Deutsche Telekom: Rare Upgrade, Record Viewers, and Buyback All Overwhelmed by One Merger Report

Deutsche Telekom shares are hugging their 52-week low despite what looks like a parade of good news. A Fitch upgrade to A-, a €2 billion buyback program, double-digit operating growth, a new labour deal covering 60,000 staff, and FIFA World Cup viewer records have all failed to pull the stock out of its slump. The culprit is a single Wall Street Journal report from June 11 that sketched out early-stage plans to merge Deutsche Telekom with its US subsidiary T-Mobile US into a multinational holding company with dual listings in Europe and the US.

The WSJ article landed like a bombshell. It outlined a structure modelled on the Linde-Praxair merger, involving a holding company that would combine the two telecom groups. Discussions are still in a preliminary phase, details could change, political backing would be needed, and no decision is certain. Deutsche Telekom has declined to comment on M&A speculation. Yet that single report has been enough to depress the stock by roughly 23% from its 52-week high of €34.35. As of the latest trade, shares are at €26.47, with an RSI of 34 — technically oversold territory.

One week after the WSJ piece, Fitch Ratings delivered a rare upgrade in the telecom sector, raising Deutsche Telekom to A- on June 22. The agency highlighted three drivers: a stronger operational profile in the US thanks to its rising stake in T-Mobile US, improving cash flow generation and greater financial flexibility, and the structural resilience of the domestic German market underpinned by heavy network investment. Fitch sees cumulative excess cash flow of roughly €15 billion from 2025 to 2027 — cash the group has already begun deploying, partly to expand its T-Mobile US ownership and to fund announced buybacks.

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

The buyback machine is running at full speed. Between June 8 and 12, Deutsche Telekom purchased 1.6 million shares at an average price of €27.90, bringing the total since the programme started on April 2 to 15.3 million shares. The current second tranche, which can reach up to €550 million, is due to expire at the end of June. The full-year programme targets up to €2 billion in buybacks for 2026, with the vast majority of shares to be cancelled — a move that will mechanically boost earnings per share.

Operational performance has been solid. In the first quarter of 2026, organic revenue rose 4.7% to €29.9 billion, while adjusted EBITDA AL jumped 7.5% to €11.5 billion. Management responded by lifting its full-year targets: adjusted EBITDA AL of around €47.5 billion and free cash flow after leasing of more than €19.8 billion. Two other bright spots have appeared. Trade union ver.di approved a new collective agreement for about 60,000 employees, delivering an 8.5% wage increase over 33 months and a pledge of no compulsory redundancies until the end of 2028. Meanwhile, MagentaTV recorded all-time highs thanks to the FIFA World Cup 2026: more than 6.5 million viewers for group-stage matches and more than twice as many new subscriptions as during the home European Championship.

The stock, however, has ignored all of it. At €26.38, the shares sit just 2.6% above the 52-week low touched on June 22, and have lost about 17% over the past twelve months. The dividend has been raised to €1.00 per share for 2025, up from €0.90, and analysts expect a further increase to around €1.13 for 2026. But the dividend story, like the upgrade, the buyback, the record viewers, and the raised guidance, is being drowned out by the M&A noise. Deutsche Telekom will report second-quarter numbers on August 6. Until then, the unresolved restructuring question is likely to keep the share price pinned near its lows.