Deutsche Telekom: Record Cash Flows and Union Peace Can't Quell Merger Jitters
21.06.2026 - 18:05:42 | boerse-global.de
The numbers coming out of Deutsche Telekom would normally be a recipe for a rising share price. Record operating profit, a freshly signed labour deal, and a dividend hike. Yet the stock closed at €26.72 on Friday, little more than 3% above its 52-week low of €25.99, after surrendering nearly 5.7% in the space of a single week. The market's focus, it appears, is elsewhere.
That elsewhere is the prospect of a full merger with T-Mobile US. A report in the Wall Street Journal that chief executive Timotheus Höttges is exploring ways to integrate the American subsidiary more tightly reignited a debate that first surfaced in April. T-Mobile US already contributes almost two-thirds of group revenue, and a formal consolidation would lock in that earnings engine. But the report triggered an immediate sell-off, with the stock posting its worst weekly decline since the original Bloomberg story on 22 April. Deutsche Telekom has declined to comment on what it calls market rumours.
Any such transaction faces formidable obstacles. Minority shareholders in T-Mobile US are reportedly wary of being exposed to the parent company's lower-margin international operations. The German government, a significant shareholder in Deutsche Telekom via KfW, has labelled the reports "speculation" and refused to take a position. A deal would also require regulatory clearance on both sides of the Atlantic, making the path to completion long and uncertain. Until Berlin's stance becomes clearer, the merger overhang is likely to keep the stock under pressure.
Should investors sell immediately? Or is it worth buying Deutsche Telekom?
On the domestic front, there is at least one cause for certainty. After four rounds of negotiations, the company and the ver.di union have reached a collective agreement covering roughly 60,000 employees. The 33-month deal runs through to the end of 2028, includes a total wage increase of around 8.5% according to the union, and rules out compulsory redundancies. UBS has labelled the outcome a clear positive, giving management planning stability on a major cost line. The final member vote was scheduled for 19 June, and the agreement is expected to be ratified.
Underpinning all this is a business that continues to fire on all cylinders. First-quarter revenue came in at €29.9 billion, an organic increase of 4.7%. Operating profit climbed to €11.5 billion, and T-Mobile US delivered service revenue growth of 11.5% to $18.9 billion. The dividend for 2025 was lifted to €1.00 per share, an 11% year-on-year increase. Deutsche Telekom is also buying back its own shares in significant volume, deploying billions to support the stock. None of this has been enough to reverse the negative momentum.
The technical picture adds to the gloom. The relative strength index stands at 33.3, deep in oversold territory, yet the 50-day moving average at €28.23 sits well above the current price. The stock has fallen more than 22% from the all-time high reached in February, and the month-on-month drop exceeds 8%. On 6 August the company will report second-quarter numbers, giving analysts at Goldman Sachs and JP Morgan — both of whom maintain buy ratings — a chance to argue the case for the upside. They will point to free cash flow, which, if it proves resilient once again, could provide the hard evidence needed to counter the persistent selling pressure.
The coming weeks will see two narratives compete for investors' attention. One is the slow, grinding progress of a possible transatlantic merger with its political and regulatory pitfalls. The other is a business that is generating record cash, buying back stock, and securing labour peace while the rest of the industry grapples with fibre rollout costs and demand uncertainty. For now, the merger story is winning the argument at the stock exchange.
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