Raise forecasts: Deutsche Telekom shares stronger: expectations exceeded in the first quarter | news

In addition, the Group has increased the forecast for AL free cash flow and adjusted EBITDA AL for the current year.

Overall, the Bonn-based company achieved organic sales growth of 1.7% in the quarter. This was lower than the previous quarter with 2.3%. However, sales of major services without sales of equipment totaled a 10% increase.

In the first quarter, the group’s sales increased 6.2% to 28.023 billion euros, analysts expected only 27.866 billion euros. Adjusted EBITDA AL increased 6.8% to 9.873 billion versus a consensus forecast of 9.548 billion. Adjusted Core AL EBITDA increased 8.5% without the change in business practices and end-device leasing accounting in the United States.

In the January-March period, consolidated net profit increased to € 3.949 billion (previous year: € 0.936 billion). Analysts only expected € 1.075 billion here. Here, in addition to the good operating business, the sale of the business in the Netherlands and a stake in fiber optic plus helped quadruple profits. On an adjusted basis, it increased 86 percent to € 2.238 billion, here the market consensus was € 1.479 billion.

Free cash flow AL increased by 46% to 3.781 billion euros. This was also much more than analysts expected at € 2.567 billion.

In mobile communications, Deutsche Telekom in Germany experienced contract customer growth with its own brands of 193,000 for the full year. Germany’s operating segment increased total revenue in 2021 by 0.9% to € 6.0 billion. Adjusted EBITDA AL grew even more: 3.6 percent to € 2.4 billion.

In Europe, however, sales fell 0.9%, but here Adjusted EBITDA AL increased 3.2%. The systems business also experienced a 1.9% decline in sales, but remained operational and adjusted in the profit zone at € 73 million.

For the current year, Telekom has announced an Adjusted EBITDA AL of more than EUR 36.6 billion (2021: EUR 37.3 billion). So far, the company had announced around 36.5 billion euros. The fact that these indicators are expected to decrease over the year is due to the deconsolidation of T-Mobile Netherlands and a change in the accounting for terminal equipment leasing in the United States. Telekom justified the increase in the forecast with the higher forecast of the US subsidiary T-Mobile US. The forecasts for the other divisions of the Group remain unchanged.

The free cash flow AL should now be exceeded by around 10 billion euros instead.

This is how the Deutsche Telekom stock reacts

After a weak start, Deutsche Telekom papers made their way into the black on Friday. The increase in forecasts for the Bonn company year did not initially have a positive effect. Just like the strong quarterly figures, they weren’t really surprising anymore, retailers said. However, JPMorgan expert Akhil Dattani spoke of robust results, which should translate into slight increases in consensus estimates. However, he sees the biggest driver for the higher estimates in the ongoing favorable wind from the strong US dollar.

Meanwhile, Telekom shares are catching up and gaining 1.86 percent to € 18.28 via XETRA. The day before, T-Shares was able to demonstrate their defensive skills and good news was probably anticipated with a high from the beginning of September 2021.

The next target for the share price would now be the mid-August high of around EUR 18.92, which was the highest level since the beginning of 2002 for equities at the time. At the beginning of March, during the general weakness of the stock market due to the war in Ukraine, they fell to 14.47 euros, the lowest since autumn 2020, which served as support.

Telekom followed its US subsidiary T-Mobile US with a higher annual target for adjusted operating profit including leasing costs (Ebitda AL). Jefferies Research analyst Ulrich Rathe spoke of a strong quarter and drew a positive conclusion. If anything, there is only a fly in the ointment with a weakness in the German landline business. The goals wouldn’t have changed without T-Mobile US, he added. T-Mobile US had already set an upside target at the end of April.

Barclays analyst Simon Coles pointed out that the Bonn-based company performed well and was the first European telecom company to raise its outlook this quarter. The US subsidiary T-Mobile US is primarily responsible for this, but things are looking good in the rest of the business as well.

FRANKFURT (Dow Jones) / (dpa-AFX)

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