T-Mobile US Earnings Ignite Deutsche Telekom Rally Amid Merger Whispers and Strike Tensions

T-Mobile US Q1 revenue hits $23.1B, lifting Deutsche Telekom shares 2% amid German labor strikes and potential full merger with its US unit.

Deutsche Telekom shares found fresh momentum on Wednesday as its US wireless arm delivered a first-quarter performance that shattered analyst expectations, offering a welcome reprieve from mounting domestic labour unrest and a stock that had been languishing near 52-week lows.

T-Mobile US posted revenue of $23.1 billion for the opening quarter, with adjusted operating profit climbing 12% year-on-year. While net income slipped to $2.5 billion, management attributed the decline to one-off costs tied to recent acquisitions. The subscriber base swelled by roughly 217,000 contract customers, prompting the board to lift its full-year net additions forecast to as high as 1.05 million.

The stock responded in kind, rising around 2% to €27.32 — a modest bounce that still leaves the shares nursing a 13% year-to-date decline and trading barely 3% above their 52-week trough. The gap to the 52-week peak of €34.25 underscores just how far the equity has fallen.

Analysts were quick to weigh in. JPMorgan maintained its “Overweight” rating with a €40 price target, noting that market expectations had already priced in the upper end of T-Mobile US’s revised guidance range. Deutsche Bank Research kept its “Buy” call and €42 target, with analyst Robert Grindle suggesting US shareholders would particularly welcome management’s strategic commentary.

Yet the transatlantic picture is far from uniform. Back in Germany, Ver.di is demanding a 6.6% pay hike for roughly 60,000 tariff employees, coupled with an annual membership bonus. After two rounds of fruitless negotiations, the union has already launched regional warning strikes, with further walkouts possible ahead of the third round scheduled for May 11-12.

The timing is tight. Just one day after those talks conclude, on May 13, Deutsche Telekom will publish its own first-quarter results. The parent company is targeting full-year adjusted operating earnings of around €47.4 billion and free cash flow of approximately €19.8 billion.

Adding another layer of intrigue, reports have emerged that Deutsche Telekom is exploring a full merger with its US subsidiary, in which it already holds a roughly 53% stake. The proposal under discussion would create a new holding company offering shares to existing investors in both entities, potentially forming the world’s largest publicly listed telecoms group. A dual listing on both sides of the Atlantic is being considered. Sources stress the talks remain at an early stage, with no official confirmation from either company.

Strategically, such a move would address a persistent valuation discount — Deutsche Telekom’s shares have long traded at a meaningful discount to the faster-growing T-Mobile US. A merger could also unlock greater financial firepower for future acquisitions.

For now, the stock’s near-term trajectory hinges on two competing forces: the outcome of German wage negotiations and any fresh details on the potential holding structure. The May 13 earnings release will serve as the next major inflection point.