Deutsche Telekom's AI Capacity Boost and Merger Talks Fail to Stem Share Decline as Labour Unrest Simmers

Deutsche Telekom lifts mid-term targets, explores T-Mobile US merger, and sees AI-driven growth, but a union wage dispute overhangs shares, which fell 1.66%.

A brewing labour dispute at Deutsche Telekom is overshadowing an otherwise robust quarterly performance, even as management lifts its mid-term targets and explores a transatlantic mega-merger. The stock slipped 1.66% on Thursday to €27.77, dipping further below its 50-day moving average of €30.26. Since the start of the year, the shares have edged down 0.36%.

The Bonner group continues to draw strength from its US arm. Fresh from T-Mobile US revising its own guidance upward in April, the parent company now expects group adjusted EBITDA to reach around €47.5 billion by 2026, while free cash flow is forecast to climb above €19.8 billion. Deutsche Telekom’s stake in T-Mobile US has risen to almost 54%, cementing its influence over the wireless giant.

That clout has fuelled renewed speculation about a full merger between the parent and its US subsidiary. Media reports indicate management is examining a combination that would create a telecom behemoth with a market capitalisation close to $300 billion and more than 200 million mobile subscribers. CEO Timotheus Höttges declined to comment directly on the rumour but noted a highly constructive relationship with the FCC.

On the operational front, artificial intelligence is emerging as a key growth driver. A new chatbot handled one million calls in the first quarter, a volume the company expects to double over the rest of the year, while AI-assisted coding is accelerating software development. The group’s dedicated Nvidia-powered cloud data centre in Munich is already operating at full capacity, prompting an expansion of the facility. This partnership is central to Deutsche Telekom’s ambition to scale up high-intensity computing capabilities.

Capital expenditure is also being redirected to Europe’s fibre network. The company connected 3.6 million households across the continent last year, and about 2.2 million customers in Germany now actively use a fibre connection. To maintain momentum, the budget for fibre rollout has been increased by €800 million.

Yet the positive news flow has done little to lift the shares. Much of the market’s attention is fixed on an escalating dispute with the Ver.di union, which is demanding a 6.6% wage increase for its 9,000 members. Recent warning strikes, which for the first time involved the group’s sales and IT subsidiaries, have weighed on sentiment. The next round of negotiations is scheduled in a few weeks, and investors will be watching closely for any resolution that could remove the overhang.