By Najat Kantouar

Deutsche Telekom said it plans to accelerate growth in revenue and earnings through 2027, turning to artificial intelligence to boost its top line and trim costs.

The German telecommunications group said Thursday that expectations of faster growth mean it aims to have 15 billion euros ($16.41 billion) in available cash by 2027 to either increase its stake in T-Mobile US or launch additional buybacks. This is after taking into account investment needs and dividend payments, it said.

Deutsche Telekom's bet on the U.S. market--where it completed a merger of its majority-owned T-Mobile US business with Sprint in 2020--has helped the group become Europe's largest telecoms company. The German group had a 50.4% stake in T-Mobile US at the end of June.

The company said AI would play a key role in its strategy in coming years. It is looking to tap into revenue opportunities valued at around 1.5 billion euros with additional products and services including AI offerings, phone insurance and payments. AI and automation will also help to bring down costs as a percentage of service revenue by 2027, Deutsche Telekom added.

T-Mobile US last month struck a deal with ChatGPT maker OpenAI to build an artificial-intelligence platform designed to help the telecom company gain and retain customers.

Deutsche Telekom expects net revenue and service revenue to grow at an annual rate of 4% between 2023 and 2027. The company's previous targets for the 2020-24 period called for annual revenue growth of 1% to 2%.

The group's adjusted earnings before interest, taxes, depreciation and amortization and after lease expenses--a closely watched metric in the industry--is expected to rise by between 4%-6% for the same period. It had targeted annual growth of 3% to 5% in the 2020-24 period.

Growth will be driven by the U.S. as the company projects revenue from the rest of its operations will rise by 2.5% to 3% through 2027, with adjusted earnings increasing by between 3% and 4%.

The group separately said it plans to launch a new share buyback of up to 2 billion euros next year and to propose an increase in its dividend for 2024 to 90 European cents from the 77 European cents it paid out for last year.

Write to Najat Kantouar at najat.kantouar@wsj.com

(END) Dow Jones Newswires

October 10, 2024 02:59 ET (06:59 GMT)

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