Deutsche Telekom meets Q2 profit expectations, lifts guidance

Deutsche Telekom reported second-quarter adjusted EBITDA AL of 11 billion euros, aligning with analyst expectations, driven by sustained growth in both Germany and the U.S. The telecoms giant subsequently raised its 2025 core profit guidance to over 45 billion euros and free cash flow AL expectations to over 20 billion euros. This upward revision was primarily attributed to the strong performance of its U.S. subsidiary, T-Mobile US, which exceeded expectations for postpaid net customer additions, signaling robust operational momentum.

Analysis

Deutsche Telekom reported second-quarter adjusted EBITDA AL of 11 billion euros, a figure that met analyst expectations and demonstrates steady operational execution. The company's management highlighted sustained growth momentum in its key markets of Germany and the United States as the primary driver. More significantly for the forward outlook, the company issued a slight but positive upward revision to its 2025 guidance, now anticipating core profit of 'more than 45 billion euros' and free cash flow of 'over 20 billion euros'. This increased confidence is directly attributed to the strong performance of its U.S. subsidiary, T-Mobile US, which recently raised its own annual forecast after exceeding Q2 wireless subscriber addition targets. This underscores the critical role of the U.S. operations in Deutsche Telekom's consolidated growth and profitability profile.

Key Decisions for Investors

• Investors should view the upward revision to 2025 core profit and free cash flow guidance as a key positive signal, reflecting management's increased confidence in sustained long-term growth.
• Given the explicit link between the guidance raise and T-Mobile's performance, continued monitoring of TMUS's subscriber growth and competitive standing in the U.S. market is crucial for evaluating Deutsche Telekom's forward earnings potential.
• While the improved outlook is favorable, the fact that Q2 core earnings were in-line with, rather than significantly ahead of, expectations suggests the positive news may be partially priced in, warranting a measured assessment of the stock's current valuation.