(Update includes outlook, detail on share buybacks and expected impact from T-Mobile US merger.)

   By Euan Conley 
 

Deutsche Telekom AG (DTE.XE) said Thursday that it is aiming to "significantly" cut costs and that it is mulling share buybacks as part of plans to pay shareholders.

The company will use automation and digitalization to reduce indirect costs outside of the U.S. by 1.5 billion euros ($1.76 billion) by 2021, it said.

About half of the cuts will come from non-staff related savings in areas including real-estate and legacy IT platforms, Deutsche Telekom said.

Meanwhile, the company provided guidance on the impact of the anticipated merger between its U.S. subsidiary T-Mobile US Inc. (TMUS) and its competitor Sprint (S). Following the closing of the transaction, integration costs will likely outweigh cost-and-investment synergies tapped by the deal for the first three years, the company said.

Deutsche Telekom confirmed its outlook for revenue; adjusted earnings before interest, taxes, depreciation, and amortization; and free cash flow until 2021. Revenue is expected to increase by between 1% and 2% per year, while adjusted Ebitda should rise by between 2% and 4% and free cash flow by 10%.

It said it wants all units to contribute to revenue and earnings growth from 2019.

Deutsche Telekom said it will pay a dividend of 70 euro cents a share and that starting in 2019, its dividend will track the development in adjusted earnings per share.

Share buybacks are also being considered as part of plans to remunerate shareholders, the company said.

Write to Euan Conley at euan.conley@dowjones.com

(END) Dow Jones Newswires

May 24, 2018 03:17 ET (07:17 GMT)