Deutsche Telekom’s Q1 Optimism Meets May Pay-Showdown as Shares Struggle Near Technical Support

Strong Q1 results from T?Mobile US drive profit forecast hike to €47.5bn, but wage talks with Verdi and bearish technicals weigh on shares.

A strong start to the year has prompted Deutsche Telekom to lift its full?year targets, yet the stock remains under pressure from a deepening labour dispute and a technical picture that suggests more pain ahead. The Bonn?based group reported an organic revenue increase of 4.7% to just under €30bn in the first quarter, while adjusted EBITDA AL climbed to €11.5bn. T?Mobile US once again powered the growth, steadily adding new contracts and providing the reliable earnings momentum that allowed management to raise the annual operating profit forecast to around €47.5bn. Free cash flow is now expected to exceed €19.8bn.

Away from the US unit, the company is ploughing ahead with its domestic fibre rollout, planning to connect a further 2.5 million homes and businesses to the glass?fibre network this year. The focus remains on winning high?margin direct customers. Analysts broadly welcomed the quarterly numbers – Deutsche Bank Research called them a reassuring signal for the market and reiterated a “Buy” rating with a €42 price target. Bernstein Research also stuck with “Outperform” and a €37 target, noting that the results were in line with expectations.

Yet the operational strength is being overshadowed by a looming confrontation over pay and conditions. The fourth round of wage talks is scheduled for 26?27 May, after three previous sessions failed to produce a deal. Union Verdi has rejected the employer’s offer as inadequate and is demanding a 6.6% salary increase, an annual member bonus of €660, and a contract duration of just twelve months. The dispute covers roughly 60,000 tariff employees. Strike action has already escalated: more than 20,000 workers have walked out since 28 April, with a rally in Potsdam drawing around 2,500 participants. For the first time, staff at the group’s private?customer sales unit, the services subsidiary in Europe, and T?Systems International were called on to join solidarity strikes.

The timing of the wage confrontation is politically sensitive given Telekom’s announcement of a €2bn share buyback programme for 2026. Unions argue that such a large capital return shows the company has financial headroom, sharpening the debate over how much of the cash flow should go to shareholders versus employees. Underlying the dispute is the broader digital transformation, with Verdi linking the pay demand to job?security guarantees for workers whose roles may be reshaped by technology.

On the trading floor, the stock continues to lag the underlying business. The shares closed at €27.70 on Friday, down 0.32% on the session, leaving them roughly 15% lower over the past twelve months. The monthly trend remains weak, with a decline of 2.98% over the past 30 days. Technically, the price is trading 8.15% below its 50?day moving average and 5.28% below the 200?day line. The relative strength index stands at 64.2, suggesting no oversold condition yet. To break the overarching downtrend, the stock would need to clear resistance near the 50?day average at around €30.

The end of May now looms as a crucial date for the market. If a revised offer emerges from the talks, the labour overhang could recede, allowing attention to return to the upgraded guidance. But if the standoff hardens, the cost of social stability during the group’s restructuring will become a more prominent factor for investors already wary of the share’s technical fragility.