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
This material has been prepared by Jason Price. Jason Price is an authorised representative (AR 000296877) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573) (62C), and a Director of S3 Consortium Pty Ltd (trading as StocksDigital).
This material is general advice only and is not an offer for the purchase or sale of any financial product or service. The material is not intended to provide you with personal financial or tax advice and does not take into account your personal objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by 62C, Jason Price, StocksDigital, any of their related body corporates or any other person. To the maximum extent possible, 62C, Jason Price, StocksDigital, their related body corporates or any other person do not accept any liability for any statement in this material.
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.
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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.
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