Deutsche Telekom lifts full-year outlook again as SpaceX push weighs on its shares

Third-quarter results beat expectations

Deutsche Telekom said on Thursday, 5 November, that revenue rose 5.5% to 31.1 billion euros in the third quarter, while operating profit climbed 8% to 12.2 billion euros, slightly ahead of market expectations. US subsidiary T-Mobile US drove much of the growth. One report put the nominal revenue increase at 7.5%, with 5.5% after currency adjustments.

For the full year the group nudged its outlook up. Operating profit is now expected at 47.6 billion euros instead of 47.5 billion, and free cash flow at 20.1 billion euros instead of 20 billion. The company plans a dividend for 2026 of 1.10 euros per share, 10% more than before, and buybacks of up to 2 billion euros next year. T-Systems, its IT and cloud unit, lifted order intake by more than a quarter to 883 million euros on rising demand for AI applications.

Chief executive Timotheus Höttges said the group would go beyond its targets.

“We will not only achieve our results, but exceed them.”

Operating profit, previous guidance47.5

Operating profit, new guidance47.6

Free cash flow, previous guidance20

Free cash flow, new guidance20.1

Operating profit, previous guidance

47.5 billion euros

Operating profit, new guidance

47.6 billion euros

Free cash flow, previous guidance

20 billion euros

Free cash flow, new guidance

20.1 billion euros

Data from the article text

Shares fall despite the strong numbers

Telekom shares initially gained nearly 2% in early Frankfurt trading, but later lost more than 3% at one point and ended among the few losers in the Dax. The main drag was a slide in T-Mobile US shares after SpaceX bought mobile spectrum in the US, which could bring in another competitor. Telekom holds roughly 55% of T-Mobile US, a stake one report values at just over 80 billion euros. A trader called the quarter strong but said investors had hoped for a bigger dividend, while ongoing merger speculation weighed on sentiment.

Starlink moves toward a fourth US network

On Thursday Höttges acknowledged publicly for the first time that Elon Musk could become a direct rival in the US, and said the group is preparing for that scenario.

“We take this competition very seriously. We also believe we have to assume that it is coming.”

SpaceX listed in the US in June and runs a mobile offering under the Starlink name. T-Mobile US was Starlink's first partner in the US, but SpaceX now wants to become a full mobile operator itself. On Wednesday, 4 November, SpaceX and the chipmaker Qualcomm agreed a partnership to build a nationwide 5G network in the US, with tens of thousands of sites and construction starting next year. At the press conference Höttges said the US could have four mobile operators in the medium term, and put the cost of an integrated offering at at least 200 billion dollars. He also noted that billionaire Charlie Ergen had failed in an earlier attempt to build a fourth US network.

Earlier in the week Höttges had told a small group of journalists that Musk, using newly acquired 800 MHz spectrum, could buy a US telecom company rather than build one, and that Telekom could be a candidate. When asked again he played this down as a purely theoretical discussion, saying the idea was not on the company's radar and that it did not want to sell.

Merger plan and the federal stake

Citing insiders, Handelsblatt reported that Höttges is pushing a full merger with T-Mobile US into a joint holding and is seeking support from Chancellor Friedrich Merz and the federal government. According to WiWo, other media say he has put the plan on hold. The federal government holds 28.6% of Telekom directly and indirectly, making it the largest shareholder.

Matthias Lützen, a portfolio manager at Union Investment, has doubts about the idea.

“I was skeptical from the start, because the industrial logic never made sense to me.”

Other experts doubt that a combination would lift the company's value as hoped, and US investors are reportedly not keen on adding a European company with comparatively weak growth. A Handelsblatt commentary argued that the state stake matters more than ever, since a merger would dilute Berlin's share and turn the Bonn-based group into a global company with German roots.