1、M IdeaDeutsche Telekom|EuropeVery attractive valuation given recent positive US dynamicsWe update forecasts post results.We note a number of positive moving parts at TMUS(better service revenue growth,recent M&A,DISH spectrum sale,stronger share price).While German competition is intense,we view the

2、 reaction to the Q2 results print(-5%)as excessive.Overweight.Top Pick.Background.i.DT shares have returned+13%this year,under-performing the broader European Telco sector by-5ppts(incl.dividends),and in particular the likes of Orange(by-36ppts)and BT(by-41ppts)-as per Exhibit 1.DT has under-perform

3、ed over the past six months(US$weakness,weaker TMUS share price,German competition,Group management changes).DT performance is far stronger on an 18mth view(total returns of+53%);ii.DT recently reported Q2 results(research comment here).Highlights included Q2 Group EBITDAaL growth of ca+5%,as well a

4、s 2025 EBITDAaL&FCF guidance upgrades.However,shares fell-5%on the day(German competition,consensus miss,see below);iii.DT has increased its equity stake in TMUS from 50%(1yr ago),to 52%today(via the share re-purchase program).TMUS remains the largest/most valuable Telco operator in the world(with a

5、 market cap of$280bn);iv.DT hosted a Capital Markets Day in October 2024.Key management guidance included a 4yr EBITDAaL growth target of+4%to+6%pa(Dec 2023a-27e),and a 2027e EPS target of ca 2.50/sh(MSe:2.68/sh);v.TMUS recently closed the acquisitions of Lumos,Metronet(both fibre service providers)

6、and US Cellular.Many positive moving parts at TMUS(MSR,DISH spectrum,M&A,cash taxes)-recent TMUS share price strength(worth+3 per DT sh).i.TMUSs Q2 print saw a positive share price reaction(+6%)-driven by accelerating service revenue growth(Q1:+5.2%,Q2:+6.1%),and an upgrade to net adds guidance.Inde