Investing.com — Kepler Cheuvreux has updated its recommendations on German telecom services stocks, maintaining a neutral stance on the sector while highlighting select opportunities among major players.
The research firm expressed a neutral view on the German telecom market overall, favoring companies with self-help earnings growth and non-telecom revenue momentum.
Despite the cautious outlook, analysts noted that valuations remain undemanding and capital returns attractive for certain stocks, potentially offering upside for investors with a 12-month-plus time horizon.
The market leader in German telecom services ranks as one of Kepler Cheuvreux’s preferred picks in the sector. While the firm maintains a neutral rating on Deutsche Telekom, it acknowledges the company’s attractive valuation and capital return profile.
Analysts noted a lack of near-term catalysts in the second half of 2026 but suggested that investors could revisit the stock as 2027 approaches. The company’s position as the dominant player in the German market underpins its ranking.
Deutsche Telekom has agreed to acquire Fiberhost and Inea from Macquarie Asset Management for approximately €1 billion. The transaction is intended to strengthen the position of its T-Mobile Polska unit in Poland’s fixed broadband market.
The second Kepler’s preferred pick among German telecom stocks is Freenet. Similar to Deutsche Telekom, the firm holds a neutral stance on Freenet, citing limited near-term catalysts expected in H2 2026.
However, analysts highlighted that the stock offers undemanding valuations and attractive capital returns, which could provide upside potential for investors looking beyond the immediate term. The research firm believes Freenet may attract renewed investor interest as the calendar moves toward 2027.
In recent developments, Freenet confirmed its full-year 2026 outlook following a first half that saw strong revenue growth, aided by its acquisition of Mobilezone. The company also stated that it expects stronger earnings in the second half of the year.
Kepler Cheuvreux’s updated recommendations reflect a measured approach to the German telecom services sector, acknowledging both the challenges facing traditional telecom operators and the potential value opportunities present in current market conditions.
The firm’s preference for self-help earnings growth strategies suggests a focus on companies that can drive performance through internal initiatives rather than relying solely on market dynamics.
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