I am happy to share my thoughts and my blog post with you here:
Depot Update:
With over +90 % price increase Deutsche Telekom is one of the strongest individual stocks in my portfolio. And that's without any tech hype or meme magic. The share is solid, delivers dividends, grows in the background - and is simply overlooked by many investors.
Time to take another thoroughly look at it again:
What's behind the success? What is the valuation? How does Telekom compare internationally? And: Is it worth buying - or would it be better to cash in and move on?
🧮 Fundamental data: Deutsche Telekom can do something - you just have to look
With over 112 billion euros in sales one of the largest telco groups in Europe - and thanks to its US subsidiary T-Mobile US it has also long been well positioned globally.
👉 2023 in figures (adjusted):
- Revenue: ~€ 112 billion
- EBITDA AL: ~€40.5 billion
- Free cash flow AL: € 16.1 bn
- Profit (adjusted): ~€7.9 billion
- Dividend: 0,77 € per share (approx. 3.5 % yield)
Particularly strong: The free cash flow is really generous compared to many other DAX companies. Deutsche Telekom uses it for dividends, buybacks and debt reduction.
🔍 Valuation: Not a bargain, but definitely not too expensive
Let's take a look at the valuation:
- P/E ratio (adjusted): ~19
- EV/EBITDA: ~6
- Free cash flow yield: ~10 %
- Dividend yield: 3.5-4% (rising)
What I like: The share is not overheatedbut not a penny stock either. Compared to other telcos (Vodafone, Telefónica etc.) the balance sheet quality is better. balance sheet quality is betterthe cash flows are more stableand the management is oriented.
A conservative DCF model (with 3 % growth, 7 % discounting) results in a fair value fair value of between € 35 and € 44 - therefore potential of around 15-40 % to the current share price.
🏗️ Infrastructure: fiber optics, 5G, cloud - much invested, much expected
Deutsche Telekom invests annually >17 billion euros in networks and technology. Why?
- 5G expansion almost complete in Germany (99% coverage planned by 2025)
- Fiber optic expansion is in full swing - copper to disappear completely by 2030
- Europe-wide strategyMarket leader in many countries (Greece, Hungary, Czech Republic ...)
- Private campus networks, cloud services, IoT - New sources of revenue away from the classic telephone connection
You can grumble about the "dusty" Telekom brand - but from a technical point of view, DT is the the leader in Europe.
🇺🇸 Growth driver USA: T-Mobile runs & delivers
However, the real growth miracle lies on the other side of the Atlantic:
- T-Mobile US (majority shareholding) is a real growth driver
- After the merger with Sprint: efficiency gains, customer growth, market share gains
- 114 million customers, market share over 30 %
- Industry leader in customer growth and service revenue growth
The US subsidiary not only brings margins - it also gives Telekom Currency diversification, higher valuation level (US market pays higher multiples) and a completely different pace of growth.
💥 Competition: between price war and premium strategy
It remains exciting in Germany:
ProviderStrengthWeakness
Telecoms
Best network, strong brand
Highest prices
O2 / Telefónica
Aggressive on prices, growing
No own fixed network
Vodafone
Cable network, combined products
Customer service, mobile phone quality
1&1
Price breaker, own infrastructure under construction
Still hardly any network coverage
Telekom pursues premium strategy:
The focus is on bundled products ("MagentaEINS"), network quality and customer loyalty. The churn rates are lower, the margins higher - but: You have to defend this position. defend this position. 1&1 in particular will put more pressure on the company in the medium term.
⚖️ Risks? Of course. But controllable
1. Regulation
The Federal Network Agency has a say in grid access and pricing. This limits imagination - but also ensures stability. No Wild West, no margin explosion - but no price explosion either.
2. Investment burden
Deutsche Telekom has to invest billions in networks every year. No future without investment. But: DT earns enough to cope with this. And the assets are long-lived.
3. Huawei dismantling
All Huawei components must be removed from German 5G networks by 2029. This is annoying, but not an existential crisis. Deutsche Telekom has been working on alternatives for years (Ericsson, Nokia, OpenRAN).
4. Competition & price war
Low-cost providers (especially O2, 1&1) will continue to exert pressure on Telekom in the future. But as long as Telekom remains betterit can justify justify premium prices.
5. USA risks
Currency risks, possible US regulation, competition with Verizon & AT&T. But: T-Mobile US is a real cash cow - and even running a buyback program.
🌱 Opportunities: Fiber, cloud, US profits - there's still room for improvement
What makes me particularly optimistic:
- T-Mobile US will probably pay dividends for the first time in 2025+
- Cash flows are increasingalso in Europe
- Fiber take-up (i.e.: customers who also book!) increases with every year
- Fewer special costsIntegration is coming to an end
- Buybacks and dividend increase are starting - also noticeable for shareholders
🧠 Personal classification & strategy
I like Deutsche Telekom because it brings calm to my portfolio.
No wild fluctuations. No 50% down in three days. Instead: Predictability, dividends, moderate growth, infrastructure moat.
The share is not a high-flyer. But it delivers. And it will continue to deliver.
✅ Conclusion - buy, hold, sell?
CriterionEvaluation
Balance sheet quality
🟡 Solid (highly indebted, but stable)
Dividend yield
🟢 Rising, well covered
Growth USA
🟢 Strong due to T-Mobile US
Valuation (DCF / P/E ratio)
🟢 Favorable to fair
Competitive advantages
🟢 Network, brand, scale
Risks (regulation etc)
🟡 Existing, but manageable
🟢 Recommendation: Hold - or savings plan in case of price weakness
I continue to hold my position - and would even add to it in the event of a setback. For me, Deutsche Telekom is a cornerstone of the defensive part of the portfolio. A cash machine with prospectsunderestimated, but solid as a rock.
If you are looking for dividends, stability and a moderate increase in value, this is the right stock for you.
No investment advice!
