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Deutsche Telekom AG ADR DTEGY

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Morningstar’s Analysis

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No Surprises in Deutsche Telekom's Results; Maintaining Fair Value Estimate

Analyst Note

| Denise Molina, CFA |

There were no surprises in no-moat Deutsche Telekom's 2020 results as the company had already upgraded its guidance in December 2020 backed by strong performance in the U.S., where EBITDAaL grew organically by 10.8% for the year, as the company added 5.5 million customers in mobile while keeping low levels of churn and higher average revenue per user derived from the merger with Sprint. The company claims it has already realized EUR 1.3 billion in synergies in 2020 (EUR 600 million for network synergies and EUR 700 million from sales, general, and administrative costs) and expects a run-rate of EUR 3 billion for 2021. (For more information on the U.S. business, please check T-Mobile’s note from Feb. 5, 2021.) We are maintaining our fair value estimate of EUR 16 per share.

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Company Profile

Business Description

Deutsche Telekom is Germany's incumbent telephone company and offers integrated telecommunication services, fixed and mobile, in several countries. Its U.S. business, T-Mobile, is among the largest wireless phone companies in the country, having recently acquired the fourth mobile provider, Sprint. Apart from Germany and U.S., the company operates in nine European countries. The firm's strategy has been to increase its scale (Sprint acquisition), improve operations through digitalization, and invest in its networks.

Friedrich-Ebert-Allee 140
Bonn, 53113, Germany
T +49 22818188880
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 223,539