Stock Exchange: XETRA

Published 19-MAY-2015 00:00 A.M.

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1 minute read

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Overview: Deutsche Telekom AG (ETR:DTE) is a German multinational telecommunications company operating in more than 50 countries. The company is listed on all major German stock exchanges as well as the OTCQX (USA). Deutsche Telekom is the market leader in the domestic German market and also operates in most European markets. The U.S. brand ‘T-Mobile US’ is one of the fastest-growing wireless companies in the United States.

Catalysts: Deutsche Telekom is strategically well placed in the domestic market (Germany) as well as in key European markets. We expect low single-digit revenue growth and a stable dividend payout ratio. The company declared a dividend of €0.50 for the financial year 2014 with the ex-dividend date on 22 nd May 2015. The board aims to grow its dividend per share over the next three years in line with free-cash-flow growth, however, a guaranteed minimum of €0.50 per share applies.

Hurdles: A potential exit of Greece from the eurozone as well as risks associated with the quantitative easing program of the European Central Bank (ECB) are general risks for European equities.

Investment View: Deutsche Telekom offers profitable exposure to the German telecommunications sector. The company is well-positioned in the domestic and European markets and experiences growth momentum in the U.S. The dividend yields 3% at current prices. Incorporating single-digit earnings growth in our valuation our 12-month price target equals €17.50. We initiate coverage with a ‘buy’ recommendation.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.

 

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