Deutsche Telekom Q3 2025 slides: Raises guidance despite mixed results

Introduction & Market Context

Deutsche Telekom presented its Q3 2025 results on November 13, showing a mixed performance that nonetheless led the company to raise its full-year guidance. The telecommunications giant reported earnings per share of €0.55, exceeding analyst expectations of €0.5083 by 8.2%, while revenue of €28.9 billion fell slightly short of the forecasted €29.14 billion.

The market reacted cautiously to these results, with Deutsche Telekom (ETR:DTE) shares trading down 1.14% at €27.31 in pre-market activity, as investors weighed the revenue miss against the positive EPS surprise and improved guidance.

Quarterly Performance Highlights

Deutsche Telekom delivered solid organic growth for the first nine months of 2025, with service revenues increasing by 3.7%, adjusted EBITDA AL (after leases) growing by 4.4%, and free cash flow AL rising by 6.8% on an organic basis. Adjusted earnings per share showed strong growth of 9.5% year-over-year.

As shown in the following comprehensive financial overview:

For Q3 specifically, revenue increased to €28.9 billion from €28.5 billion in the same period last year, representing a 1.5% year-over-year growth. Service revenues grew by 2.2% to €24.7 billion, while adjusted EBITDA AL remained nearly flat with a modest 0.2% increase to €11.1 billion.

However, free cash flow declined by 9.2% to €5.6 billion, reflecting ongoing investments in AI and digital infrastructure. This decline was not prominently featured in the presentation materials but was disclosed in the earnings call.

Segment Analysis

T-Mobile US continues to be the growth engine for Deutsche Telekom, delivering exceptional customer acquisition results. The US subsidiary reported a record 2.3 million total postpaid net additions in Q3 2025, up significantly from 1.6 million in Q3 2024. Postpaid phone net additions reached 1,007,000, while broadband customer net additions jumped to 560,000.

This strong customer momentum is illustrated in the following chart:

T-Mobile's financial performance was equally impressive, with revenues increasing by 9.0% year-over-year to US$21.9 billion and adjusted EBITDA AL growing by 5.5% to US$8.4 billion.

In contrast, the German segment faced challenges, particularly in fixed-line services. Total revenues in Germany decreased by 1.8% year-over-year to €6.35 billion, while adjusted EBITDA AL remained essentially flat with a minimal 0.1% increase to €2.73 billion.

The presentation highlighted that this performance was impacted by tough comparables from Q3 2024:

Fixed service revenue in Germany declined by 0.3% year-over-year, a significant drop from the 2.1% growth seen in Q3 2024. Mobile service revenue growth also slowed slightly to 1.8% from 2.1% a year earlier.

The European segment delivered moderate growth, with revenues increasing by 2.2% to €3.18 billion and adjusted EBITDA AL growing by 4.6% to €1.24 billion. However, this represented a slowdown from the 8.0% EBITDA growth recorded in Q3 2024.

Strategic Initiatives

Deutsche Telekom continues to invest heavily in network infrastructure, extending its leadership in both fiber and 5G coverage. The company has expanded its fiber network to reach 11.8 million homes in Germany, up from 9.3 million a year ago, while 5G coverage has reached 99% of the German population and 89% across Europe.

The network expansion strategy is illustrated in this chart:

Artificial intelligence has emerged as a key strategic focus for Deutsche Telekom, with AI initiatives being implemented across all business segments. The company reported that its internal AI knowledge bot is now used by more than 80,000 employees, while AI-driven coding has accelerated development with up to 14% of code being AI-created.

The company's AI-powered customer service chatbot "FragMagenta" is delivering a 55% solution rate, and the Magenta AI assistant has been rolled out across most markets. These initiatives form part of Deutsche Telekom's broader digital transformation strategy:

Guidance and Outlook

Despite the mixed quarterly results, Deutsche Telekom raised its full-year 2025 guidance. The company now expects adjusted EBITDA AL of approximately €45.3 billion (up 5% year-over-year) and free cash flow AL of around €20.1 billion (up 4%). Adjusted EPS is projected to reach €2.00, representing 9% growth.

The updated guidance is detailed in the following chart:

CEO Tim Höttges emphasized the company's commitment to innovation during the earnings call, stating, "We won't stop. We are acting." He highlighted the transformative impact of AI across the business, saying, "There is no area, no process that is not changed by AI."

Looking further ahead, Deutsche Telekom projects adjusted EPS to reach €2.50 by 2027, supported by continued investments in network infrastructure and digital transformation. The company also plans to pay a dividend of €1.00 per share and has announced a share buyback program of up to €2 billion in 2026.

While Deutsche Telekom's presentation painted an optimistic picture of its future prospects, the company still faces significant challenges, including intense broadband competition in Germany, slow growth in the broadband market, and ongoing investment requirements for network infrastructure. The decline in the stock price following the earnings announcement suggests that investors remain cautious about these headwinds despite the raised guidance and positive long-term outlook.

Full presentation:

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