Das Steigende Telekom (The Rising Telekom)

The WSJ Heard on the Street column ($$$ link) looks at Deutsche Telekom’s (DT) valuation. I’ve included a good summary of the metrics at the end of this post for those who don’t have access to the online WSJ - courtesy of Seeking Alpha’s Telecom Stock Blog.

The WSJ article makes the case that even though the valuation of Telekom is attractive on paper, the continued price erosion in wireless and expanding competition in broadband will cap revenue growth.

What the article misses is the groundswell in Europe to deregulate the Telecom sector further in order to spur deployment of next generation broadband infrastructure. Regardless of what the Digital Elite want you to believe, the US is ahead of France, Germany, Spain, Italy and the UK in broadband deployment. And the gap in next generation services is growing. From the article:

In a bid to separate itself from the pack, Deutsche Telekom is spending €3 billion ($3.64 billion) to build a broadband network that will connect residential customers to the Internet at a much faster speed than is currently available and allow it to offer a “triple play” of high-definition television, wireless and Internet access. But regulators in Brussels want to force the company to share the network with rivals at imposed rates, and high-definition TV is expected to remain a marginal business in the near term.

Spanish and French carriers are agitating with the EU to remove the re