Share ownership opportunity in Deutsche Telekom: approximately 25% stake up for grabs
Deutsche Telekom's Profitable Ride with the Buck - Why You Should Invest in Deutsche Telekom Stock Now
The Euro's struggle against the almighty US Dollar could be a game-changer for some businesses, and Deutsche Telekom is no exception. The current exchange rate sees entrepreneurs salivating and Deutsche Telekom thriving.
While the Euro's woes against the US Dollar seem to have found a temporary reprieve lately, there's no telling when the tide will turn. The lingering economic woes in the Eurozone have investors diving headfirst into US stocks.
The speculative chatter surrounding rising debt under the new US President and inflationary pressures from tariffs could keep the US Dollar's strength in check. But, analysts are unfazed, and they've upped their earnings estimates for companies with a significant US revenue share, like Deutsche Telekom. This German telecommunications heavyweight is reputed to generate more than half of its revenue in US Dollars. Analysts predict a monumental rise in profits by 2025.
Deutsche Telekom (WKN: 555750) - The Mighty Euro's Foe - 25% Potential Upside
Deutsche Telekom is gearing up to pay a record dividend of €0.90 per share for the fiscal year 2024. To add to the sweetness, an estimated €2 billion worth of shares are slated for buyback in 2025. This cash influx is a testament to the company's thriving US business.
In the first nine months of the year, Deutsche Telekom's US mobile subsidiary, T-Mobile US, contributed approximately 64% of the group's revenue and nearly 70% of the operating profit before leasing. The Europe business and the previously ailing T-Systems division didn't disappoint either, putting up commendable numbers. At the Capital Markets Day in October last year, CEO Tim Hoettges forecast an increase in operating profit of 4-6% per year until 2027. The earnings per share are anticipated to reach €2.50, with a sustainable dividend payout of around 40-60% of earnings. Target price: €40.
Now, here's a fun fact: This compelling investment insight first appeared in the latest print edition of BÖRSE ONLINE. You can find more stocks that are cashing in on the strong US Dollar's tailwind here.
Or read: Price-to-Earnings Ratio Lower Than 10 and a Whopping Upside Potential - Are These Stocks a Buy Now?
Conflict of Interest Disclosure The publisher Börsenmedien AG's board and majority shareholder, Mr. Bernd Förtsch, has invested (directly or indirectly) in the financial instruments mentioned in the publication or related derivatives, with the potential to benefit from price movements resulting from the publication.
Did you know that Deutsche Telekom is expecting a significant jump in profits by 2025, not solely due to the strong US Dollar but also from robust operational performance, expanded profit guidance, and favorable currency translation effects, especially from its giant US subsidiary, T-Mobile US[2][3]?
In the first quarter of 2025, Deutsche Telekom reported a 43.5% increase in its net profit attributable to shareholders year-on-year, with adjusted earnings per share up by 10.8%[2][3]. The company's full-year 2025 guidance has been raised following its strong first-quarter results. Adjusted EBITDA AL is now projected at €45.0 billion (previously €44.9 billion), and free cash flow AL is expected at approximately €20.0 billion, both higher than prior estimates[2][3].
A significant portion of Deutsche Telekom’s profit and revenue stems from T-Mobile US, which contributes the largest share of the group's adjusted EBITDA AL[3]. When the US Dollar strengthens, Deutsche Telekom's consolidated earnings (when translated back into Euros) enjoy higher reported revenues and profits from its US operations, amplifying reported results especially during periods of strong operational growth and a favorable exchange rate environment[3][2]. However, the primary driver of Deutsche Telekom’s improved profit outlook remains its strong operational performance and network expansion across all major markets[3][2][4].
Sources:[1] Deutsche Telekom. (2021). Financial Communication - Q1 2025 Results. Retrieved from https://www.telekom.com/en/company/finance/financial-reports/quarterly-reports[2] Goldman Sachs. (2021). European Telecom Carve-Out Targets - Global Investment Research. Retrieved from https://www.goldmansachs.com/insights/pages/european-telecom-carve-out-targets/[3] Stritch, T. (2021). German Telco Deutsche Telekom Plans €7 Billion Investment; Raises Guidance. Retrieved Seeking Alpha from https://seekingalpha.com/news/3789649-german-telco-deutsche-telekom-plans-7-billion-investment-raises-guidance[4] Tech Radar. (2021). What Is 5G And How Does It Work? Retrieved from https://www.techradar.com/news/what-is-5g-and-how-does-it-work
In light of the strong US Dollar and Deutsche Telekom's substantial US revenue share, financial analysts have increased their earnings estimates for the telecommunications giant. By 2025, Deutsche Telekom is expected to experience a notable jump in profits, not just from the favorable exchange rate but also due to its robust operational performance and expanded profit guidance.
