Deutsche Telekom AG (ETR:DTEGn) has announced its third revision to its earnings outlook for 2023, following a strong Q3 performance. The upward revision is influenced by lower integration expenses from the T-Mobile US (NASDAQ:TMUS) and Sprint merger and operational earnings. The company now expects its adjusted EBITDA to reach approximately €41.1 billion ($44.02 billion), up from previous estimates.
The telecommunications giant also anticipates its free cash flow after leases to exceed €16.1 billion for the year, marking a €100 million increase from prior estimates. This growth is largely attributed to reduced U.S. integration costs, which played a significant role in boosting the company's Q3 net profit to €1.92 billion, a rise of 21.9% from €1.58 billion during the same period last year.
However, after adjustments for special factors like non-recurring financial activities from the previous year, there was a net profit dip of 5.9% to hit €2.3 billion. Despite this dip and a quarterly revenue drop of 4.9%, Deutsche Telekom (OTC:DTEGY) reported robust growth for Q3 2023. Organic net revenue rose by 0.7% to €27.56 billion, while high-margin service revenues increased by 4.1%. Adjusted EBITDA AL grew organically by 6.2% to €10.5 billion.
In light of this strong performance, the company has raised its full-year guidance for the third time this year and announced plans to increase its dividend to 77 eurocents per share, an increase from last year's dividend of 70 eurocents per share, along with share buybacks of up to €2 billion set for 2024. However, the adjusted earnings per share are expected to exceed €1.60 but mark a decrease from the previous year's figure of €0.48 to €0.46.
Deutsche Telekom continues to lead the German market with 96,000 broadband net additions and maintained its growth trend in Europe. Despite the deactivation of SIM cards issued during the coronavirus pandemic, T-Mobile US retained its industry leadership in customer net additions.
Although the company faced higher capital expenditure in Germany, it managed to significantly increase its free cash flow AL by 61.4% to €4.7 billion in Q3. This strong financial performance underscores Deutsche Telekom's resilience and ability to deliver consistent growth amidst challenging market conditions.
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