Deutsche Telekom's Operational Muscle Flexes Higher Guidance but Labour Unrest Caps Share Revival

Deutsche Telekom Q1 revenue and EBITDA beat expectations, prompting a second guidance raise. Yet labor disputes with Ver.di and investor caution keep shares down 14.7% YoY, despite strong T-Mobile US and AI growth.

The Bonn-based telecommunications giant delivered first-quarter numbers that underscore its resilience, yet the stock continues to trade under a cloud of labour tensions and lingering investor caution. Revenue and earnings beat expectations, prompting management to nudge its full-year forecasts higher for the second time, but the improving outlook has done little to re-energise the share price.

Group revenue climbed organically by 4.7 percent to €29.9 billion in the three months to March, while adjusted EBITDA AL rose 7.5 percent to €11.5 billion. Net income on an adjusted basis reached €2.6 billion, and free cash flow AL came in at a robust €5.7 billion. Chief Executive Tim Höttges described the performance as evidence of “resilience in turbulent times,” noting that the business is largely insulated from global shocks.

The driver of that strength remains T-Mobile US, where service revenues surged 11.3 percent, fuelled by demand for premium plans and bundled offerings. The US subsidiary's momentum has been so pronounced that Deutsche Telekom’s stake in the business has edged closer to 54 percent this spring. That outperformance is now feeding directly into the group’s revised guidance: for the full year, the company expects adjusted EBITDA AL of around €47.5 billion, up from the previous target of €47.4 billion. The free cash flow AL forecast has also been lifted to more than €19.8 billion, while the outlook for adjusted earnings per share remains at roughly €2.20.

Beyond the US engine, the group is leaning into artificial intelligence as a growth lever. A new chatbot routed one million calls in the first quarter, a volume the company expects to double over the remainder of the year. AI is also being deployed to accelerate software development, and capacity for specialised Nvidia chips at the group’s Munich data centre is already fully booked. On the domestic front, Germany’s fibre rollout continues to expand: more than 13 million households can now connect to the FTTH network, and 2.2 million German customers are actively using a fibre line. The pace of build-out requires heavy investment, and the company has earmarked an additional €800 million in capital spending to keep the momentum going.

Yet the operational picture is marred by a hardening labour dispute at home. The Ver.di union is demanding a 6.6 percent wage increase for the group’s tariff employees, and tensions escalated recently when 9,000 workers walked out in warning strikes — a protest that, for the first time, included sales and IT subsidiaries. The fourth round of talks is scheduled to begin in the coming weeks, adding an unpredictable element to the domestic outlook.

Against that backdrop, Deutsche Telekom’s shares remain stuck in a narrow range. The stock closed on Thursday at €27.79, a 14.68 percent decline over the past twelve months and still trading below its 50-day moving average. On the day of the results announcement, the shares gave up 1.45 percent in Frankfurt, underscoring how little the modest guidance increase has shifted sentiment. While the fundamentally sound business and the slight upgrade to forecasts provide a solid foundation, the market is waiting for clearer evidence that the US growth pace can be sustained and that the German fibre expansion can proceed without crimping margins — and for a resolution to the labour standoff that has begun to weigh on investor confidence.