Deutsche Telekom AG (ETR:DTEGn) (DTEGY.PK) anticipates receiving dividends from its American subsidiary, T-Mobile US (NASDAQ:TMUS), for the first time in the fourth quarter of 2023. The German telecommunications major also plans to sell a portion of its T-Mobile US shares on the market next year, while maintaining majority ownership in the business. The exact number of shares to be sold has not been finalized.
The decision follows T-Mobile US's announcement of a shareholder return program, which includes up to $19 billion in dividend payments and share buybacks from the fourth quarter of 2023 to the end of 2024. This move aligns T-Mobile US with peers like AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) who regularly pay dividends to shareholders. As part of this program, T-Mobile US will pay quarterly dividends totaling around $3.75 billion from October 1, 2023, to December 31, 2024.
Deutsche Telekom (OTC:DTEGY) expects to receive approximately $1.8 billion in dividend payments, after taxes, over the next five quarters. The first quarterly dividend from T-Mobile US, amounting to around $750 million, is set to be paid in the fourth quarter of this year. In addition, T-Mobile intends to increase the dividend per share by around 10 percent annually.
As of mid-July 2023, Deutsche Telekom held a 51.4% equity interest in T-Mobile US. This stake increased recently as the German parent refrained from participating in the first phase of a buyback program initiated by its U.S. subsidiary last year.
Despite these developments, Deutsche Telekom confirmed that T-Mobile US's shareholder-return program does not alter its own dividend policy or debt-reduction targets. The company emphasized that maintaining a secure and sustainable majority in T-Mobile US remains a strategic objective for the group. The telecom giant also aims to return to a comfortable debt corridor - the ratio of net debt to adjusted EBITDA between 2.25 and 2.75 - by the end of 2024.
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