Telekom's Twin Tailwinds: Regulatory Boost and Labour Truce, Yet Shares Keep Falling

Regulatory reform and union truce fail to lift Deutsche Telekom shares as buyback struggles and investors await concrete results.

On paper, Deutsche Telekom should be basking in good news. A landmark regulatory reform has opened the door to a potential fibre monopoly, and a costly but decisive union deal is set to end weeks of disruptive strikes. Yet the Bonn-based telecoms giant continues to watch its stock slide, with investors seemingly unmoved by either development.

Fibre gamble risks alienating rivals

The German cabinet this week approved amendments to the Telecommunications Act, granting network operators the so-called “right to full expansion” – the ability to cable entire buildings with fibre even if competitors have already laid their own connections. The move effectively hands the former monopoly a weapon to squeeze out smaller rivals, who have warned that Deutsche Telekom could systematically undercut them on pricing and coverage. Management counters that the change is essential to hit the country’s gigabit-coverage targets, but acknowledges that construction costs in Germany remain far above the European average, making the economics of the build-out challenging.

Labour peace at a price

Meanwhile, a separate source of uncertainty is nearing resolution. Tomorrow, the ver.di union commission will vote on a new wage agreement covering some 60,000 employees. The package, which runs for 33 months, excludes compulsory redundancies until the end of 2028 and delivers a €290 monthly pay rise in two installments, followed by a 2.4% increase to the pay scale from June 2028. Analysts estimate the total cost at around 8.5%. The truce would end weeks of strikes and give the company a fixed cost base for more than two years, allowing management to refocus entirely on the fibre rollout.

Buybacks fail to stem the tide

The share price has not reflected any of this progress. Deutsche Telekom has been actively buying back its own stock – the current €550 million tranche, part of a €2 billion programme for 2026, runs until the end of June. Last week alone it repurchased 1.6 million shares. But the support has proved inadequate. After paying an average of €28.49 in early June, the stock has since slipped to around €26.93, leaving the buyback underwater. On a monthly basis the shares have shed nearly 8%, and the year-to-date loss stands at roughly 3%.

Fundamentals still solid

The sell-off looks at odds with the operational picture. In May, S&P lifted the company’s rating to ’A-‘, explicitly citing its strong cash position. Management has reaffirmed its full-year guidance, targeting free cash flow above €19.8 billion and adjusted EBITDA of roughly €47.5 billion. The next reality check comes on 6 August, when second-quarter results are due.

Technicians see a potential floor forming: the relative strength index has dropped to 34.6, just shy of oversold territory. But the market is clearly waiting for concrete evidence – either from tomorrow’s union ballot or the August numbers – that the twin tailwinds can finally turn into a lasting rally.