Deutsche Telekom: AI Cloud Project and Record Buyback Struggle to Ease M&A Concerns

Shares hover at €26.47 after merger speculation from WSJ, while €2B buyback, 7.5% EBITDA growth, and industrial AI project Soofi fail to lift sentiment.

The telecommunications giant finds itself in an unusual tug-of-war. A state-backed artificial intelligence project running on its own cloud infrastructure and a €2 billion share buyback programme should be providing tailwinds. Instead, the stock is hovering near its 52-week low, weighed down by a single press report that refuses to fade from the market’s memory.

The source of the anxiety is a Wall Street Journal story published on June 11, which outlined early-stage talks about a potential multinational holding company that would merge Deutsche Telekom with its US subsidiary T-Mobile US. The blueprint bears a resemblance to the Linde-Praxair dual-listing structure. Any deal would require political backing and is far from certain — the company has declined to comment on the speculation. Yet the mere prospect has been enough to knock the shares to €26.47, roughly 23% below the 52-week high of €34.35. The relative strength index has slipped to 34, a technically oversold reading that typically attracts bargain hunters.

Buying activity remains brisk on the corporate side. Between June 8 and June 12, Deutsche Telekom repurchased around 1.6 million shares at an average price of €27.90. Since the buyback programme kicked off on April 2, a total of 15.3 million shares have been retired. The current second tranche, capped at €550 million, is set to expire at the end of June, while the full-year 2026 programme allows for up to €2 billion in purchases, with the bulk slated for cancellation.

Operationally, the company is delivering on multiple fronts without receiving much market credit. In the first quarter, organic revenue climbed 4.7% to €29.9 billion and adjusted EBITDA after leasing jumped 7.5% to €11.5 billion. Management responded by raising full-year guidance to around €47.5 billion in adjusted EBITDA AL and free cash flow after leasing of more than €19.8 billion. T-Mobile US, a key profit engine, reported first-quarter revenue of $23.11 billion, up 10.63% year on year. Analysts project 2026 earnings per share of roughly $10.42, and the dividend is expected to increase to $4.15 from $3.66. The US unit added 1.8% on June 23, bucking the broader tech sell-off that sent the DAX down 0.98% to 24,893 points and hit Infineon (?6.3%) and Aixtron (?8.3%) hard.

Beyond the numbers, the Bonn-based group is carving out a role in Europe’s push for digital sovereignty. The SOOFI research project, led by TU Darmstadt and backed by the German Ministry for Economic Affairs and Climate Action with around €20 million until July 2026, has trained its first large language model on the Telekom Industrial AI Cloud. The model, dubbed “Soofi S”, is a 30-billion-parameter mixture-of-experts architecture running on NVIDIA Blackwell GPUs. While the financial impact remains modest, the initiative positions Deutsche Telekom as an infrastructure partner for industrial AI applications — a diversification that carries none of the volatility of pure semiconductor stocks.

Labour relations have also stabilised. Trade union ver.di has approved a new collective agreement covering roughly 60,000 employees, delivering an 8.5% wage increase over 33 months and a no-compulsory-redundancy guarantee through the end of 2028. Meanwhile, MagentaTV posted record viewership during the 2026 FIFA World Cup group stage, drawing more than 6.5 million viewers per match and more than doubling the number of new subscriptions compared with the home European Championship.

Despite all this, the M&A overhang dominates the narrative. The next tangible milestones are T-Mobile US’s second-quarter results on July 23 and Deutsche Telekom’s own quarterly report on August 6. Until the holding-company speculation is either confirmed or definitively shelved, the market’s attention is likely to remain fixed on the corporate structure rather than the operating strength.