Deutsche Telekom Forges Satellite Alliance with Starlink to Reshape European Connectivity

A landmark partnership between Deutsche Telekom and SpaceX’s Starlink unit promises to redefine mobile communications across Europe. Announced at the Mobile World Congress in Barcelona, this collaboration will introduce satellite-based mobile services directly to smartphones in ten countries, eliminating the need for additional hardware. This technological leap is aimed at eradicating the continent’s persistent coverage gaps.

Financial Performance Provides Solid Backdrop

The satellite announcement coincides with the release of Deutsche Telekom’s robust annual figures. For 2025, group revenue reached 119.1 billion euros, representing organic growth of 4.2%. Adjusted EBITDA climbed to 44.2 billion euros.

The company’s U.S. subsidiary, T-Mobile US, continues to be the primary growth engine, reporting a 7.8% increase in service revenue and an operating profit rise of nearly 7%. Deutsche Telekom raised its stake in T-Mobile US to 52.8% in February and stated it does not intend to sell further shares in 2026.

Performance in the domestic German market presented a mixed picture. Total revenue saw a slight decline of 0.4% to 25.6 billion euros, attributed to weaker equipment sales. However, service revenue grew organically by 1.1%. The company reported record numbers in fiber optic expansion, adding 2.5 million new connections in 2025, bringing the total to 12.6 million reachable households. The target is at least 25 million by 2030.

Next-Gen Satellite Internet on the Horizon

The commercial launch of the Direct-to-Cell service is scheduled for 2028. At that time, approximately 140 million Telekom subscribers across ten European markets, including Germany, will gain access. Compatible smartphones will automatically switch to the satellite network when terrestrial signals fail, maintaining data, video, voice, and SMS availability.

Should investors sell immediately? Or is it worth buying Deutsche Telekom?

A key differentiator is that Deutsche Telekom will be the first European partner to utilize Starlink’s V2 technology. These second-generation satellites are designed to deliver genuine broadband speeds directly to smartphones, marking a significant advancement over currently available modified satellite services.

The Bonn-based conglomerate is not new to satellite connectivity. Its U.S. division, T-Mobile, launched similar services in the summer of 2025. The European expansion was widely anticipated and strategically positions Deutsche Telekom against rivals such as Telefónica and Orange, who are collaborating with AST SpaceMobile, and Vodafone, which has a partnership with Amazon.

Shareholder Returns and Forward Outlook

For the 2025 fiscal year, the management board has proposed a dividend of 1.00 euro per share. Concurrently, a share buyback program of up to 2 billion euros is planned for 2026. Since the start of the year, the company has already repurchased 11.15 million of its own shares.

Guidance for 2026 projects an adjusted EBITDA of approximately 47.4 billion euros, implying growth of about 7%. Free cash flow is expected to reach around 19.8 billion euros, with adjusted earnings per share forecast at about 2.20 euros (representing currency-adjusted growth of 10%).

Deutsche Telekom shares have gained nearly 20% since the beginning of the year, trading well above their 200-day moving average. The combination of pioneering satellite technology, solid financials, and a committed capital return policy is likely to bolster investor confidence further. The Annual General Meeting is scheduled for April 1, with Q1 2026 results to follow on May 13.