Buyback Support Lifts Deutsche Telekom, but Government Stake Casts Shadow Over T-Mobile US Plans

Stock up 2.2% as aggressive share repurchases absorb supply, but integration plan with T-Mobile US faces opposition from shareholders and German government.

Deutsche Telekom’s stock clawed back ground on Monday, rising 2.22 percent to 26.73 euros as the company’s aggressive share repurchase program continued to absorb supply. The advance builds on Friday’s close of 26.15 euros and leaves the equity up 4.86 percent over the past week, though it remains 5.88 percent lower on the month and 4.09 percent in the red since the start of the year.

The buyback engine is running at full throttle. Between July 1 and July 3, Deutsche Telekom bought back 908,705 of its own shares via Xetra at an average price of 24.74 euros, spending roughly 22.48 million euros. Just days earlier, on June 29 and 30, it had acquired 727,344 shares at 24.79 euros, for a total outlay of 18.03 million euros. Combined, the two batches accounted for more than 1.63 million shares and about 40.5 million euros. Since the repurchase program kicked off in April, the company has now retired some 20.28 million shares. The current tranche — the third of the year — is capped at 560 million euros and is slated to run until the end of September. The overall program, with a ceiling of two billion euros, remains on track to wrap up by year-end.

Yet the buyback backdrop is far from serene. A report published on July 11 by the Neue Zürcher Zeitung revealed that management is examining a tighter integration of Deutsche Telekom and T?Mobile US under a single holding company, a move aimed at closing the valuation gap with the higher?priced American subsidiary. The idea has drawn sharp opposition from prominent shareholders. Jens Ehrhardt of DJE Kapital and Martin Wirth of FPM have publicly rejected the plan, while one unnamed top?30 investor warned that the restructuring could actually erode the group’s overall market capitalization.

The biggest obstacle, however, may sit in Berlin. The German federal government holds roughly 28 percent of Deutsche Telekom’s shares and is said to be deeply skeptical of the proposed holding structure. With no official comment yet from the company, the dispute looks set to simmer — and any escalation could weigh on sentiment regardless of the comfort the buyback provides.

On the chart, the stock is still trying to reclaim key technical levels. Monday’s close left it 2.3 percent shy of its 50-day moving average at 27.37 euros and a full 7.1 percent below the 200-day average of 28.75 euros. The 52-week high of 34.35 euros, touched in late February, remains 22 percent distant, while the June 30 low of 23.54 euros is now 13.55 percent behind. The relative strength index stands at 53.2, suggesting neither overbought nor oversold conditions.

Two upcoming events will likely set the tone in the near term. T?Mobile US reports second?quarter earnings on July 23, followed by Deutsche Telekom’s own interim results on August 6. Until then, the tug?of?war between the reassurance of steady buybacks and the uncertainty stirred by the holding?company debate — amplified by the government’s 28 percent blocking minority — will keep investor attention firmly divided.