Deutsche Telekom Raises Dividend by 10% to EUR 0.70; Healthy Organic Trends Continue

Deutsche Telekom raised its financial outlook for the third time during 2022. We are not surprised as management tends to be prudent in its guidance, normally underpromising and overdelivering. Dividends for fiscal-year 2022 were also raised by 10% year on year aided by the good results, from EUR 0.64 to EUR 0.70 per share. Group service revenue has grown organically by 4.0% during the first nine months of the year, while EBITDA after leases (EBITDAaL) has grown by 5.9%. The U.S. has been the main growth engine, up by midsingle digits each quarter, with Germany also performing well, up 2.7% organically the past two quarters. Management seems to be managing inflationary pressures well in its cost base, with most energy costs being hedged and cost savings measures in place, which are helping EBITDAaL growth. We are maintaining our EUR 22 fair value estimate, which represents a 15% upside at today’s prices.