (FTTH) connections, an average of 5,873 per working day. By end-March, more than 13 million German households could order a fibre line, yet only 2.2 million were active paying customers. The group added roughly 200,000 fibre users in the three-month period, a growth rate that, while solid, trails the pace at which new homes become addressable. For the full year, management targets 750,000 new FTTH customers, rising to one million in 2027. Achieving those numbers will determine whether the €30bn earmarked for network build by 2030 – with an extra €800m now flowing in over the coming years – begins to generate the returns that justify the outlay.

Financially, the reported picture was muddied by a weak US dollar. Group revenue inched up just 0.4% to €29.9bn, masking an organic expansion of 4.7% when currency and consolidation effects are stripped out. Service revenues in mobile proved resilient, rising 2.1%, and the domestic branded business – Telekom and Congstar – pulled in 200,000 new contract customers, lifting the total German user base above 75 million. The strength in operations, however, was overshadowed by a 28.2% slump in reported net profit to €2.0bn, driven by the absence of positive valuation effects from equity holdings that boosted the year-ago figure. On an adjusted basis, net profit improved to €2.6bn. Free cash flow after leases stayed broadly stable at €5.7bn, slightly ahead of the prior-year level.

Investors have yet to reward the operational resilience. The stock closed at €27.79 on Thursday, representing a 1.39% weekly gain but a 2.66% monthly decline. By Friday, the shares had edged up to €27.83 as the market digested the figures. Analysts at JP Morgan and DZ Bank reiterated their buy recommendations, pointing to the underlying momentum in the core business. Still, the share price remains well below its year-ago level, suggesting the market is looking for clearer evidence that the fibre bet will pay off before re-rating the equity.

Beyond the infrastructure push, Telekom is leaning on artificial intelligence to drive efficiency and open new revenue streams. In the first quarter, a chatbot handled one million calls in Germany, and management expects to double that volume over the rest of the year. Across the group, more than 500 AI and digitalisation projects are under way, focusing on customer service and network operations. Nvidia’s B200 chips are fully booked at the company’s Munich data centre, and an investor event in October will provide a deeper look at AI applications and their financial impact.

On the horizon, a domestic labour negotiation adds a note of uncertainty. The next wage round for roughly 60,000 employees is scheduled for 26–27 May, and while Telekom’s strong cash generation offers some cushion, the talks carry the potential for short-term disruption. For now, the narrative centres on whether the group can convert its build speed into customer adoption speed – the critical lever that would turn an expensive long-term bet into sustainably higher earnings.