Deutsche Telekom: US-Driven Profit Upgrade Coincides with Escalating German Labour Standoff

The Deutsche Telekom stock jumped 3.55 percent to EUR 28.61 on Monday, clawing back some of the ground lost over the past year. Yet even after that bounce, the shares still trade roughly 14 percent lower over twelve months and remain below the 200-day moving average. The day’s advance came as the company raised its full-year earnings guidance, powered by its American subsidiary – but the good news is being overshadowed by an increasingly bitter wage dispute at home.

T-Mobile US has become the group’s undisputed growth engine. After the US division lifted its own cash flow and operating profit targets, the Bonn-based parent followed suit, now targeting an adjusted EBITDA AL of around EUR 47.5 billion for 2026, equivalent to organic growth of roughly 6 percent. Deutsche Telekom’s stake in T-Mobile US reached nearly 54 percent at the end of April, a share that is rising passively thanks to the American unit’s aggressive share buyback programme.

The financial firepower for that buyback, and for the group’s own EUR 2 billion stock repurchase plan running on Xetra for 2026, comes from a free cash flow the company expects to exceed EUR 19.8 billion this year. Shareholders also received a EUR 1 dividend for the past year. But the generous capital allocation is drawing sharp criticism from labour representatives who see ample room for higher pay.

Should investors sell immediately? Or is it worth buying Deutsche Telekom?

The conflict with the ver.di union escalated after the third round of talks produced a first structural offer that the union branded utterly insufficient. ver.di is demanding a 6.6 percent wage increase over a one-year term plus an annual EUR 660 bonus for members. Over 20,000 employees have walked out since late April, and, in a novel development, workers at subsidiaries such as T-Systems have joined solidarity strikes. The fourth round of negotiations is set for May 26-27, with the union expecting a substantially improved offer.

Technically, the stock remains under pressure. Before Monday’s rally it had closed the previous week at EUR 27.63, and it still lags its 50-day average of EUR 30.16 as well as the longer-term 200-day line at EUR 29.24. The 12-month loss has narrowed from around 17 percent on Friday to roughly 14 percent after Monday’s gains, but the uncertain outcome of the wage talks is a near-term risk for domestic margins. Management also has a key investor event planned for October 5, focused on artificial intelligence use cases – a presentation that would benefit from a resolved labour dispute rather than an open conflict.

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