Deutsche Telekom Stock Is a Cheap Play on T-Mobile’s Dominance

The launch of Deutsche Telekom’s 5G network in Dusseldorf in June.

Getty Images

An alternative way for investors to play


growth and future buyback program is via shares of its largest stakeholder,

Deutsche Telekom

Europe’s leading telecom operator by revenue traces its roots to a German state-owned business privatized in 1995. It has had a presence in the U.S. market since 2001, and operates in about a dozen other European countries outside of Germany.

Deutsche Telekom’s (ticker: DTE.Germany) American depositary receipts trade over the counter in the U.S. securities market under the ticker DTEGY.

The pitch for the stock is simple: When backing out the value of DT’s stake in

T-Mobile US

(TMUS), worth some $90 billion at current market levels, the remaining European telecom business is dirt cheap—just $4 billion. And there’s room for improvement there as the company pays down debt and potentially turns cash flow toward a higher dividend.

New Street’s James Ratzer, who leads the research firm’s European Communication Services team, estimates that DT’s stock should be worth about 25 euros ($24.93) per share by the sum of its parts, versus the stock’s recent €18.75. If T-Mobile stock rises to New Street’s price target, the value of DT shares would balloon to €30, per Ratzer’s math.

The catalyst for closing the gap may be DT reaching its debt-paydown target and hiking its dividend payout. The stock currently yields about 3.4% annually, versus the sector average of more than 5%, according to Ratzer. A dividend announcement could come in November, based on past years.

DT stock provides the potential for investors to ride T-Mobile’s growth and buyback in the U.S. while also getting an undervalued European telecom with the potential for dividend income growth.

Write to Nicholas Jasinski at

Leave a Reply

Your email address will not be published. Required fields are marked *