Deutsche Telekom Faces Twin Pressures: Labour Strife and a Pivot to Defense

Deutsche Telekom’s defense pact with Rheinmetall for drone protection collides with ver.di strikes demanding 6.6% wage hike. Stock stays below 50-day and 200-day averages amid fiber and AI growth plans.

The company is entering a defining week with two narratives pulling in opposite directions. A newly announced cooperation with Rheinmetall moves Deutsche Telekom closer to the defense sector, while an escalating wage dispute with ver.di threatens operational stability. The stock, meanwhile, remains trapped below key technical thresholds.

The defense partnership, unveiled at the AFCEA conference in Bonn, envisions a multi-threat protection system designed to shield critical infrastructure and urban areas from drones, sabotage, and hybrid attacks. Rheinmetall will supply sensors and effectors, while Telekom contributes cloud infrastructure and real-time data analysis. Passive RF sensors mounted on antenna masts will detect drones without emitting active signals. CEO Tim Höttges has signaled further defense collaborations, viewing the sector as a growth engine.

That strategic shift comes as the labor front heats up. More than 20,000 employees have joined warning strikes, with a particularly large demonstration in Potsdam drawing 2,500 participants on May 11-12. ver.di is demanding a 6.6% wage increase for roughly 70,000 tariff employees, along with an annual member bonus of €660. Management’s current offer has been dismissed as inadequate, and the fourth round of negotiations is set for May 26-27. The walkouts have spread to subsidiaries including Deutsche Telekom Privatkunden-Vertrieb GmbH, Deutsche Telekom Services Europe SE, and T-Systems International GmbH, amplifying pressure on the board.

The broader conflict intersects with Telekom’s digital transformation. ver.di is linking higher pay to guarantees against layoffs as the company automates more processes. That is a sensitive point: the company wants to become leaner, but it also needs industrial peace in a complex labor structure.

At the market close on Friday, shares stood at €27.63, a daily drop of 0.58%. On a weekly basis they still eked out a 0.80% gain, but over the past twelve months the decline measures 15.17%. The stock sits 8.38% below its 50-day moving average of €30.16 and 5.52% below the 200-day average, underscoring the absence of a clear upward catalyst.

Beyond labor and defense, the glass fiber rollout remains a central operational theme. The company counted roughly 2.2 million active fiber customers at end-March, adding about 0.2 million in the first quarter. The take-up rate climbed to 17.1%, up from a year earlier. CFO Christian Illek targets 0.75 million new FTTH customers this year and one million next year, supported by an additional €800 million in fiber investment over the next three years.

Artificial intelligence offers another growth vector. A chatbot deployed in Germany intercepted one million calls in the first quarter, a figure the company aims to double by 2026. Telekom has also taken stakes in AI startups Perplexity, 11labs, and Lovable to bring external innovation in-house. An investor day on October 5 will detail concrete applications and financial impacts.

A share buyback program worth €2 billion, announced for 2026, provides a floor for the equity. In the first week of May, Telekom repurchased 1.6 million shares at an average price of €27.43, spending roughly €45 million. That activity has done little to lift the stock above its technical resistance, however.

The convergence of labor unrest, defense ambitions, and capital-discipline measures leaves the stock in a narrow range. The May 26-27 tariff round will be the next decisive moment: an improved offer could ease the pressure, while hardened positions would sharpen focus on strike costs and the price of social stability during corporate restructuring. In parallel, the Rheinmetall deal offers a glimpse of a future where Telekom’s infrastructure and data capabilities command a premium in the security market. For now, investors are weighing both bets.