Deutsche Telekom Sets Aggressive Financial Targets Amid Strong Performance

Deutsche Telekom has not only delivered on its promises but is now raising the bar. The telecommunications giant has outlined ambitious goals for 2025, reporting increased revenues and earnings alongside a record dividend and expanded share buyback plans. However, CEO Tim Höttges tempered the corporate optimism with pointed political commentary, urging the EU to revise regulations and improve conditions for AI data center investments.

While the operational performance suggests strong momentum, market observers are likely to focus intently on whether the company’s 2026 outlook can reliably meet elevated expectations.

Currency Headwinds Fail to Dent Solid 2025 Gains

The company’s latest financial results surpassed its own guidance. Group revenue for 2025 climbed to €119.1 billion, marking a 2.9% increase, with organic growth reaching 4.2%. Adjusted EBITDA (EBITDA AL) rose to €44.2 billion, up 2.8% reported and 4.7% on an organic basis.

A significant factor was foreign exchange pressure, particularly from a weaker U.S. dollar, which weighed on the reported figures. Currency effects were quantified at approximately €0.6 billion in the fourth quarter alone. On a constant currency basis, the adjusted EBITDA AL would have been €45.5 billion, slightly exceeding the company’s most recently raised target of €45.3 billion.

Free cash flow (AL) also advanced, increasing by 2.0% to €19.5 billion. In the final quarter, the adjusted EBITDA AL of €10.8 billion came in just ahead of the analyst consensus estimate of €10.7 billion.

Divergent Regional Performance: U.S. Growth and German Investment

The primary growth engine once again was the United States. T-Mobile US boosted its revenue by 4.1% in 2025, with service revenue jumping 7.8% and operating profit growing by nearly 7%. Looking ahead, the subsidiary forecasts its adjusted operating profit will rise from $33.9 billion to between $37.0 and $37.5 billion in 2026. Deutsche Telekom, which holds a 52.8% stake, is reportedly exploring options to increase its ownership further.

The picture in Germany was more mixed. Revenue there saw a slight decline of 0.4% to €25.6 billion, attributed mainly to lower equipment sales. However, service revenue grew organically by 1.1%, and the adjusted operating result increased by 1.7% to €10.7 billion.

Should investors sell immediately? Or is it worth buying Deutsche Telekom?

The company highlighted record-breaking progress in its fiber-optic network expansion, adding 2.5 million new connections in 2025. This brings the total number of households reachable to 12.6 million, with a target of at least 25 million by 2030. Furthermore, Deutsche Telekom has now surpassed the milestone of 2 million FTTH (Fiber-to-the-Home) customers in its domestic market.

Shareholder Returns and a Forward-Looking 2026 Framework

For the 2025 financial year, the board will propose a dividend of €1.00 per share. The group is also continuing its capital return strategy via buybacks, with a program of up to €2 billion planned for 2026. Since the start of the year, the company has already repurchased 10,010,643 of its own shares.

The guidance for 2026 sets a confident tone:
– Adjusted EBITDA AL: Approximately €47.4 billion (representing growth of roughly 7%)
– Free Cash Flow AL: Around €19.8 billion
– Adjusted Earnings Per Share: About €2.20 (approximately a 10% increase on a currency-adjusted basis)

According to Reuters data, the EBITDA forecast exceeded market consensus, while the free cash flow projection was slightly below it. A potential catalyst for future growth is the expectation that from 2027 onward, free cash flow could accelerate as capital expenditures in the U.S. begin to moderate.

The equity market has responded favorably recently. Shares closed yesterday at €33.03, recording a gain of 21.30% over the past 30 days. While this price remains about 7.69% below the 52-week high of €35.78, it trades comfortably above the 50-day moving average.

CEO Höttges concluded with a clear message to policymakers. He criticized the current EU regulatory trajectory for not mandating network usage fees from large U.S. tech platforms and pointed to delays in securing government funding for AI “Gigafactories.” The underlying warning is unambiguous: without suitable regulatory and support frameworks, the company is unwilling to commit to such large-scale projects.