Deutsche Telekom ETR: DTE reported what Chief Executive Tim Höttges called a “robust” start to 2026, citing broad-based growth across the group and an upgraded full-year outlook following stronger guidance from T-Mobile US.
On the company’s first-quarter earnings call, Höttges said group organic service revenue rose 4.6% year over year, while organic EBITDA growth accelerated to 7.5%. He said the company remains on track with its capital markets targets despite what he described as a “world of uncertainty.”
“Deutsche Telekom is resilient, we are keeping delivering the strong growth as promised,” Höttges said.
The company raised its 2026 group guidance to reflect T-Mobile US’s guidance increase. Deutsche Telekom now expects constant-currency group EBITDA growth of around 6% to 47.5 billion euros, and free cash flow of more than 19.8 billion euros. The guidance is based on last year’s average dollar exchange rate of 1.13 euros, management said.
T-Mobile US Drives Growth
Chief Financial Officer Christian Illek said T-Mobile US delivered a strong first quarter, with service revenue up 11.3% under U.S. GAAP. He said the growth reflected both stronger organic momentum and the contribution from acquisitions, particularly U.S. Cellular.
Core adjusted EBITDA at T-Mobile US accelerated to 11.9% growth in the quarter, compared with 6.8% in the fourth quarter. Höttges said T-Mobile’s EBITDA growth was “stunning,” noting that it reached 12% on a U.S. GAAP basis and 10% on an IFRS basis.
T-Mobile also increased postpaid account net additions by 6% from a year earlier, which Illek said appeared to be the strongest performance in the industry. Average revenue per account rose nearly 4%, ahead of industry peers, according to Illek.
The U.S. business also continued to expand in broadband, adding more than 500,000 subscriptions in the quarter. Illek said fixed wireless access additions were higher than a year ago. T-Mobile raised its customer guidance for account growth by 50,000, to a midpoint of 1 million accounts, with a range of 950,000 to 1.05 million.
Höttges also noted that Deutsche Telekom’s stake in T-Mobile reached almost 54% at the end of April, up 2 percentage points from a year earlier.
Germany Shows Stable Broadband, Fiber Progress
In Germany, Illek described the quarter as solid. Total revenue rose 2.1%, with growth roughly split between service revenue and non-service revenue. Adjusted EBITDA increased 2.5%, matching the prior quarter and coming in line with management’s expectations.
Mobile service revenue growth slowed sequentially to 2.1%, but Illek said it remained within the company’s guidance corridor. Fixed service revenue also slowed, while broadband revenue remained subdued, which Illek attributed mainly to customer losses in 2025.
The company said its German broadband subscriber base was stable for a second consecutive quarter, despite previously announced price increases. Illek said Deutsche Telekom expects elevated churn from backbook price increases to continue into the second and third quarters, with a peak in the second quarter. Still, he said the company intends to stabilize the broadband subscriber base in the second quarter and expects better broadband revenue growth in the second half if that stabilization holds.
Fiber remained a key focus. Illek said German fiber net additions rose 16% to 148,000, while fiber penetration increased 10%. Höttges said Deutsche Telekom passed 3.6 million additional European homes with fiber-to-the-home over the past 12 months and now reaches 13 million homes in Germany.
Höttges said the company remains committed to rolling out 2.5 million homes passed per year in Germany and has increased its fiber investment envelope by 800 million euros over the next three years. He said the company has also improved fiber build-out costs by about 10% to 15%, helped in part by AI-assisted planning, quality control and documentation.
On television services, Illek said Deutsche Telekom added 90,000 over-the-top TV contracts in Germany in the first quarter, bringing total TV additions to close to 120,000 when combined with traditional triple-play growth. Höttges said he expects a significant increase tied to the World Championship, noting that MagentaTV has rights to all 144 games.
Europe and T-Systems Continue Positive Trends
Outside the U.S. and Germany, Deutsche Telekom’s European segment posted its 33rd consecutive quarter of organic EBITDA growth. Illek said organic service revenue in Europe increased 2.1%, supported by strong IT service revenue growth in Greece. Organic EBITDA rose 3.5%.
T-Systems also remained on what Illek called a positive track, though he said EBITDA growth would be slower than last year as the company invests in sovereign cloud and artificial intelligence.
Illek said T-Systems’ order book growth slowed in the first quarter due to seasonality and the absence of large deals booked in the prior-year period. He said the company remains committed to its guidance for order entry growth.
AI Becomes a Central Strategic Focus
Höttges repeatedly emphasized artificial intelligence as a top priority. Deutsche Telekom plans to host an investor event dedicated to AI on Oct. 5, where management intends to present use cases and their financial implications.
At Mobile World Congress, the company introduced what Höttges described as the first AI call assistant native to its voice network, with live translation, call summaries and contextual assistance. It also presented “Minder,” a multi-agent network system designed to predict, detect and resolve network issues before they affect customers.
In Germany, Höttges said an AI-enabled chatbot deflected 1 million calls in the first quarter, and the company plans to double that number in 2026. He said AI-supported coding is three times faster in some cases, and up to 95% faster in others.
Höttges said AI presents revenue opportunities in connectivity, sovereign cloud and enterprise applications, while cautioning that he does not expect hyperscalers to simply pay telecom operators a generic premium for connectivity. He said the company’s Nvidia B200 capacity in Munich is sold out, and RTX utilization reached about 40% after three months.
Balance Sheet Strength and Strategic Questions
Deutsche Telekom’s reported results were affected by a weaker U.S. dollar, Illek said. Still, adjusted earnings per share rose 8%, and management said it remains comfortable with its full-year guidance of 10% growth.
Free cash flow was supported by lower capital spending, mainly in Germany, though Illek noted drags from foreign exchange and 300 million euros of higher restructuring expenses related to the U.S. Net debt excluding leases increased by 1.4 billion euros, which Illek attributed to the dollar. The leverage ratio including leases stood at 2.64, below the company’s comfort zone of 2.75.
Illek also highlighted Standard & Poor’s decision to raise Deutsche Telekom’s rating to A-minus, the first such upgrade in 18 years.
During the question-and-answer session, executives declined to comment on press speculation about potential transactions involving T-Mobile. Höttges said the company’s capital allocation framework remains unchanged and that management would not respond to market rumors.
Executives also addressed satellite connectivity, with Höttges saying Starlink and other satellite services are complementary rather than a substitute for terrestrial networks. He said 99% of traffic is terrestrial and cannot be handled by satellite services, but satellite partnerships can improve connectivity in areas Deutsche Telekom cannot otherwise reach.
“If you can’t fight the dragon, ride the dragon,” Höttges said, while adding that Deutsche Telekom does not want to place its “destiny into one hand” and remains open to working with other satellite companies.
About Deutsche Telekom ETR: DTE
Deutsche Telekom AG, together with its subsidiaries, provides integrated telecommunication services. The company operates through Germany, United States, Europe, Systems Solutions, Group Development, and Group Headquarters and Group Services segments. It offers fixed-network services, including voice and data communication services based on fixed-network and broadband technology; and sells terminal equipment and other hardware products, as well as services to resellers. In addition, the company provides mobile voice and data services to consumers and business customers; sells mobile devices and other hardware products; and sells mobile services to resellers and to companies that purchases and markets network services to third parties, such as mobile virtual network operators.
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