Deutsche Telekom’s hot streak continues

• Deutsche Telekom has just presented its results for up to 30 September 2025
• It has raised 2025 guidance for the third time this year
• T-Mobile US remains a strong growth engine, while FTTP is a bright point in Germany
• Meanwhile, AI remains at the core of everything

Deutsche Telekom (DT)’s CEO, Tim Höttges, has painted a glowing picture of the German telco’s performance for the year to date, declaring that DT is doing well in an otherwise difficult market environment where “investments are being cut everywhere, dividends reduced and staff cut back”.

Fresh from a recent joint press conference with Nvidia, when DT and the US AI infrastructure giant presented their new AI factory in Munich, Höttges made it clear at a results briefing on Thursday that the motto “we won’t stop” remains a guiding principle, with ongoing plans to invest in 5G, fibre, AI, upskilling staff and more besides.

First, the results for the third quarter (Q3) and first nine months of the year. 

Revenue growth remained relatively modest, increasing by 1.5% to €28.9bn in Q3, and 3% to €87.3bn in the first nine months. Adjusted earnings before interest, taxes, depreciation and amortisation after leases  (EBITDAaL) rose 3.2% to €33.4bn in the first nine months.

Höttges drew attention to the fact that organic service revenue growth amounted to 3.7% for the year to date. He also spoke approvingly of the 4.4% rise in adjusted EBITDAaL on an organic basis to €33.4bn in the nine-month period, as well as the 6.8% rise in free cash flow and 9.5% growth in adjusted earnings per share. 

He was keen to note that DT is raising its dividend to €1 for 2025, pointing out that this is “the highest dividend ever paid in our company’s history”. Furthermore, DT intends to buy back shares for €2bn in the 2026 financial year.

Overall, he said the group as a whole is “on course”. DT is also raising its full-year 2025 guidance for the third time this year, largely owing to the ongoing strong performance of T-Mobile US and the consolidation of UScellular since the beginning of August. 

DT now expects to report group adjusted EBITDAaL of around €45.3bn, up from the previous guidance of over €45bn. The forecast for free cash flow after leases now stands at around €20.1bn, up from more than €20bn.

Not everything is rosy in the DT world, of course. While T-Mobile US, Europe and even enterprise unit T-Systems developed according to plan, Telekom Deutschland produced a below-target 1.4% rise in adjusted EBITDAaL in the first nine months, as well as a 1.5% decline in revenue. 

According to DT CFO Christian Illek, Germany continues to experience weak market growth and strong competition. Fibre-to-the-home (FTTH) remains one of the more positive developments here, with a record 155,000 new customer additions reported for the third quarter. However, penetration is still too low for the group’s liking, at just 16.1%. The FTTP network now passes 11.8 million households. 

Illek noted that fibre investments are paying off. “Is it fast enough? I would like it to be faster. But you can see that the trend is pointing in the right direction,” he said. 

AI in focus

Meanwhile, Höttges tends to spend much of his time talking about DT’s focus on and investment in AI, and said AI is now being used in all customer service areas at the operator. 

A recent trip to the Cyber Security Summit in Tel Aviv has also clearly fuelled his ambition to accelerate the telco’s digital transformation.  

Höttges added: “There is no area, no process that is not being changed by AI in our company. And I would also say that this is not just about efficiency targets but also about being able to serve our customers better.”

For its customers, DT recently launched the so-called AI phone, (the T Phone 3), an affordable smartphone device that integrates generative AI (GenAI) capabilities from AI tech partner Perplexity. 

According to Höttges, the Android-based AI phone is attracting customer interest in Germany, where Apple iPhones tend to be more popular, but is especially well received in other DT markets in Europe where Android-based phones have a stronger market share. 

“What is particularly interesting is that customers are interested in the AI functionality… We are one of, if not the strongest, distributors for Perplexity in the non-US markets. But Picsart and ElevenLabs functionalities are also in high demand,” he said. 

On the topic of the €1bn AI factory with 10,000 Nvidia Blackwell GPUs, Höttges said Nvidia’s investment share is “about half”. DT is investing in the datacentre, connectivity, software and security, and the cloud infrastructure.

“I believe we are now providing an answer to sovereignty. I also don’t think it’s a bad thing that you now have American chips, but otherwise only operate the European and German infrastructure here. Because as long as we don’t have any chips, it’s better to build a factory like this than not to build a factory at all,” Höttges added. 

He confirmed that DT remains keen to build one of up to five so-called AI gigafactories – large-scale facilities equipped with approximately 100,000 state-of-the-art AI chips. “This is our next big step, which we are currently planning internally”, he said, noting that more should be revealed in the next two to three months.

- Anne Morris, Contributing Editor, TelecomTV