An article by Hannes Wittig, Head of Investor Relations Deutsche Telekom.
Last Friday, the Deutsche Telekom stock fell sharply. The closing price was around 9 percent below the previous day's price. Such a price drop is unusual, and deserves a closer look. The most recent volatility measure of the T-Share was 0.7. This means that the fluctuation range of the T-share is usually significantly lower than the DAX average.
What happened? In the U.S., Bloomberg reported that Amazon.com was negotiating with all mobile network operators (T-Mobile, Verizon, AT&T, and Dish) to develop a very low-cost mobile offering for its Prime customers. In view of the widespread use of Amazon Prime, this speculation initially caused a great deal of uncertainty among investors in telecommunications stocks. In the hours that followed, T-Mobile, Verizon and AT&T denied that they were talking to Amazon about such an offer. Amazon also stated that the company currently has no plans for a mobile offering in Prime. There was no official statement from Dish; the dish network is currently still under construction.
In the U.S., market participants have taken a close look at this, and the prices of U.S. mobile carriers have since recovered somewhat. Investors continue to take a wait-and-see approach to Deutsche Telekom shares.
So here is some background:
- The fact that Dish is entering the market as a new entrant is not unexpected. The American mobile market has always been very competitive - this is nothing new.
- T-Mobile has been consistently successful in this market environment since the turnaround in 2012 and regularly acquires around 5 million new postpaid customers per year. Also in 2023 5.3 to 5.7 million are expected!
- For the future, T-Mobile has a handful of special trump cards: T-Mobile has the best network, and the lead seems difficult to catch. T-Mobile is recognized as the cheapest of the major carriers. T-Mobile still has huge growth potential in rural areas, which make up around 40 percent of the country – at the moment, its market share is growing by more than one percent per year! In addition, T-Mobile is gaining in business customers and wireless broadband connections.
- Over the past 10 years, T-Mobile shares have risen by more than 700 percent. This has also benefited Deutsche Telekom shares, which have outperformed the Dax significantly during this period.
So the following still applies: #wewontstop