European telcos raise payouts as earnings improve in Q3

European Telecoms Raise Dividends and Outlook as Q3 Earnings Improve

Improved Earnings Drive Dividend Increases and Upgraded Forecasts

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.

Deutsche Telekom: Upgraded Outlook and Shareholder Rewards

Germany's Deutsche Telekom 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.

CEO Commentary and Strategic Progress

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: Higher Dividends and Improved Financial Metrics

Swisscom, which improved its 2026 outlook slightly, also plans to raise its dividend to 27 Swiss francs ($33.16) per share from 26 francs.

Financial Performance and Outlook

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.

Market Reaction

Shares in Swisscom gained 1.9% in afternoon trading.

Orange and Other Operators: Regional Growth and Upgraded Targets

Last week, France's Orange lifted its 2026 core profit growth target, citing strong growth in Africa, the Middle East, Poland and Spain.

Revenue Growth and Expansion

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.

Other Operators' Outlooks

Its local competitor Bouygues, Nordic telecom Telia and Belgium's Proximus also raised their outlook.

Industry Trends: Profitability and Investor Focus

The results suggest Europe's largest telecom operators are benefiting from improving profitability after years of heavy spending on fibre and mobile networks.

Investor Considerations and Capital Allocation

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.

Currency Exchange Rates

($1 = 0.89 euros)

($1 = 0.81 Swiss francs)

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