Deutsche Telekom’s Buyback at a Premium Highlights the Divide Between Management Confidence and Market Jitters

The market may be punishing Deutsche Telekom’s shares, but the company itself is paying top dollar for them. In the week to 29 May, the telecoms giant acquired roughly 1.5 million of its own shares at an average price of €29.20 apiece – nearly 5% above the current trading level of €27.73. That willingness to spend above the market underscores a growing gap between the group’s operational heft and the stock’s tepid reception.

The second tranche of the ongoing buyback programme, totalling up to €550 million, is scheduled to conclude at the end of June. Since it began on 2 April, more than 12 million shares have already been retired, with the bulk set to be cancelled – a move that mechanically boosts earnings per share. For the full year 2026, the board has pencilled in total buybacks of as much as €2 billion. Together with a €1.00 per-share dividend, that yields a combined distribution of €6.8 billion to shareholders.

Longer-term cost visibility has meanwhile improved. The wage deal struck with the ver.di union in late May runs through to the end of 2028 and covers some 60,000 employees. The package includes staggered pay increases: a monthly supplement rising to €340 in August 2026 and to €480 by July 2027, with no compulsory redundancies for the duration. The tariff commission approved the agreement unanimously on 19 June after a member ballot, and analysts at UBS promptly reiterated their buy recommendation, pointing to the newly predictable labour cost base. Their price target for the stock stands at €36.60.

Should investors sell immediately? Or is it worth buying Deutsche Telekom?

Yet the macro headwinds blowing from the United States have proved stronger than any company-specific good news. A surprisingly robust US labour market report reignited fears that interest rates will stay elevated for longer, a particularly uncomfortable prospect for capital-heavy sectors like telecoms. Deutsche Telekom’s leverage means a prolonged period of tight monetary policy translates into persistently high financing costs. Over the past twelve months the shares have shed more than 18% of their value.

Chart watchers, however, detect the early contours of a reversal. The price action on Friday generated a hammer candlestick formation, often interpreted as a sign that selling pressure is exhausting. The relative strength index (RSI) at 38.6 confirms that the stock is already in oversold territory. It currently trades roughly 5% below its 200-day moving average, with the 52-week low of €25.99 still about 6.7% away.

Until the next major catalyst on 6 August, when second-quarter results are due, the pace of the remaining buybacks may provide the most tangible support. The ver.di vote has already cleared one source of uncertainty, and the company is sticking to its full-year guidance – adjusted EBITDA AL of around €47.5 billion and free cash flow AL above €19.8 billion. T-Mobile US, which now accounts for more than 70% of the group’s market value, continues to drive growth with a 11.3% increase in first-quarter service revenue. At home, fibre penetration inched up from 15.5% to 17.1%, connecting more than 13 million households directly. All of which leaves investors facing the same question: how much longer will the fundamental story remain at odds with the market’s mood?

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