Deutsche Telekom Stock Finds Floor in €560 Million Buyback Tranche, Yet Merger Fears Cap the Recovery

Deutsche Telekom's stock remains under pressure as €2bn buyback program offsets merger speculation with T-Mobile US. Shares down 9% YTD, with next catalyst on Aug 6 quarterly results.

Deutsche Telekom’s share price is caught between two opposing forces. While the company is aggressively repurchasing its own stock, persistent speculation about a potential merger between the group and its US subsidiary, T-Mobile US, continues to unsettle investors. The result is a volatile trading pattern that has left the stock nursing deep year-to-date losses despite pockets of relief.

The Bonn-based telecoms giant disclosed on Thursday that it has already bought back 18.6 million of its own shares this year. The announcement provided a brief lift to the stock, which closed the session at €25.30. Over the preceding week, however, the shares had shed 3.84%, and the 30-day decline stood at 9.80%. The repurchase program is designed to boost earnings per share and return more capital to stockholders.

A closer look at the buyback activity reveals substantial scale. Between April 2 and June 30, the second tranche saw the acquisition of roughly 19.4 million shares at a total cost of approximately €543.4 million. Now the third phase is underway, launched at the start of July. Under this new tranche, the company plans to invest up to €560 million, representing around 23.5 million shares, with purchases executed exclusively on the Xetra trading platform. The bulk of the bought-back stock will be cancelled to reduce share capital, while a small portion is earmarked for executive compensation programs. The overall buyback authorization totals €2 billion, of which more than half has now been used.

Despite this buying support, the stock remains deeply depressed from its highs. The 52-week peak of €34.35, set on February 27, is now 26.35% above the current price. The 50-day moving average sits at €27.59 and the 200-day average at €28.80, both well above the present level. The relative strength index reading of 37.9 points to a battered but not yet oversold condition. On June 30, the shares hit a fresh year low of €23.54, and Thursday’s close was only 7.48% above that trough. Since the start of 2024, the stock has dropped 9.22%, and the 12-month decline stretches to 18.44%.

The trigger for the recent sell-off was a Handelsblatt report on Monday suggesting that chief executive Tim Höttges is working on concrete plans for a combination with T-Mobile US. Such rumors hit the stock particularly hard because the American division is the operational backbone of the group. Additional chatter involving SpaceX added to the unease. Some analysts, however, remain unmoved. UBS analyst Polo Tang reaffirmed his buy rating and a €36.60 price target, arguing that the merger fears are unfounded. He noted that a formal denial from the company would likely relieve the stock immediately.

Looking ahead, the next major catalyst comes on August 6, when Deutsche Telekom releases its quarterly results. The company is targeting an adjusted operating result of around €47.5 billion for the full year and free cash flow exceeding €19.8 billion. Investors will scrutinize the numbers for any sign that the buyback program and underlying operations can counterbalance the merger anxiety. For now, the stock remains in a tug-of-war, with the repurchases providing a floor but speculation keeping a lid on any sustained upward move.