European telcos raise payouts as earnings improve in Q3

Space Exploration Technologies

Yesterday 13:48

By Cian Muenster, Emanuele  Berro and Leo Marchandon
Nov 5 (Reuters) - European telecom companies are raising shareholder payouts and nudging up forecast as stronger cash generation from network investments, cost cuts and consolidation begins to feed through to results.
Germany's Deutsche Telekom DTEGn.DE raised its full-year earnings outlook for the third time this year on Thursday, after quarterly earnings beat analyst expectations. It also proposed a 10% dividend increase and announced plans for a share buyback of up to €2 billion ($2.25 billion) in 2027.
Chief Executive Tim Hoettges said the company remained on track to exceed its 2026 targets, helped by strength at T-Mobile US and momentum in Germany's mobile and fibre businesses.
Swisscom SCMN.S, which improved its 2026 outlook slightly, also plans to raise its dividend to 27 Swiss francs ($33.16) per share from 26 francs.
The Swiss group reported nine-month EBITDAaL (core earnings after lease expenses) of 3.83 billion Swiss francs, up from 3.77 billion a year earlier. It now expects operating free cash flow above 2 billion francs for the full year and leverage — the debt-EBITDAaL ratio — to drop below its prior estimate of around 2.3.
Shares in Swisscom gained 1.9% in afternoon trading.
Last week, France's Orange ORAN.PA lifted its 2026 core profit growth target, citing strong growth in Africa, the Middle East, Poland and Spain.
Orange said revenue in Africa and the Middle East rose 14.2% in the third quarter, while it completed its integration of MasOrange as it expands activities in Spain.
Its local competitor Bouygues BOUY.PA, Nordic telecom Telia TELIA.ST and Belgium's Proximus PROX.BR also raised their outlook.
The results suggest Europe's largest telecom operators are benefiting from improving profitability after years of heavy spending on fibre and mobile networks.
Investors remain focused on how companies deploy growing cash flows. 
Deutsche Telekom shares fell after its results, with traders citing concerns over capital returns and the possibility of a future transaction involving T-Mobile US. Operators across the sector, meanwhile, continued to weigh shareholder payouts against acquisitions and investment in new technologies such as satellite connectivity.

 ($1 = 0.89 euros)
 ($1 = 0.81 Swiss francs)

 (Reporting by Cian Muenster, Emanuele Berro and Leo Marchandon; Editing by Joyjeet Das)
 ((Cian.Muenster@thomsonreuters.com;))