Deutsche Telekom AG: Analysts Upgrade Predictions After Strong 2024 Results

Deutsche Telekom AG (DTE) has once again exceeded analyst expectations, reporting strong financial results for the 2024 fiscal year. The German telecommunications giant's adjusted earnings before interest, taxes, and amortization after leases (EBITDA AL) grew by 6.2% to €43.0 billion, surpassing the approximately €43.0 billion forecast by the company in November. This marks the third consecutive year that DTE has exceeded its own guidance.

The company's total revenue increased by 3.4% to €115.8 billion, while service revenues grew by 3.9% to €96.5 billion. Free cash flow AL grew by 18.7% to €19.2 billion, and adjusted net profit increased by 18.3% to €9.4 billion. Deutsche Telekom's CEO, Tim Höttges, attributed the company's success to its strong growth across all business areas and the continued momentum of its strategic flywheel.



Analysts have been updating their predictions for DTE following the strong results. Deutsche Bank, for instance, raised its target price for DTE's shares to €31 from €28, citing the company's ability to exceed its own guidance and the likelihood of further growth in 2025. Goldman Sachs also maintained its 'Buy' rating on DTE, with a target price of €29. Other analysts, such as JPMorgan and Bernstein, have also revised their target prices and ratings for DTE's shares.



Deutsche Telekom's strong performance in 2024 was driven by several key factors:

1. Germany: Strong growth in fiber use: Deutsche Telekom's fiber-optic network gained popularity, with more than 10 million households now able to subscribe to a fiber rate plan. The gigabit network added 472,000 new customers in 2024, a 61% increase from the previous year. This growth in fiber use contributed to the company's overall revenue and earnings growth.
2. United States: Net customer additions continue: T-Mobile US, a subsidiary of Deutsche Telekom, continued its industry-leading growth in 2024. The company reported 6.1 million new postpaid mobile customers, including 3.1 million phone customers. This strong customer growth drove T-Mobile US' service revenues up by 4.5% and adjusted EBITDA AL up by 8.1% compared to 2023.
3. Europe: Seven years of earnings growth: Deutsche Telekom's European operations also contributed to the company's overall performance, with seven consecutive years of earnings growth.

Deutsche Telekom expects to maintain its growth momentum in 2025. The company forecasts adjusted EBITDA AL to increase by around 4.5% to approximately €44.9 billion, adjusted free cash flow AL to grow by around 4.0% to around €19.9 billion, and adjusted earnings per share to increase by around 9.0% to around €2.00. Additionally, the company plans to distribute a record dividend of €0.90 per share and to conduct share buy-backs of up to €2 billion in 2025.



In conclusion, Deutsche Telekom AG's strong 2024 results have led analysts to upgrade their predictions for the company. With a solid performance across its business areas and a positive outlook for 2025, DTE continues to be an attractive investment opportunity in the telecommunications sector.