Telekom Underwhelms: MMS Shutdown, Security Launch and Record Cash Flow Fail to Stem Share Slide

DT cuts legacy MMS, secures labour peace until 2028, and launches sovereign cybersecurity with Palo Alto, yet shares slide 11.5% in a year despite strong Q1 earnings.

Deutsche Telekom is pushing ahead with modernisation on multiple fronts – cutting legacy infrastructure, forging a sovereign cybersecurity partnership and locking in labour peace until 2028 – yet the market remains unimpressed. The stock has slid to just above €27.60, roughly 20% below its 52-week high of €34.35, and sits beneath both its 50-day and 200-day moving averages. The relative strength index of 40.1 offers no clear signal of a near-term rebound.

The most tangible cost-saving measure arrives on 30 June 2026, when Telekom finally pulls the plug on its MMS service. Vodafone made the same move three years ago, and now Telefónica and 1&1 are following suit. By retiring the outdated protocol, the operators free up capacity and reduce network maintenance expenses, steering users toward the richer RCS standard or plain SMS. It marks the end of an era in mobile messaging, but for shareholders it is a small, efficient step.

That efficiency theme extends to the workforce. On 19 June, ver.di members cast their final vote on a new labour contract agreed in late May. The 33-month deal, covering roughly 60,000 employees, rules out redundancies for operational reasons through late 2028. Salaries rise in three stages: an extra €340 per month from August 2026, €480 per month from July 2027, and a 2.4% tariff-table increase in June 2028. The union’s tariff commission has already voted unanimously in favour, making a final rejection unlikely. If approved, Telekom locks in predictable staff costs for nearly three years.

On the growth side, the group is betting on a differentiated security product. Together with Palo Alto Networks, Telekom unveiled Sovereign Cortex with T Security on 9 June. The platform brings AI-driven threat detection to Europe’s most regulated sectors – healthcare, financial services, government and critical infrastructure. Crucially, encryption keys remain inside Telekom’s own data centres; neither Palo Alto Networks nor Google (which partners with Palo Alto) can access them. T Security handles both SOC and identity management, directly addressing the requirements of GDPR, NIS2 and DORA. Commercial launch is set for the third quarter of 2026, so meaningful revenue contributions will not appear until after that.

None of this has lifted the share price because the operational story is already strong – and the market is looking straight through it. In the first quarter, group revenue rose organically by 4.7% to €29.9 billion, while adjusted EBITDA AL climbed 7.5% to €11.5 billion. Management responded by raising its full-year guidance: it now expects adjusted EBITDA AL of around €47.5 billion and free cash flow AL of more than €19.8 billion. At home, fibre penetration reached 17.1% with 2.2 million FTTH contracts.

The disconnect between these numbers and the stock’s trajectory has frustrated bulls. The share has lost roughly 11.5% in the past twelve months, and the downward move accelerated after the February peak. Technical support levels have given way one by one.

The next major catalyst arrives on 6 August with second-quarter earnings. Between now and then, the market will be watching whether the Sovereign Cortex launch can already generate concrete customer wins – because without that proof of commercial traction, even a strong earnings beat may struggle to reverse the slide.