German telecommunications stocks are trading at undemanding valuations with attractive capital returns, according to Kepler Cheuvreux, which maintained a neutral sector outlook for the second half of 2026.
The research firm highlighted Deutsche Telekom as a preferred pick, citing its dominant market position in Germany and strong capital return profile. The company’s planned acquisition of Fiberhost and Inea from Macquarie Asset Management for approximately €1 billion is expected to bolster T-Mobile Polska’s fixed broadband presence in Poland, though the deal’s impact is not expected to materialize in the near term.
Freenet, identified as the second preferred telecom stock, received a neutral rating due to a lack of short-term catalysts through the end of 2026. Analysts noted that Freenet’s revenue growth in the first half of the year, driven by the acquisition of Mobilezone, has led to a confirmed full-year 2026 outlook and expectations of stronger performance in the second half.
Kepler Cheuvreux emphasized that valuations across the sector remain low, with capital returns offering potential upside for investors with a time horizon exceeding 12 months. The firm’s recommendations focus on companies generating profit growth through internal initiatives and revenue streams beyond traditional telecom services, despite the overall cautious sector stance.
Historical performance cited by ProPicks AI for Siemens Energy and Sandisk—up 231.5% and 189%, respectively—was referenced as part of a broader discussion on undervalued opportunities, though these were not directly tied to the current telecom recommendations.
