Deutsche Telekom: 2027 Plan Looks Solid, Convinces Us to Raise Our Fair Value Estimate

We are raising our fair value estimate for narrow-moat Deutsche Telekom to EUR 28 from EUR 25 per share as we raise our medium-term forecasts after the firm’s capital markets day. We give credibility to management’s 2027 plan, which estimates group revenue will grow at a 4% compounded annual growth rate until 2027 and adjusted EBITDAaL at a 4%-6% rate. Our five-year group adjusted EBITDAaL CAGR sits at 4.6%, in line with management’s targets. Deutsche Telekom’s management has a long history of delivering (and surpassing) its long-term commitments with shareholders, which gives us greater confidence in the outlook. Shares now look fairly valued compared with our EUR 28 fair value estimate. Our capital allocation rating for Deutsche Telekom is Exemplary.