Deutsche Telekom Closes Sale of Towers and Raises Guidance in Q2; Shares Remain Undervalued

Deutsche Telekom made a slight upgrade to its guidance during its second-quarter earnings release and now expects EBITDA (after leases) to be 1% higher compared with the previous outlook. We are not surprised by this as management tends to be conservative in its guidance, usually making improvements through the year. Deutsche Telekom remains one of our favorite names in European telecom, given its exposure to growing and rational markets (Germany and the United States) and our Exemplary capital allocation rating. We are maintaining our EUR 23 fair value estimate, with the shares providing 22% upside at this point.