Deutsche Telekom Raises Guidance After Strong Q1, but Stock Stalls as AI and Labour Overhangs Loom

Despite strong Q1 and raised guidance, Deutsche Telekom shares remain 19% below high; analysts bullish with €42 target, AI and T-Mobile merger in focus.

Deutsche Telekom raised its full?year targets following a robust first quarter, yet the share price continues to trade at a deep discount to both its 52?week high and virtually every analyst target. The company now expects adjusted EBITDA AL of approximately €47.5 billion and free cash flow above €19.8 billion, while lifting its customer?acquisition forecast to 950,000–1.05 million new contract accounts – an increase of 50,000 at each end of the range.

Despite the upbeat revision, the stock is stuck around €27.80, roughly 19% below its year?high of €34.25 and down about 14.65% over the past twelve months. The disconnect between operational momentum and market valuation underscores a lingering debate over how much future growth investors are willing to price into a defensive telecoms name.

Analysts remain broadly constructive, though their conviction varies. Deutsche Bank reiterated a Buy and a €42 target, calling the quarter reassuring and pointing to a strong free cash flow outside the US. Goldman Sachs also keeps a Buy recommendation, but trimmed its price objective to €40 from €42. Bernstein Research rates the stock Outperform with a €37 target and highlighted reports about a potential merger with T?Mobile US as a strategic catalyst worth watching.

The first?quarter numbers themselves were solid. Revenue rose organically by 4.7% to €29.9 billion, adjusted EBITDA AL climbed 7.5% to €11.52 billion – beating consensus estimates of €11.38 billion – and free cash flow reached €5.7 billion. Adjusted net profit came in at €2.601 billion, or €0.54 per share. In Germany, revenues grew 2.1% to €6.3 billion, while T?Mobile US once again served as the group’s main growth engine.

Deutsche Telekom is now betting heavily on artificial intelligence as the next operational lever. An investor event scheduled for October 5 will lay out concrete AI applications and their financial impact. In the first quarter, an AI?powered chatbot handled one million calls in Germany, and the company aims to double that volume this year. Nvidia B200 capacity in Munich is fully utilised, while AI is already helping to reduce the cost of the fibre?rollout programme, which continues at a pace of 2.5 million homes annually.

On the labour front, a tariff dispute with the Verdi union remains a near?term overhang. Negotiations covering roughly 60,000 employees are set to resume on May 26?27. The next operational checkpoint is the second?quarter report on August 6, which will test whether the raised guidance can be underpinned by further cash?flow strength.

Separately, the company opened a flagship store in Dortmund in early May, spanning two floors and 350 square metres of digital experience space. The concept features an AI avatar named “MIA” and focuses on fibre products, reflecting the strategic priority the management places on broadband connectivity. Whether the store format moves the needle on customer numbers will become apparent in future quarterly disclosures.