Deutsche Telekom: Labour Accord and Buyback Tailwinds Meet a Transatlantic Merger Headwind

A union vote could bring clarity, but Deutsche Telekom's stock remains pressured by a potential €300-400bn T-Mobile US merger and political risks.

A union vote on Friday could hand Deutsche Telekom a rare piece of certainty. Yet the stock remains caught in the gravity of a much bigger story: the prospect of a €300–400 billion transatlantic tie-up that has left investors guessing. With the shares trading at €27.69, the market is pricing in neither the full benefit of a strong operational recovery nor the political risks of a megamerger.

The ver.di tariff commission will decide on 19 June whether to accept a 33-month labour agreement covering roughly 60,000 employees. The deal, reached at the end of May, would raise total compensation by around 8.5% over its life, with base salaries climbing 2.4% in June 2028. The company has ruled out compulsory redundancies for the full term, and union members would receive exclusive bonus payments. The commission’s endorsement is expected, and approval would remove a persistent source of uncertainty for analysts recalibrating their earnings models.

That operational clarity is already underpinned by solid numbers. Deutsche Telekom reported first-quarter revenue of €29.90 billion, equivalent to organic growth of 4.7%. Adjusted EBITDA AL climbed 7.5% to €11.5 billion. Management lifted its full-year guidance in response, targeting adjusted EBITDA AL of around €47.5 billion and free cash flow above €19.8 billion. Earnings per share are seen at €2.20, while the dividend for 2025 was raised 11% to €1.00 a share. Fibre roll-out in Germany continues to gather pace: more than 13 million homes are now connected, pushing the penetration rate above 17%.

Alongside the operational story, the company is ploughing capital into its own shares. A buyback programme of up to €2 billion for 2026 is under way, with the second tranche worth €550 million set to expire at the end of June. In the week of 8–12 June alone, the group repurchased about 1.6 million shares at an average price of €27.90, bringing the total since 2 April to 15.3 million shares. Most of the stock is headed for cancellation, which should mechanically lift earnings per share. Yet the market has barely reacted: the shares, down roughly 1% since the start of the year, have fallen more than 11% over the past twelve months and sit 21% below the February high of €34.35.

The dominant drag remains the Wall Street Journal report that Deutsche Telekom and T-Mobile US are being lined up for a full merger under a new holding company, with the combined entity valued at $300–400 billion. The German group already owns just over 53% of the US wireless operator, and the plan would absorb the remaining public float without a massive cash outlay. The prospect immediately knocked more than 3% off the stock. A completed merger would dilute the German government’s direct stake to an estimated 17–18%, well below the 25% threshold that Berlin has historically considered a floor for strategically important companies. Regulatory and shareholder hurdles on both sides of the Atlantic loom large, and the company itself has acknowledged the complexity.

With the union ballot on Friday and the next quarterly report due on 6 August, the immediate trajectory hinges on two very different forces. A clear labour vote would let the market focus on a solid operating base and a generous buyback. But until the merger saga reaches a definitive turn – or fades – the share price is likely to remain hostage to headlines from Washington and Bonn, rather than to the steady grind of a €2 billion repurchase programme.