Deutsche Telekom: 5.7% Weekly Rout Pushes Stock to Oversold as Merger Cloud Lingers Over Fundamentals

Despite labor peace, raised guidance, and fibre investments, Deutsche Telekom shares near 52-week low as merger speculation for T-Mobile US weighs on investor sentiment.

Deutsche Telekom’s shares are trapped in a puzzling disconnect. The Bonn-based telecoms group has secured labour peace, upgraded its 2025 outlook, and committed billions to network expansion. Yet the stock has slumped to within three percent of its 52-week low, weighed down by the one issue that refuses to go away: the future of T-Mobile US.

The selling pressure accelerated last week after a Wall Street Journal report revealed that Chief Executive Timotheus Höttges is exploring ways to fully merge T-Mobile US with its German parent. The rationale is straightforward — T-Mobile US already generates roughly two-thirds of group revenue and is the company’s true profit engine. But the prospect of a formal tie-up spooked investors, sending the stock down more than three percent in the week — its worst weekly performance since April 22, when Bloomberg first flagged potential merger talks. On a seven-day view, the cumulative loss stands at nearly 5.7 percent.

The stock closed at €26.72 on Friday, leaving it perilously close to the 52-week trough of €25.99. The all-time high set in February now lies 22 percent above the current price.

On the operational front, however, the picture is markedly more positive. Deutsche Telekom and the ver.di union concluded a new collective agreement covering around 60,000 employees. The deal, ratified on June 19, runs for 33 months through to the end of 2028. Wages will rise in three steps totaling 8.5 percent, and in return the company has ruled out compulsory redundancies for the duration of the contract. The arrangement removes any near-term strike risk and gives management a clear cost base for long-term planning.

That planning includes a major push on fibre infrastructure. The company has pledged an additional €800 million in fibre investment over the next three years, part of a broader €30 billion infrastructure programme through 2030. On the regulatory side, a new infrastructure pact signed with the federal government and industry in June commits municipalities to faster permitting processes, with the Bundesnetzagentur conducting half-yearly progress reviews.

The first-quarter numbers underline the group’s operational strength. Net revenue hit €29.9 billion, representing organic growth of 4.7 percent, while adjusted operating profit rose 7.5 percent. T-Mobile US itself delivered service revenue growth of 11.5 percent, reaching $18.9 billion. Buoyed by the performance, management raised its full-year guidance and now expects free cash flow to exceed €19.8 billion. The 2025 dividend was also increased by 11 percent to €1.00 per share.

Yet none of that has been enough to arrest the share price decline. The stock now trades well below its 50-day moving average of €28.23, and the relative strength index sits at 33.3 — a level that typically signals an oversold condition. From a purely technical standpoint, a bounce could be overdue, but the merger overhang is keeping buyers on the sidelines.

Höttges himself declined to comment on the WSJ report, telling analysts in May that the company does not comment on market rumours. The path to any deal remains fraught. Minority shareholders in T-Mobile US are said to be wary of being exposed to the lower-margin international business. The German government, a significant shareholder in Deutsche Telekom, has called the reports “speculation” and declined to take a position. Any formal proposal would also require regulatory clearance in both Germany and the United States — a process that could stretch out for months if not years.

The next catalyst on the calendar arrives on August 6, when Deutsche Telekom releases its second-quarter results. Until then, the stock’s direction will largely be dictated by sentiment around the merger narrative — and the question of whether Berlin is prepared to bless a deal or let the speculation simmer.