“Take the issue seriously”: Telekom raises its forecast and feels the harsh winds caused by Starlink

Telekom is having a more than solid summer. Sales and earnings increase. The shareholders should benefit from this. In the USA, however, Musk's Starlink plans are giving the Bonn-based company new competition to which the DAX group has to react.

Thanks to robust growth, Deutsche Telekom is optimistic about the future. “We will not only achieve our results, but exceed them,” said CEO Tim Höttges. He announced an increase in the dividend by ten percent to 1.10 euros as well as additional share buybacks worth up to two billion euros. As usual, he followed the lead of the US subsidiary T-Mobile in his forecasts for the year as a whole and raised them slightly.

The Bonn-based group increased its annual sales by 5.5 percent to 31 billion euros in the third quarter. Operating profit grew by eight percent and, at more than twelve billion euros, slightly exceeded market expectations. Another bright spot was once again T-Systems. The IT services and cloud subsidiary increased its order intake by more than a quarter to 883 million euros thanks to rapidly growing demand for AI applications. Telekom therefore wants to present details of the planned expansion of its AI data center in Munich next week. However, Höttges expressed reservations about a possible application by Telekom to operate a European AI gigafactory. It is too early for that.

A stockbroker described Telekom's quarterly results as strong. However, investors would have hoped for a slightly higher dividend. In addition, ongoing speculation about a merger between Telekom and T-Mobile weighed on sentiment. As a result, Telekom shares were unable to maintain their premarket gains and temporarily lost more than three percent.

This topic has dominated the headlines for months. According to the considerations, the two companies should be merged into a joint holding company. However, experts doubt that the company's value can be increased through a merger as hoped. In addition, US investors are not interested in bringing a European company with comparatively weak growth into their portfolio through the merger.

The main motive for a merger is the growing competitive pressure from Starlink, the satellite subsidiary of the space company SpaceX. Billionaire Elon Musk's company recently secured a package of radio frequencies in the USA to offer satellite-based calls and Internet connections via standard smartphones. “The topic needs to be taken seriously,” emphasized Marcel Tietjen, technology expert at the consulting firm BearingPoint. "Two years ago, satellite reception on cell phones was still considered a niche." According to a survey conducted by his company, a third of all mobile phone customers in Germany could now imagine switching to Starlink.

“We have to assume that there will be four mobile phone providers in the USA in the future,” said Höttges. He takes the threat of increased competition very seriously and expects profit margins to deteriorate. The Telekom boss recently described the competition with Musk as the biggest challenge, alongside the upheavals caused by AI. According to a media report, SpaceX is toying with the takeover of the US mobile operator Boost, a subsidiary of the satellite operator EchoStar. Starlink requires a traditional cell phone network because direct connections from the smartphone to the satellite only work when there is a clear view of the sky.

The EU has reserved a large proportion of the licenses due to be awarded next year for domestic providers. T-Mobile parent Telekom wants to apply for these frequencies together with Telefonica from Spain, Vodafone from Great Britain and Orange from France. Companies must quickly offer appropriate tariffs with satellite reception, advised BearingPoint expert Tietjen. "Who operates the satellites becomes less important than the question of who owns the customer."