Spotlight on the world’s strongest brands: Deutsche Telekom

Deutsche Telekom is a leader in the integrated telecommunications sector, with over 240 million mobile customers, 25 million fixed lines and over 20 million broadband lines.[1] In the US, the company’s brand is T-Mobile, while in Germany the Telekom brand is used.

Deutsche Telekom generates at least two-thirds of its revenues from the US, where it holds a c. 52% stake[2] in wireless network operator T-Mobile, the largest contributor to the company’s aggregate brand value.

The company points to AI and digitalisation as ways of further strengthening its leading position in customer engagement and innovation. In keeping with its core values of sustainable growth and transformation, in recent years it’s focused on deploying AI solutions targeting improved financial performance. The company’s chatbot has a track record of solving 50% of customer queries without human intervention,[3] saving on staffing costs. 

Ultimately, this allows the company to return more money to investors via dividends and buybacks.

Strong earnings and cashflow, with shareholder returns in focus

On a year-on-year basis, sales rose 3.4% and revenues rose 18.75% in the latest reporting period, surpassing analyst expectations in both cases.[4]

Deutsche Telekom’s strategy is focused on value rather than volume. The company comprises a portfolio of networks and services in its core markets, supporting consistent growth from revenues through earnings per share (EPS). It has also established a clear policy of paying dividends from EPS and has additional cash surplus to return cash to shareholders until 2027. 

The company has shown consistent double-digit EPS growth and consistent dividend growth over the past five years. In October, Deutsche Telekom announced a €2bn share repurchase programme, which is planned to complete by the end of 2025. 

Looking ahead, expectations for free cashflow and return on common equity (ROCE) are encouraging. Free cashflow is forecast to reach €21bn by 2027 (from €16.1bn in 2023), and ROCE is forecast to reach 9% by this date (up from 6% 2023).

What is the Deutsche Telekom brand worth?

BrandFinance® is the leading name in independent brand valuation. In its latest Global 500 publication, Deutsche Telekom is ranked 11th overall. For the past years it has been the single most valuable brand in Europe, and first in the telecommunications sector globally. 

The company’s brand value increased by 16% in 2025, and makes up one-quarter of the company’s total enterprise value.

As shown below, the consistent rise of Deutsche Telekom’s brand value has mirrored the trend in its market capitalisation. Since 2020, brand value and market cap have more than doubled, and Deutsche Telekom also managed to increase its dividends by 50%.

A structural beneficiary of German fiscal stimulus

Deutsche Telekom’s story is not only about its consumer customer base. Its B2B offering, albeit smaller, could be well placed to benefit from the German fiscal stimulus.  

The German cabinet is expected to provide details on spending plans later this year, with additional borrowing set to boost economic growth in the country over a period of several years. Assuming the coalition’s plan passes parliament, corporate income tax should also be lowered from 2028.

Together, these measures should provide structural support for many German corporates, with firms operating in security, digitalisation, cloud and defence particularly well placed, in our view.

Risks to consider

Most of the performance contribution for Deutsche Telekom has come from the US, where latest earnings were driven by over 6 million postpaid subscriber additions. USD-linked earnings could be influenced by trade developments, US recession concerns and US dollar weakness, although for the latter, the balance sheet impact on assets could largely be offset by debt.

Developments in Europe could also be a risk as the market is highly competitive and the Fiber to the Home rollout could cause higher capex (Germany has a low rank internationally when it comes to fiber optic network rollout, with a 20% fiber utilisation compared with Europe’s 35%).[5]

Growing competitive pressures in both the US and Germany could also potentially threaten the growth outlook. Potential overspending on fibre (or potentially even cable) acquisitions in the US is also a potential concern, with all of the big three telcos ramping up their fibre spending/M&A.

Our next blog will consider how Coca-Cola has built a brand with truly global reach, and how its business model is faring in today’s environment.

 

*For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an L&G portfolio. The above information does not constitute a recommendation to buy or sell any security.

[1] Source: Deutsche Telekom as at June 2025.
[2] Source: Deutsche Telekom as at 4 July 2025.
[3] Source: The Quiet AI Revolution at Deutsche Telekom: A Story of Bots, Culture, and Change | by Johnreesphotos | Medium
[4] Source: Deutsche Telekom Q1 2025 results presentation.
[5] Source: Company presentation.