The Telekom subsidiary T-Mobile US wants to buy back its own shares worth billions again.
BELLEVUE/BONN (dpa-AFX) – After the previously released 14 billion US dollars, company boss Mike Sievert plans to buy back his own shares for up to a little more than 15 billion dollars (14 billion euros) by the end of next year. Almost four billion dollars are to flow to shareholders through the payment of dividends. The total volume of the capital distribution program amounts to 19 billion dollars, the group announced on Wednesday in Bellevue.
This is made possible by a higher free cash flow.
By buying back shares, Deutsche Telekom has the medium-term opportunity to place shares on the market without endangering the “secure, sustainable majority” in the US subsidiary. The group can also soon look forward to the first dividend payment from the subsidiary. In mid-July, the Bonn parent held 51.4 percent of T-Mobile US. Sievert said Deutsche Telekom does not want to sell any shares directly to the subsidiary as part of this program.
Since the number of outstanding shares falls in the event of a buyback, Telekom can part with shares in the medium term and continue to hold the majority. A spokesman for the Bonn-based company has announced that it intends to place the shares on the market from the beginning of 2024.
“The exact number of T-Mobile US shares that Deutsche Telekom will sell has not yet been determined,” it said. Telekom currently holds around 605 million of the almost 1.2 billion outstanding T-Mobile shares. With a closing price of around $134 on Wednesday, the stock market value of the US subsidiary of the Bonn-based group is currently almost $158 billion. The Telekom package is worth the equivalent of around 75 billion euros. For comparison: the total market capitalization of Deutsche Telekom is slightly less than 100 billion euros.
Telekom receives dividend for the first time
T-Mobile US also announced that the company intends to pay a dividend of approximately $750 million to its shareholders in the final quarter of 2023. Just over half of this goes to Deutsche Telekom. From 2024, T-Mobile US plans to increase the payout by a tenth each year.
Only in the second quarter did the America subsidiary declare that it had already exhausted a large part of the authorized capital for share buybacks. So far, around 83.5 million shares have been bought back for $11.8 billion, it said at the end of July. By the end of September, management could have spent another $2.2 billion.
Nothing will change in Deutsche Telekom’s dividend policy: the adjusted earnings per share will continue to be decisive for the amount of the payout. “Of this, 40 to 60 percent should be distributed to the shareholders, with a minimum dividend of 60 cents per share,” the Dax group clarified.
T-Mobile US is largely responsible for the recent success of the German group and accounts for the lion’s share of the balance sheet. Most recently, Sievert made cuts: around 5,000 jobs are to be cut and some replaced by artificial intelligence (AI). The number corresponds to around seven percent of the total workforce.
JPMorgan leaves Deutsche Telekom at ‘Overweight’
The US bank JPMorgan has left Deutsche Telekom’s rating at “Overweight” with a price target of EUR 28.80. Analyst Akhil Dattani referred to the announcement of a share buyback program and dividends at T-Mobile US in a study available on Thursday. The US subsidiary of Telekom is no longer just “pure growth, but growth plus value”. The t-share itself remains a “top pick” in the sector for Dattani.
Goldman leaves Deutsche Telekom on ‘buy’ – target EUR 27.20
The US investment bank Goldman Sachs has left Deutsche Telekom (Deutsche Telekom) shares on “buy” with a price target of EUR 27.20 after announced dividend payments by the subsidiary T-Mobile US. T-Mobile US cash use has largely met expectations, analyst Andrew Lee wrote in a study published Thursday. At the same time, this should indirectly help the T-Share to a revaluation. Because: The subsidiary’s plans should support the parent company to increase its own payout ratio from around 4 percent in the current year to a mid to high single-digit percentage in 2024 and beyond.
In XETRA trading, Deutsche Telekom shares temporarily lost 0.05 percent to EUR 19.93. Meanwhile, shares of the Telekom subsidiary T-Mobile US lost 2.02 percent on the NASDAQ to 134.13 US dollars and are 0.28 percent higher at 134.50 US dollars before the market.
dpa-AFX
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