Deutsche Telekom Q2 2025 slides: guidance raised again as growth accelerates

Introduction & Market Context

Deutsche Telekom (OTC:DTEGY) (XETRA:DTE) presented its Q2 2025 results on August 7, 2025, revealing strong performance across key segments and prompting the company to raise its full-year guidance for the second time this year. Despite the positive results, Deutsche Telekom’s stock price declined by 2.44% on the day of the announcement, closing at €31.16.

The telecommunications giant continued its trajectory of consistent growth, building on the momentum seen in Q1 2025 when the company reported an 11% increase in adjusted earnings per share and a 3.5% rise in organic service revenue. The Q2 results further solidified this upward trend, with improvements across most business segments.

Quarterly Performance Highlights

Deutsche Telekom reported organic service revenue growth of 3.7% for the first half of 2025, with adjusted EBITDA AL (after leases) increasing by 5.2% and free cash flow AL rising significantly by 17.8%. Adjusted earnings per share grew by 6.4% compared to the same period last year.

As shown in the following chart of financial performance across segments, the company achieved strong organic growth in adjusted EBITDA AL across all business units:

T-Mobile US (NASDAQ:TMUS) remained the primary growth driver, with 6.0% organic growth in adjusted EBITDA AL, while the European segment delivered an impressive 6.7% increase. The German market showed more modest growth at 2.1%, and Systems Solutions contributed 4.9% growth.

In the US market, T-Mobile delivered a record quarter for customer acquisition, adding 1.7 million total postpaid customers in Q2 2025, up from 1.3 million in the same quarter last year:

This exceptional performance in customer growth led T-Mobile US to raise its 2025 guidance for customer additions to 6.1-6.4 million, an increase of 500,000 at the midpoint. Postpaid phone net additions reached 830,000, while 5G broadband customer net additions grew to 454,000, establishing an industry-leading position with a total customer base of 7.3 million.

Detailed Financial Analysis

The company’s Q2 2025 reported financials showed continued growth despite some headwinds from foreign exchange rates and phasing effects:

Group revenue increased by 1.0% year-over-year to €28,671 million in Q2 2025, while service revenues grew by 1.2% to €24,384 million. Adjusted EBITDA AL rose by 1.7% to €10,999 million, with the non-US segments contributing a 3.3% increase to €3,701 million.

Net profit showed significant improvement, increasing by 25.2% to €2,615 million, while adjusted earnings per share grew by 2.5% to €0.51. Free cash flow AL decreased by 6.7% to €4,878 million in Q2 due to foreign exchange impacts and working capital phasing, but remained strong for the half-year with a 17.8% increase to €10,528 million.

The following chart illustrates the factors affecting free cash flow AL and adjusted net profit:

In Germany, Deutsche Telekom achieved its 35th consecutive quarter of EBITDA growth, with adjusted EBITDA AL increasing by 2.0% to €2,605 million despite a slight decrease in revenues. The European segment delivered its 30th consecutive quarter of organic EBITDA growth, with a 6.3% increase.

Systems Solutions showed particularly strong performance, with order entry growing by 11.5%, revenues increasing by 3.3%, and adjusted EBITDA AL rising by 10.2% compared to Q2 2024.

Strategic Initiatives

Deutsche Telekom continued to invest in network infrastructure, extending its leadership in both fixed and mobile networks. The company expanded its fiber-to-the-home (FTTH) coverage to 21.8 million homes in Germany and 11.1 million in the EU, while 5G coverage reached 99% in Germany and 82% across the EU:

The company also made significant progress in its AI and digital transformation initiatives, with more than 16 million users utilizing its apps and 4.8 million monthly active users in the Magenta Moments program. The AI-powered chatbot "FragMagenta" achieved a solution rate of over 50% in the first half of 2025, deflecting 1.6 million calls from service agents.

In the US, T-Mobile successfully closed the Metronet and UScellular transactions, while also selling part of its 3.45GHz spectrum for US$2 billion and agreeing to sell its 800MHz spectrum. Deutsche Telekom’s stake in T-Mobile US reached 52.1% as of July 18, 2025, strengthening its position in the US market.

Forward-Looking Statements

Based on the strong performance in the first half of 2025, Deutsche Telekom raised its full-year guidance for the second time:

The company now expects adjusted EBITDA AL to exceed €45.0 billion (an increase of €50 million from previous guidance) and free cash flow AL to exceed €20.0 billion (also up €50 million). Adjusted earnings per share guidance was raised from approximately €1.90 to approximately €2.00, representing a 9% increase over the 2024 result of €1.83.

This updated guidance aligns with the company’s trajectory observed in Q1 2025, when Deutsche Telekom projected group EBITDA of €45 billion and free cash flow of €20 billion for the year.

The company summarized its key messages for the first half of 2025, emphasizing consistent reliable growth despite some headwinds in Germany:

Deutsche Telekom confirmed it remains on track for both its full-year 2025 targets and its longer-term CMD 2023-27 guidance. The company highlighted its extended network leadership, record customer growth in the US, new growth opportunities from successful M&A transactions, and strong progress with AI-powered digitization.

With leverage well within its comfort zone and a growing stake in T-Mobile US, Deutsche Telekom appears well-positioned to continue its growth trajectory through the remainder of 2025 and beyond.

Full presentation:

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