Deutsche Telekom's Positive Fundamentals and US Promotions Fail to Lift Stock from Year Lows Amid Merger Speculation

Deutsche Telekom shares cling to €26 support after hitting 52-week low, despite Fitch upgrade, strong Q1 results, and buyback, as T-Mobile US merger speculation and regulatory hurdles persist.

Deutsche Telekom shares ended Wednesday at €26.37, clinging to the critical €26 support level after touching a fresh 52-week nadir of €25.71. The stock has shed roughly 14.5% over the past twelve months and almost 10% in the last 30 days alone, with the year-to-date loss now standing at about 5%. The relative strength index of 32.9 points to an oversold condition, but buyers have yet to step in with conviction.

That technical picture looks all the more puzzling given the steady stream of upbeat news from the German telecom giant. Fitch Ratings recently upgraded Deutsche Telekom to A-, citing a stronger operational profile at its T-Mobile US unit, improved free cash flow generation and growing financial flexibility. The 53% stake in the American subsidiary is described as the core driver of the rating action, with a stable outlook attached.

First-quarter results reinforce the positive fundamentals. Organic revenue rose 4.7% to €29.9 billion, while adjusted EBITDA after leasing (EBITDA AL) climbed 7.5% to €11.5 billion. Management responded by lifting the full-year forecast, now expecting EBITDA AL of around €47.5 billion and free cash flow after leasing of more than €19.8 billion. By 2027, cumulative excess cash flow is projected to reach €15 billion.

The share buyback programme underscores the board's confidence. The second tranche, worth up to €550 million, is set to wrap up by 30 June. Between 8 and 12 June alone, the company repurchased roughly 1.6 million shares at an average price of €27.90. Total authorisation for 2026 stands at €2 billion.

Yet none of this has been enough to offset the persistent drag from merger speculation. Reports emerged that CEO Tim Höttges is exploring a full integration of T-Mobile US, possibly via a new holding company that would buy shares in both entities. The aim would be to unite two listed companies under a single transatlantic structure. The German government and state-owned KfW together hold about 28% of Deutsche Telekom, meaning Berlin would have to sign off — and that approval is far from guaranteed. Regulatory hurdles on both sides of the Atlantic and the need for T-Mobile US minority shareholder consent add further complexity.

While investors digest that uncertainty, T-Mobile US is pushing ahead with commercial tactics. The unit launched a promotion offering the Apple iPhone 17 free to new customers and certain upgrade plan holders during Amazon Prime Days, which run from 23 to 26 June. The goal is to grab market share in a saturated US wireless market. At the same time, T-Mobile US has activated emergency protocols as Tropical Storm "Arthur" heads toward the Gulf Coast, threatening network infrastructure in Texas and Louisiana.

A Seeking Alpha analyst upgraded Deutsche Telekom shares to "Buy" on 22 June with a €28 target, pointing to the now-cheaper valuation. He cautioned, however, that organic growth is likely to remain constrained to 3–4%, meaning earnings per share gains will come primarily from buybacks rather than operational expansion.

Technically, the €26 level is being watched closely. A sustained hold could open the path toward the 50-day moving average at €28.03 and eventually the 200-day at €28.91. A breakdown, though, would expose the €25 mark. The next major catalyst comes on 6 August, when Deutsche Telekom reports second-quarter results — an opportunity for management to address the elephant in the room.