Deutsche Telekom Caught Between Corruption Raid and Merger Uncertainty

The German telecoms giant is weathering a storm on multiple fronts. Shares in Deutsche Telekom closed at €27.53 on Thursday, hovering just above their 52-week low, as investors digest news of a criminal probe into its fibre-optic unit and persistent speculation over a transatlantic restructuring.

Corruption Investigation Hits Fibre Business

In a coordinated dawn operation, North Rhine-Westphalia’s state criminal police searched roughly 40 residential and commercial properties, including the Bonn headquarters of Telekom Technik GmbH. The Cologne public prosecutor’s office is investigating ten individuals on suspicion of bribery, breach of trust, and money laundering.

At the centre of the case is a 37-year-old manager at the Telekom subsidiary responsible for awarding fibre-optic contracts. Prosecutors allege he funnelled lucrative projects to a construction company based in Duisburg, receiving kickbacks equivalent to three percent of each contract value in return. The estimated damage so far stands at a mid-six-figure euro amount.

The LKA seized assets worth more than half a million euros and secured extensive digital evidence. Notably, the investigation was triggered internally: an anonymous tip-off came through the company’s whistleblower system, and Telekom alerted authorities in autumn 2025. A company spokesperson confirmed the workplace search and stressed the group’s proactive role in the probe. Market observers view this as evidence of functioning compliance structures, though the reputational damage to the capital-intensive fibre rollout business is undeniable.

Merger Speculation Adds to Pressure

Separately, the stock has been rattled by reports that management is examining a full merger with T-Mobile US. The logic is straightforward: Deutsche Telekom holds roughly 53 percent of its American subsidiary, which trades at significantly higher valuation multiples on the Nasdaq. A combined holding structure could eliminate the so-called conglomerate discount and unlock that premium for the entire group.

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

Yet investors remain deeply sceptical. The stock lost over five percent in the past seven days alone, and on Wednesday it fell as much as 3.7 percent intraday on the merger reports. The current price of €27.53 sits roughly 19 percent below the 52-week high of €34.25 and well under the 200-day moving average of €29.50 — a technical sell signal. Analysts peg the next support level at €26.00.

The scepticism is grounded in real obstacles. The German government and KfW still hold significant stakes in Deutsche Telekom, meaning any transatlantic merger would require close coordination between Berlin and Washington. There is also the open question of how T-Mobile US shareholders would view a shift to a European holding structure. On Wall Street, T-Mobile US shares also dropped around 3.7 percent on the news.

Buyback Programme Signals Confidence

Amid the turbulence, the group is pressing ahead with its capital market strategy. The second tranche of the current share buyback programme has been running since 2 April 2026, with plans to repurchase up to €550 million worth of its own shares by the end of June. In the week of 13-17 April alone, the company bought back over 1.5 million shares.

The message from the boardroom is clear: management considers the stock undervalued at current levels. Whether that conviction will restore market confidence depends heavily on how concrete the merger plans prove to be — and whether the company provides clarity in the weeks ahead.

Key Dates Ahead

The next major milestone comes on 13 May 2026, when management presents first-quarter results. For the full year, the board is targeting adjusted operating earnings of €47.4 billion and free cash flow of nearly €20 billion. Those figures will be scrutinised more closely than ever given the dual headwinds facing the stock.