Deutsche Telekom: MMS Sunset and 32,000-Strong Strike Cast Shadow Over Firm Q1 Results

Germany's telecom giant juggles legacy MMS phase-out, 32,000 workers striking for 6.6% pay rise, and an overbought stock down 14.5% from 52-week high.

The German telecoms giant finds itself squeezed between two unrelated but equally significant operational developments – the planned shutdown of its legacy MMS service and an escalating wage dispute that has already drawn 32,000 employees to the picket lines. Meanwhile, the stock trades at €29.26, roughly 14.5% below its 52-week high of €34.23, and with a relative strength index of 74.8 points, the shares are technically overbought – a signal that often precedes a short-term pullback.

The Multimedia Messaging Service, which once carried photos, audio clips and short videos over mobile networks, will be switched off in Deutsche Telekom’s network on 30 June 2026. Rivals o2 and 1&1 are following suit on the same date. The decision reflects the plain fact that WhatsApp, Signal and similar messenger apps have long made MMS redundant. File sizes were capped at just 0.3 megabytes, and per-message costs ranged from €0.39 to €0.79 depending on the provider. The company is steering customers towards the RCS chat standard embedded in modern messaging apps – now supported by both Android and iPhone devices. The financial impact of the phase-out is negligible for a group of Telekom’s scale; the real significance lies in the push to modernise ageing network infrastructure.

That modernisation effort faces a more immediate threat from the labour front. Three rounds of collective bargaining between Deutsche Telekom and the ver.di union have failed to produce a deal. The industrial action began on 28 April, escalated to twelve federal states on 7 May, and has now involved more than 32,000 employees. A rally in Potsdam drew around 2,500 workers. ver.di is demanding a 6.6% pay increase for roughly 60,000 tariff employees. After the third round, management tabled a so-called structural offer that addresses some points but falls far short of the union’s expectations. The next round of talks is scheduled for 26 and 27 May, and ver.di says it expects a serious offer by then. If the talks collapse again, the risk of broader strikes rises – hitting technical customer service, forcing appointment cancellations and potentially slowing the rollout of fibre-optic broadband.

That fibre build-out is a key part of the group’s growth story. On the home market, the fibre network already reaches more than 13 million households, and market penetration has climbed from 15.5% to 17.1%. Those operational metrics sit against a solid financial backdrop. In the first quarter of 2026, revenue grew organically by 4.7% to €29.9 billion, adjusted EBITDA AL rose 7.5% to €11.5 billion, and free cash flow AL reached €5.7 billion. Management responded by raising the full-year outlook: adjusted EBITDA AL is now expected around €47.5 billion, free cash flow AL above €19.8 billion, and adjusted earnings per share remain forecast at roughly €2.20.

Yet the stock has largely ignored this momentum. Over the past 30 days, the shares have edged up nearly six percent, but they remain well off their 52-week peak. JP Morgan analyst Akhil Dattani sees the recent decline – almost seven percent within a single month – as an opportunity. He reiterates an “Overweight” rating with a €40 price target, arguing the shares are cheap at current levels.

The MMS shutdown itself contributes no material figure to those financial targets. But it fits a broader pattern of shedding legacy systems to free up resources for higher-value investments. The real near-term catalyst for the equity, however, is the outcome of the fourth round of wage negotiations. A settlement would contain operational risks around network expansion and customer service, and could pave the way for a re-rating of a stock that, while technically overbought, appears fundamentally undervalued by at least one veteran telecoms analyst.