Deutsche Telekom Leverages AI for Accelerated Growth and Cost Reduction

Deutsche Telekom Looks to AI to Boost Revenue Growth, Trim Costs -- 2nd Update

Deutsche Telekom said it plans to accelerate growth in revenue and earnings through 2027, turning to artificial intelligence to boost its top line and trim costs. The German telecommunications group said Thursday that expectations of faster growth will leave it with 15 billion euros ($16.41 billion) in available funds by 2027. The company aims to use this surplus to either increase its stake in T-Mobile US or launch fresh buybacks, on top of a program of 2 billion euros it will carry out next year, dividend payments and investments. Deutsche Telekom has been looking to bolster its exposure to the U.S., a bet that helped it become Europe's largest telecoms company with a market value that rose about 63% since the last time it provided mid-term targets in May 2021 to some 133 billion euros. A merger of T-Mobile US with Sprint was completed in 2020, creating a giant that soon became the second-biggest U.S. cellphone carrier by subscribers but diluting Deutsche Telekom's stake in the enlarged business. The German company achieved majority ownership in the U.S. business last year, and had a stake of 50.4% at the end of June. Deutsche Telekom said AI would play a key role in its strategy in coming years. It is looking to tap into revenue opportunities valued at around 1.5 billion euros with additional products and services including AI offerings, phone insurance and payments. T-Mobile US last month struck a deal with ChatGPT maker OpenAI to build an AI platform designed to help it gain and retain customers. AI and automation will also help the German group to bring down costs, with savings of 700 million euros expected by 2027, it said. Deutsche Telekom expects net revenue and service revenue to grow at an annual rate of 4% between 2023 and 2027. The company's previous targets for the 2020-24 period called for annual revenue growth of 1% to 2%. The group's adjusted earnings before interest, taxes, depreciation and amortization and after lease expenses--a closely watched metric in the industry--is expected to rise by between 4%-6% for the same period. It had targeted annual growth of 3% to 5% in the 2020-24 period. Deutsche Telekom forecast adjusted earnings per share would rise to around 2.50 euros by 2027, ahead of analysts' expectations of 2.44 euros, according to consensus expectations provided by the company. Growth will be driven by the U.S. as the company projects revenue from the rest of its operations will rise by 2.5% to 3% through 2027, with adjusted earnings increasing by between 3% and 4%. The group said it plans to launch a new share buyback of up to 2 billion euros in 2025, building on a repurchase program of the same size it is carrying out this year, and to propose an increase in its dividend for 2024 to 90 European cents from the 77 European cents it paid out for last year. Deutsche Telekom has been trying to reduce its debt in recent years, but now expects its ratio of net debt to adjusted earnings to stay at the current level in 2027. Meanwhile, it plans to continue to invest in expanding its fiber networks and 5G network coverage in Germany and its other European operations in the next three years. Write to Najat Kantouar at [email protected]

Deutsche Telekom Looks to AI to Boost Revenue Growth, Trim Costs -- Update

Deutsche Telekom said it plans to accelerate growth in revenue and earnings through 2027, turning to artificial intelligence to boost its top line and trim costs. The German telecommunications group said Thursday that expectations of faster growth mean it aims to have 15 billion euros ($16.41 billion) in available cash by 2027 to either increase its stake in T-Mobile US or launch additional buybacks. This is after taking into account investment needs and dividend payments, it said. Deutsche Telekom's bet on the U.S. market--where it completed a merger of its majority-owned T-Mobile US business with Sprint in 2020--has helped the group become Europe's largest telecoms company. The German group had a 50.4% stake in T-Mobile US at the end of June. The company said AI would play a key role in its strategy in coming years. It is looking to tap into revenue opportunities valued at around 1.5 billion euros with additional products and services including AI offerings, phone insurance and payments. AI and automation will also help to bring down costs as a percentage of service revenue by 2027, Deutsche Telekom added. T-Mobile US last month struck a deal with ChatGPT maker OpenAI to build an artificial-intelligence platform designed to help the telecom company gain and retain customers. Deutsche Telekom expects net revenue and service revenue to grow at an annual rate of 4% between 2023 and 2027. The company's previous targets for the 2020-24 period called for annual revenue growth of 1% to 2%. The group's adjusted earnings before interest, taxes, depreciation and amortization and after lease expenses--a closely watched metric in the industry--is expected to rise by between 4%-6% for the same period. It had targeted annual growth of 3% to 5% in the 2020-24 period. Growth will be driven by the U.S. as the company projects revenue from the rest of its operations will rise by 2.5% to 3% through 2027, with adjusted earnings increasing by between 3% and 4%. The group separately said it plans to launch a new share buyback of up to 2 billion euros next year and to propose an increase in its dividend for 2024 to 90 European cents from the 77 European cents it paid out for last year. Write to Najat Kantouar at [email protected]

Deutsche Telekom Targets Faster Growth Helped by AI

Deutsche Telekom said it plans to accelerate its revenue and earnings growth through 2027, helped by the use of artificial intelligence, and launch a 2 billion-euro ($2.19 billion) share buyback program in 2025. The German telecommunications group said Thursday that it expects net revenue and service revenue to grow at an annual rate of 4% between 2023 and 2027. The company's previous targets for the 2020-24 period called for annual revenue growth of 1% to 2%. The group's adjusted earnings before interest, taxes, depreciation and amortization and after lease expenses--a closely watched metric in the industry--is expected to rise by between 4%-6% for the same period. It had targeted annual growth of 3% to 5% for the metric in the 2020-24 period. Deutsche Telekom separately said it plans to launch a new share buyback of up to 2 billion euros next year and to propose a dividend increase to 90 European cents from 77 European cents. Write to Najat Kantouar at [email protected]