Telekom Lands First A- Rating as US Division Fuels Guidance Lift Amid DAX Rout

S&P upgrades Deutsche Telekom to A-; raised guidance lifts stock 2.1% despite DAX drop. Strong T-Mobile US performance underpins earnings, but technicals remain weak.

The German blue-chip index shed 1.6 percent on Wednesday, but Deutsche Telekom carved out a 2.1 percent gain to close at €28.24. The outperformance was underpinned by two catalysts: a long-term credit rating upgrade to A- from S&P Global and a modest upward revision to the full-year outlook, powered once again by T-Mobile US.

The US subsidiary now accounts for roughly half of group revenue and remains the decisive earnings lever. In the first quarter, consolidated revenue came in at €29.9 billion, with organic growth of 4.7 percent—though reported growth was trimmed to just 0.4 percent after currency headwinds. Adjusted EBITDA AL rose 7.5 percent on an organic basis to €11.5 billion, while free cash flow AL edged up 0.7 percent to €5.7 billion. The underlying quality of earnings was strong enough for management to nudge the full-year adjusted EBITDA target to around €47.5 billion, up from €47.4 billion, and lift the free cash flow forecast to more than €19.8 billion.

The headline net profit, however, told a different story. It dropped to €2.04 billion from €2.845 billion a year earlier, but the decline was attributed to the absence of positive valuation effects from holdings—not to any deterioration in the core business. Adjusted net income, which strips out such one-offs, came in at €2.6 billion, while the adjusted earnings per share guidance was left unchanged at roughly €2.20.

S&P’s upgrade to A- reflects the group’s stable dividend, multibillion-euro cash generation, and the sustained growth story from T-Mobile US. For institutional investors, the improved credit profile removes a key overhang and provides a fresh buying rationale at a time when much of the market is rotating out of cyclicals. The strategic pivot is also gathering pace: Telekom is pushing an AI-cloud platform aimed at monetising data and computing power, and has entered a defence partnership with Rheinmetall to develop a drone-defence shield. Labour disputes over tariffs remain an operational risk that could dent near-term margins.

Despite Wednesday’s bounce, the stock is still in a technical downturn. It sits 7.02 percent below its 50-day moving average and 3.53 percent below the 200-day line, while the 12-month return stands at minus 11.06 percent. The slightly raised guidance and the rating upgrade provide a stronger foundation for a recovery, but the market is waiting to see whether T-Mobile US can sustain its momentum through the rest of the year. For now, the narrative is shifting away from a traditional telecom utility and toward a technology and infrastructure group that can weather geopolitical shocks—exactly the kind of re-rating that drew buyers on a day when most of the DAX was in the red.