Deutsche Telekom lifts 2026 outlook, plans up to €2 billion buyback

By Emanuele Berro

Nov 5 (Reuters) - Deutsche Telekom raised its 2026 outlook for the third time this year on Thursday, proposed a 10% dividend increase and announced plans for a share buyback of up to 2 billion euros ($2.25 billion) in 2027, extending strong momentum driven by its U.S. business.

The Bonn-based telecom group lifted its full-year earnings forecast after reporting third-quarter results that topped analyst expectations, supported by continued strength at T-Mobile US and solid momentum in its German mobile and fibre businesses.

"We are well on track for 2026. We will not only meet our targets, but exceed them," Chief Executive Tim Hoettges told reporters.

Shares in the company were down 2.5% by 1152 GMT.

One trader said investors were focusing on a lower-than-expected dividend and renewed concerns about a potential full merger with T-Mobile US.

BUYBACKS OR MERGER?

The latest buyback plan follows Deutsche Telekom's decision in August to expand its 2026 repurchase programme, reflecting management's view that the company's shares remain undervalued.

The focus on dividends and buybacks comes as investors debate whether excess cash should be returned to shareholders or preserved for a potential transaction involving T-Mobile US, a prospect some regard as complex and uncertain.

Hoettges said Deutsche Telekom was preparing for the prospect of SpaceX entering the U.S. wireless market, adding that investors were already pricing in lower long-term profitability for incumbent operators.

He also said it was too early to say whether Deutsche Telekom would apply to host a European AI gigafactory, with the company focused on securing industrial customers to underpin the economics of any project.

($1 = 0.8880 euros)

(Reporting by Emanuele Berro in Gdansk; Editing by Matt Scuffham)