Deutsche Telekom did good business in the third quarter. Group sales increased 9% and operating profit increased at a similar pace. Above all, the subsidiary T-Mobile US once again proved to be a support. The Bonn group therefore raises its annual forecasts. Shareholders must participate in the success with an increased dividend. But the t-share is weakening – today.
From July to September, Deutsche Telekom was able to increase the number of its new contracts at an above average rate. With an increase of 368,000 new mobile contract customers under its own brand, the group has far exceeded industry expectations. The executive committee pointed to the new rates as the reason for the strong growth. Telekom also gained more customers than expected in the broadband segment. As a result, consolidated sales in the third quarter increased nearly 9% to nearly € 29 billion.
Business in the United States is booming, Europe is shrinking
Again, this is mainly due to the America business, which according to the same statements reached a record number of new contract customers in the last quarter. The subsidiary T-Mobile US was able to acquire 854,000 customers in the third quarter, more than double that of the parent company. Against this backdrop, Telekom sales in the United States grew by 15.9%, while Europe recorded a decline of 1.1%. The development of revenues from services diverged further with an increase of 24.6% and a minus 4.4%. The operating result in the US business also increased by 15.9%, while in Europe it fell by 5.3%.
Group operating profit (adjusted AL Ebitda) rose 8.5 percent to € 10.5 billion. The conclusion, however, was that profit was significantly higher: due to increased operating profitability, among other things, adjusted net profit increased by more than 80 percent to € 2.4 billion.
“Our business continues to grow,” Group CEO Tim Höttges said Thursday. “We are therefore able not only to increase our forecasts for the current year for the third time, but also to increase our dividend.” The telecom group is now aiming for a 2022 operating profit more than 37 billion euros. So far, there has been an increase to around € 37 billion.
Various exchange rates as a basis
Analysts were hoping for more upfront and expected an average increase of around 40 billion euros. The reason for the big difference are different exchange hypotheses. Because for their predictions, Telekom still relies on an outdated dollar exchange rate of $ 1.18 per euro. However, as the euro has recently weakened significantly, the conversion for the T-Mobile US subsidiary results in a completely different value – industry experts are already counting on this. At the current exchange rate, the Americans are contributing significantly to the Group’s operating profit, so much so that even Telekom’s forecasts would reach almost 40 billion euros.
Net income is expected to be above € 1.50 per share instead of € 1.25. Therefore, the dividend should be increased from € 0.64 to € 0.70 per share.
However, Deutsche Telekom stock reacts cautiously to forecasting and rising dividends. The price drops to € 19.30 in early trading. On Friday, the T-Share reached its highest level since 2001 at EUR 19.80. In the current year, Telekom is the best Dax value with a plus of 21%.
Deutsche Telekom
(WKN: 555750)
Valuation of the Deutsche Telekom stock
“The numbers are solid, but the third expected increase is no surprise,” said one broker. Some short-term investors would have hoped for more and then cashed in.
BÖRSE ONLINE predicts that the Telekom stock will continue to rise and exceed the € 20 mark in the near future. The issued price target is 24 euros.
(With material from dpa-AFX and Reuters)
Conflict of Interest Notice: The managing director and majority owner of the publisher Börsenmedien AG, Bernd Förtsch, has taken direct and indirect positions on the following financial instruments mentioned in the publication or related derivatives that could benefit from any price movements resulting from the publication: Deutsche Telekom.
The author holds direct positions in the following financial instruments mentioned in the publication or related derivatives that could benefit from any price movements resulting from the publication: Deutsche Telekom.
