DT.Telekom (XETR: DTE) registered growth in customer and financial metrics on both sides of the Atlantic to end the year above targets. DTE’s share price has seen a steady incline and now trades above a 22-year high as a result, after gaining 13.75% year-to-date.
Key to the robust share price performance was consistently better-than-expected earnings for all quarters of 2022. To add the cherry on top, the European Union (EU) selected DTE as the lead coordinator for developing the EU Wide communications infrastructure under The European Quantum Communication Infrastructure (EuroQCI) Initiative. This will likely see DTE’s share price experience some tailwinds while reinforcing its position as the largest telecoms company in Europe.
Source: Koyfin
Above is the Year-to-date performance of DTE compared to the DAX 30 Index. DTE has mirrored the performance of the DAX30 and currently outperforms the index by a small margin, with a growth of 13.75 compared to 11.15%. Given that DTE’s guidance for 2023 is positive, it is probable that the upward trajectory is only in its infancy.
Technical
Bulls have spearheaded DTE’s share price above highs last seen in 2001 as the business performance encouraged buying, quarter by quarter. A consolidation on declining volumes formed a rectangle pattern before a breakout to the upside of the €20.630 per share level occurred. The level now acts as support, while resistance currently stands at the €22.400 per share level, based on the Fibonacci Extension Golden Ratio of 61.8%.
If strong earnings entice bulls, the share price will likely see some upside price action with the resistance level at €22.400 per share level of interest in a bull case. The Relative Strength Index points to overbought conditions, which might be extended longer as bulls overrun the market.
Alternatively, if bears disregard all the green lights surrounding DTE, price will likely be dragged down towards the €20.630 per share level. This will probably be supported by RSI moving towards oversold conditions if price declines on high volumes.
Fundamental
Full-year Revenue surged 6.1% to €114B, while operational performance was highlighted by a resounding 7.7% growth in Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA). However, the aforementioned is only the tip of the iceberg in DTE’s brilliant performance for the financial year. Net profit grew by a staggering 91.6% to €8B, while Free Cash Flows extended by 30% to end the year.
DTE’s 48.4% ownership primarily drove the top-line performance in a similar business across the Atlantic, T-Mobile (NASDAQ: TMUS). TMUS realised record services revenues for 2022, up 5% and growth in the total customer base of 4% to 113M customers, leading to an 8 consecutive year of growth in its customer base. While the U.S. customer growth was impressive, Europe’s was much the same, with a gain of 8.4% and 4.8% in prepaid and broadband customers, respectively.
According to DTE’s 2023 Guidance, “growth continues unabated”. If growth continues on this trajectory, DTE’s share price will likely face minimal friction to the upside as bullish investors flock to growth fundamentals.
After discounting for future cash flows, a fair value of €23.13 per share was derived. Price currently trades at an 8% discount to the fair value, leaving some room for the upside.
Summary
DTE’s 2022 performance and 2023 guidance will potentially strengthen the backbone of bullish investors in the medium to long term. If price breaks above the 21.416 per share level, bulls will likely be inclined to take the share price higher. The overall outlook for DTE is positive.
Sources: DT.Telekom AG NA, Reuters, Nasdaq, Wall Street Journal, TradingView, Koyfin