A new artificial intelligence data centre in Munich, packed with 10,000 Nvidia Blackwell GPUs, has already signed up Siemens, SAP and the startup Perplexity as tenants. The facility, a cornerstone of Deutsche Telekom’s digitalisation drive, underscores the operational strength that the Bonn-based group continues to generate. Yet the share price stubbornly refuses to reflect it, trading at 27.92 euros on Friday — roughly 10 percent lower than a year ago and well below its 200-day moving average of 29.00 euros.
The disconnect stems from a pair of powerful headwinds. First, the European Central Bank’s decision to lift its benchmark rate to 2.25 percent is raising the cost of the capital-intensive network buildout and making dividend stocks less attractive relative to bonds. Second, market uncertainty over a potential full-scale merger with T-Mobile US has created a persistent cloud of volatility. T-Mobile US already supplies nearly two-thirds of group revenue, and chief executive Timotheus Höttges is pushing for a complete takeover of the US subsidiary — a move that would create the world’s largest telecoms operator. But Bernstein Research analyst Ulrich Rathe points to formidable regulatory hurdles, including the need to convince US minority shareholders and secure approval from the German state, which still holds roughly 28 percent of Deutsche Telekom.
In the face of these pressures, the company has been deploying its own artillery. During the first week of June alone, it bought back 1.58 million shares — worth around 45 million euros at the time. That forms part of a broader programme targeting up to two billion euros in repurchases for the full year 2026. By cancelling the bought-back stock, management aims to boost earnings per share and close the valuation discount between the parent and its highly profitable US unit. The buybacks, however, have so far failed to arrest the stock’s decline. The shares recently broke below their 38-day moving average, triggering a short-term technical sell signal, and on Thursday closed at 28.14 euros.
Should investors sell immediately? Or is it worth buying Deutsche Telekom?
Underlying financials remain solid. First-quarter revenue climbed 4.7 percent to 29.9 billion euros, while adjusted net profit rose 6.5 percent. For the full year, the company is targeting adjusted operating earnings of around 47.5 billion euros. A strong free cash flow underpins the planned distributions, including a dividend of one euro per share for fiscal 2025. The balance sheet also benefits from low customer churn: just 4.3 percent of German households leave annually, well below the industry average. More than 30 percent of homes now use a Deutsche Telekom fibre-optic connection.
Another important milestone is imminent. In mid-June, the company and unions are expected to finalise a new collective wage agreement for domestic staff. A settlement would bring much-needed planning certainty on personnel costs — a critical factor given the broader regulatory and macroeconomic uncertainties. Meanwhile, chart watchers are eyeing the 50-day line at 28.71 euros; a decisive reclaim of that level would brighten the technical picture, while failure to do so keeps the stock in a downtrend.
At a price-to-earnings ratio of 13.5, Deutsche Telekom is hardly expensive on a fundamental basis. But until the merger ambiguity clears and the ECB’s rate cycle shows signs of peaking, the share price appears caught between a strong operating story and a market that is demanding a clearer path forward.
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