(Bloomberg) — Deutsche Telekom AG said it plans to offer a buyback program of up to 2 billion euros ($2.2 billion) in 2025 and will rely on artificial intelligence to become more efficient over the next three years.
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Europe’s largest telecommunications operator will also propose a dividend of 90 cents per share for the 2024 financial year, up from 77 cents last year, the company said in a statement released Thursday ahead of the capital markets day. The share buyback program for next year follows a similar buyback of 2 billion euros in 2024.
Deutsche Telekom is outperforming its peers in Europe, buoyed by subscriber growth at T-Mobile US Inc., where the company has a majority stake. This stake gave the company the financial flexibility to deploy higher shareholder returns than most of its peers, and the company said it would use additional cash to continue to increase its stake in the operator American telephone number or to repurchase shares.
Deutsche Telekom’s financial outlook indicates that the company is allowing itself flexibility to obtain new cash returns for shareholders, thereby increasing their stake in T-Mobile or “the outside chance that they might need to be willing to react in the event of a much greater value-creating operation in the United States.” is emerging,” James Ratzer, an analyst at New Street Research, said in a note Thursday.
Deutsche Telekom shares rose 1.3 percent to 27.09 euros as of 12:48 p.m. in Frankfurt trading. They’re up about 25% so far this year.
CEO Tim Höttges said the operator plans to deploy more artificial intelligence tools internally, initially focusing on customer service tools, such as self-service applications and a customer service. AI-based messaging. Deutsche Telekom already uses Meta Platforms Inc.’s Llama generative AI, although Höttges said the company is “agnostic” in choosing large language models.
Deutsche Telecom is building at least three data centers, which will initially require 300 megawatts of power and could eventually grow to one gigabyte. Höttges said they have locations in mind for additional sites, although finding the right land, energy and water supplies has been difficult.
“It’s not easy to compete with us, because now we also have liquidity,” he told a news conference on Thursday. “We no longer have to ask: How can we create a majority in the United States? Where do we invest? Or where can we find enough funds to invest?
The company said annual service revenue growth is expected to average around 4% through 2027. Organic service revenue grew 3.6% in 2023.
Adjusted earnings before interest, taxes, depreciation, amortization and after leases are expected to grow by an average of 4% to 6% annually during the period, the company said. Deutsche Telekom forecast adjusted Ebitdaal growth of around 6% for this year.
(Updates with analyst, CEO comments from fourth paragraph)
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