Telekom Tweaks Guidance Higher as US Arm Powers Q1 — But Share Price Stays Stuck in the Mud

Revenue rose 4.7% organically to €29.9B; T-Mobile US service revenue surged 11.3%. Full-year cash flow target raised to €19.8B+, but stock fell 2% on modest guidance.

Deutsche Telekom delivered a solid first quarter, with its US subsidiary T?Mobile US once again providing the growth kicker. The Bonn?based group nudged up its full?year cash flow target and lifted its earnings forecast, yet the stock dropped almost 2% on Thursday, settling at €27.72. Investors appear to want more than incremental improvement before they pile back in.

Revenue for the three months came in at €29.9 billion, a 4.7% organic increase that was pared back to just 0.4% on a reported basis because of the weaker US dollar. Service revenues — the recurring income that truly reflects customer engagement — rose 4.6% organically to €25.0 billion. Adjusted EBITDA AL climbed 7.5% organically to €11.5 billion, underscoring that the underlying operating momentum remains intact.

The engine room remains T?Mobile US, where service revenues surged 11.3% in the quarter. That strength gave management the confidence to lift the free cash flow outlook: the full?year target now stands at more than €19.8 billion, up from the previous “at least” €19.8 billion. The adjusted EBITDA AL forecast was raised by a similar hair’s breadth, to around €47.5 billion from roughly €47.4 billion. The adjusted earnings per share projection was left unchanged at about €2.20.

For all the operational stability, the bottom?line picture was cloudier. Reported net profit fell to €2.04 billion from €2.845 billion a year earlier, but the drop was almost entirely due to the absence of positive valuation effects from equity holdings rather than a deterioration in the core business. Adjusted net income actually rose 6.5% to €2.6 billion, or €0.54 per share on an adjusted basis.

Free cash flow AL reached €5.7 billion, a modest 0.7% gain, while net financial debt stood at €133.8 billion at quarter?end — a reminder of why every cash flow uptick matters for the group’s capital allocation.

On the domestic front, the German fibre rollout continues to gain traction: around 13.0 million homes and businesses can now book a direct fibre connection, with 2.2 million customers actively using a tariff. T?Systems, the IT services division, chipped in with a 4% gain in adjusted EBITDA AL. Elsewhere in Europe, the contract customer base is expanding.

The €2 billion share buyback programme, due to run until the end of 2026, saw the company repurchase roughly 1.6 million shares in the first week of May. A dividend of €1.00 per share is proposed for the 2025 financial year, with a medium?term payout ratio of 40%?60% of adjusted earnings per share.

Despite these positives, the stock is technically bruised. Thursday’s close at €27.72 leaves the shares 5.26% below its 200?day moving average of €29.26 and a hefty 8.4% under the 50?day line at €30.26. Over the past 30 days the stock has shed 3.55%, and the 12?month return stands at minus 11.06%. A decisive break above the 50?day average would be needed to brighten the chart — but for now, the market is waiting for more than a modest guidance lift to restore its faith.