The disconnect between Deutsche Telekom’s operational strength and its stock price is widening. While the telecoms giant is riding a wave of record World Cup viewership and solid earnings, its shares stumbled to a new 52-week low of €25.71 on Monday. By midweek the stock had recovered slightly to trade around €26.40, yet it remains down roughly 5% since the start of the year.
Investor unease centres on a bold strategic move by chief executive Tim Höttges. The Bonn-based group is pushing to fully integrate its highly profitable US subsidiary T-Mobile US, which already generates two-thirds of total revenue. The logic is compelling: a full buyout of minority stakes would unlock cost synergies, streamline the financing of a massive fibre rollout, and potentially lead to a dual-listed holding company in the US and Europe. But the hurdles are daunting. Höttges needs the backing of 75% of shareholders to push through the plan, and any deal would face close scrutiny from US antitrust authorities and the CFIUS national security panel. Investors are fretting over a possible rise in debt levels and the risk of dilution from new capital measures.
Against this backdrop, the company’s operating numbers tell a different story. MagentaTV, the group’s streaming platform, is capitalising on exclusive World Cup broadcast rights: more than 36 million viewers tuned in during the first week, with the France–Senegal match peaking at 6.5 million. New subscriptions have doubled compared with the European Championship two years ago, and network traffic hit a record 2,700 gigabits per second during Germany’s opening game. Beyond the tournament, the core business is on a steady upward path. In the first quarter, adjusted operating profit rose 7.5%, prompting management to lift its full-year guidance to around €47.5 billion.
Should investors sell immediately? Or is it worth buying Deutsche Telekom?
Yet the share price refuses to respond. The market appears to be looking past the strong fundamentals towards the near-term distraction of a multi-billion-dollar deal. A share buyback programme—in which the company repurchased over 1.6 million of its own shares in mid-June alone—has provided only modest support. Analysts remain broadly bullish, with an average price target of €38, but technical indicators offer little comfort. The stock trades 23% below its yearly high, and a first buy signal would require a break above the 50-day moving average at €28.03.
All eyes are now on the next quarterly results, due on 6 August. The World Cup figures will need to translate into hard profit to justify the current valuation. Meanwhile, investors are waiting for concrete steps on the US integration. No date has been set for an extraordinary general meeting, but the 75% approval threshold means Höttges will have to make a compelling case to a sceptical shareholder base.
Ad
Deutsche Telekom Stock: Buy or Sell?! New Deutsche Telekom Analysis from June 25 delivers the answer:
The latest Deutsche Telekom figures speak for themselves: Urgent action needed for Deutsche Telekom investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from June 25.
Deutsche Telekom: Buy or sell? Read more here...
