Deutsche Telekom DTE.DE
What does Deutsche Telekom do?
Deutsche Telekom is one of the largest telecommunications companies in the world and offers mobile, fixed-line, broadband and internet services as well as IT and digital solutions. The group earns money mainly from monthly fees paid by private and business customers for mobile and fixed-line connections, from sales of devices, and from wholesale services for resellers and virtual network operators. In addition, it provides telecommunications and IT services to business customers.
The business is divided into the regions Germany, United States and Europe, as well as the Systems Solutions and Group Development segments. The US subsidiary T-Mobile US is particularly significant and contributes a large share of revenue and earnings. In Germany and several European countries, Telekom is among the leading providers with its own network infrastructure. Its competitive position rests on network quality, customer base and economies of scale, while the market is characterized by intense competition and high investment needs.
Score profile
Rank vs. Telecom Services (17 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Deutsche Telekom ranks in the middle in the group Telecom Services (5.3/10). On growth, the company ranks above average in the group Telecom Services (7.6/10). On valuation (higher = cheaper), the stock ranks in the middle in the group Telecom Services (4.7/10). On financial strength, Deutsche Telekom ranks above average in the group Telecom Services (6.8/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 10.1x | 8.7x | better than 35 % |
| Trailing P/E | 14.6x | 11.8x | better than 29 % |
| PEG ratio | 1.9x | 1.6x | better than 37 % |
| EV/EBITDA | 6.6x | 7.7x | better than 68 % |
| Price/sales | 1.0x | 1.0x | better than 50 % |
| Price/book | 2.0x | 1.4x | better than 32 % |
| Revenue growth | 7.5% | 3.7% | better than 79 % |
| Earnings growth | 15.5% | 0.0% | better than 74 % |
| Gross margin | 43.9% | 56.9% | better than 21 % |
| Operating margin | 23.9% | 12.9% | better than 79 % |
| Net margin | 7.3% | 8.8% | better than 44 % |
| Return on equity | 15.4% | 11.6% | better than 68 % |
| Debt/equity | 160.4% | 91.3% | better than 32 % |
| Current ratio | 1.0x | 0.9x | better than 74 % |
| Free cash flow yield | 23.1% | 8.3% | better than 97 % |
| Dividend yield | 3.9% | 3.9% | – |
| Payout ratio | 56.2% | 46.2% | – |
| Beta | 0.34 | 0.62 | – |
Valuation: what is Deutsche Telekom worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Deutsche Telekom a model range of 22.33 EUR to 35.81 EUR per share.
18 analysts, average rating “Buy”, average price target 35.92 EUR (+38.6%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The number of mobile and broadband customers and the average revenue per customer determine recurring income.
- The performance of the US subsidiary T-Mobile US strongly affects revenue, earnings and currency effects.
- Efficiency in network operations and the expansion of fiber and 5G networks support customer retention and margins.
Risks
- Intense price competition and regulatory intervention can put pressure on revenue and margins in core markets.
- Network expansion and spectrum auctions require permanently high investment, which limits financial flexibility and distributions.
- Dependence on the US business brings currency risk and concentration in a single, fiercely contested market.
What to look for with Deutsche Telekom
Adjusted EBITDA after leases and free cash flow show how much operating earnings power remains for debt reduction and distributions after heavy network investment.