Deutsche Telekom Q2 Earnings Call Highlights

Key Points

• Deutsche Telekom raised its 2026 free-cash-flow outlook to approximately €20 billion, while maintaining its €47.5 billion group EBITDA target and €15.4 billion ex-U.S. EBITDA guidance.
• The company plans up to an additional €3 billion in 2026 share repurchases, potentially bringing total shareholder remuneration to nearly €10 billion, while management expects leverage to remain below its 2.75 target.
• T-Mobile US remained the primary growth engine, delivering 9.6% organic EBITDA growth and strong customer gains; Germany also continued expanding fiber additions and pricing, despite modest broadband-customer losses.

Deutsche Telekom ETR: DTE reported continued organic growth in the first half of 2026, raised its group free-cash-flow outlook following an increase at T-Mobile US, and announced plans for up to an additional €3 billion in share repurchases during 2026.

Chief Executive Officer Tim Höttges said group organic service revenue rose 3.9% in the first six months, while organic EBITDA increased 7.4%. Adjusted earnings per share grew 10.3%, he said, with customer growth remaining strong across the company’s markets.

“Our EBITDA growth is best in class and our earnings per share, the growth is double digit,” Höttges said. He added that the company was investing to maintain network leadership and support future growth while keeping leverage at prudent levels.

Guidance Update and Shareholder Returns

Deutsche Telekom raised its 2026 group free-cash-flow guidance to around €20 billion after T-Mobile US increased its own outlook by $0.2 billion at the midpoint on July 23. The company maintained its constant-currency guidance for group EBITDA growth of around 6% to €47.5 billion and reiterated DT ex-U.S. EBITDA guidance of €15.4 billion.

The company said it is continuing to execute an existing €2 billion share-buyback program in Europe and is proposing an additional facility of up to €3 billion for 2026. If fully used, the additional program would bring total shareholder remuneration for 2026 to almost €10 billion, according to Höttges.

Höttges said the decision reflected the company’s view that its shares had traded at the bottom of their long-term valuation ranges despite what management sees as favorable growth prospects. He described repurchasing shares as an investment intended to support adjusted earnings-per-share accretion rather than a program conducted at any price.

“We want to take advantage of any excessive discounts, but we will not put our network leadership, our spectrum flexibility, our A-rating, or our strategic flexibility at risk,” Höttges said.

Chief Financial Officer Christian Illek said the company’s leverage ratio, including leases, stood at 2.65, while leverage excluding leases was 2.3. He said Deutsche Telekom expects to remain below its stated leverage target of 2.75 even with the expanded share-repurchase program.

The company also confirmed that it will not sell shares into T-Mobile US’s share-buyback program during 2026. Deutsche Telekom’s stake in T-Mobile US increased to 54.3% by July, up 2 percentage points from a year earlier.

T-Mobile US Drives Growth

Management pointed to T-Mobile US as a key contributor to group performance. Höttges said the U.S. business posted 9.6% organic EBITDA growth under IFRS in the first half and added about 500,000 accounts over the period. T-Mobile US reported 277,000 account additions in the second quarter under U.S. GAAP, according to Illek.

Illek said T-Mobile US service revenue increased 8.9% year over year in the second quarter and core EBITDA rose 11.7%. He said growth was supported in part by last year’s acquisition of UScellular. Annual ARPA growth was 2%, while postpaid phone churn declined to 0.85% in the quarter.

Höttges cited rural expansion, business-to-business services and fixed wireless as major growth opportunities for T-Mobile US. The company is investing in digitization, the integration of UScellular, fiber opportunities and wireless technology leadership, he said.

Management said planned broadband customer targets at T-Mobile US do not require additional spectrum purchases, though future upper C-band and 2.7 GHz auctions could provide further capacity and growth flexibility.

Germany Broadband, Fiber and Mobile

In Germany, Deutsche Telekom recorded its 39th consecutive quarter of EBITDA growth, according to Höttges. Illek said total revenue rose 3.7% in the second quarter, supported by World Cup-related non-service revenue, while adjusted EBITDA increased 2.7%.

The company expects German EBITDA growth to fall below its recent 2.5% to 2.7% range in the third quarter due to cost phasing, before rising above that range in the fourth quarter. Illek said the company’s full-year German EBITDA target of €11 billion remains intact.

Mobile service revenue growth accelerated sequentially to 2.4%, while fixed-line service revenue also improved. Broadband revenue growth increased to 1.9% in the second quarter from 1.6% in the first quarter. Management expects further acceleration in the second half as the effect of back-book price increases becomes more pronounced.

Deutsche Telekom lost 20,000 broadband customers during the quarter, which Illek said was largely related to price-driven churn and similar to the level recorded a year earlier. He said churn has been lower than initially anticipated and should moderate in the third quarter before normalizing in the fourth quarter.

Fiber net additions rose 18% year over year, with 161,000 additions during the quarter. Fiber penetration increased 11%, and management said it intends to accelerate fiber monetization through a stronger focus on both single-dwelling and multi-dwelling units.

Höttges said the company was encouraged by customer reaction to a €2 monthly increase affecting roughly 4.9 million broadband customers. He argued that pricing discipline is necessary as operators continue investing in fiber and network infrastructure.

European Operations and T-Systems

Deutsche Telekom’s European segment generated 4.1% organic service-revenue growth and 4.1% organic EBITDA growth in the quarter. Höttges said this represented the unit’s 34th consecutive quarter of organic growth. Reported revenue growth was 1.5%, affected by the deconsolidation of Romania and a planned reduction in wholesale transit revenues, partly offset by the stronger Hungarian forint.

T-Systems recorded year-over-year revenue and EBITDA growth and remains on track toward its capital-markets-day targets, Illek said. While order-book performance was slower due to timing, management expects a stronger second half.

The IT-services unit secured contracts to build and operate Volkswagen’s global private-cloud network and, alongside SAP, develop a central citizen application. Höttges said demand is rising for sovereign cloud infrastructure, secure digitization and artificial-intelligence applications.

He also said the company’s industrial AI cloud in Munich, built with NVIDIA and containing 10,000 Blackwell B200 GPUs, was sold out. Deutsche Telekom is considering an expansion, though Höttges stressed that data-center and AI investments would need to meet return requirements and would not be pursued solely for political reasons.

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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