Deutsche Telekom Lifts Indirect-Cost Savings Target by €300 Million as Fiber Order Book Swells

Deutsche Telekom raised its 2027 gross savings target outside the US to about €1.1 billion, citing automation and AI, as analysts split on valuation.

Deutsche Telekom has raised the bar on its efficiency drive, telling investors that automation and artificial intelligence will deliver larger savings than previously flagged — even as the shares drifted lower in Frankfurt and analysts offered a mixed reception.

The Bonn-based carrier now expects gross savings of roughly €1.1 billion outside the United States by 2027, a €300 million increase over its earlier interim goal. By the end of the decade, indirect-cost reductions are projected to reach €2.5 billion measured against a 2023 baseline.

A €7 Million-Home Fiber Mandate

The savings push runs alongside a steady expansion of the group's network footprint. The real estate industry has handed Deutsche Telekom a contract covering seven million residential units, extending a run of infrastructure wins. In August the company completed 222,000 additional fiber connections, bringing high-speed broadband access to 14.1 million households and businesses nationwide.

Earlier this month the group also agreed to acquire the fiber network infrastructure of ruhrfibre and Metrofibre in Essen. The asset deal gives it access to a local network serving roughly 87,000 households, though the transaction has yet to formally close.

Automation Already Reshaping Service and Networks

Inside the business, the shift toward software-driven operations is well advanced. The "Frag Magenta" digital assistant handled about 2.6 million inquiries in the first half of the year. In the US, automated agents now manage 40 percent of customer contacts, while the volume of telephone service requests there fell 55 percent.

Network maintenance is following a similar path. The internal MINDR system already resolves 96 percent of mobile network faults autonomously. More than 100,000 employees have completed related training as the company prepares its workforce for the transition.

Chief executive Tim Höttges views the programs as a central lever for the competitiveness of the group's European national companies. Not everyone is convinced: the DPVKOM union voiced sharp criticism, warning of possible job losses from the accelerated use of technology.

New Revenue Streams in Enterprise

Beyond cost control, management sees fresh income emerging in the business-customer segment outside the US, where it expects a revenue contribution of about €250 million this year. That figure is targeted to climb to roughly €800 million by 2030.

Analysts Split on Valuation

Deutsche Bank Research reaffirmed its buy rating on the DAX group with a €40 price target. Analyst Robert Grindle, writing after an investor event, highlighted management's optimistic view of both cost advantages and new revenue opportunities. Bank of America also renewed its positive stance, pointing to the combination of revenue growth and automated savings.

Goldman Sachs took a different tack. According to media reports, the investment bank adjusted its valuation yesterday, trimming its price target to €38 from €40 while keeping a "Buy" rating. Its analysts welcomed the higher cost-savings targets and noted potential for upward estimate revisions should the company deliver on its goals as planned.

The shares traded at €26.50 on the day of the savings update, down 1.4 percent, and at €26.85 in a later session, roughly flat. Since the start of the year the stock is off 4.6 percent, leaving it in consolidation mode despite the strategic initiatives, and it sits 22 percent below its 52-week high.

Next Test: The Quarterly Report

Attention now turns to operating performance, which must show how well the pace of investment and new business balance out in day-to-day operations. The upcoming interim report will offer a detailed scorecard, revealing whether cost discipline is taking hold in the current financial year and whether the intended margin trajectory remains on track.