Deutsche Telekom's Scrapped US Merger Reshapes the Bull Case Ahead of Thursday's Report
Published on 08/05/2026 at 13:52 | Redaktion boerse-global.de
The narrative around Deutsche Telekom has shifted dramatically in the span of a week. What began as speculation about a full-scale integration of T-Mobile US has morphed into a confirmed retreat — and investors have responded not with disappointment, but with relief. The Bonn-based group's decision to shelve plans for a complete merger with its American subsidiary has stripped away a layer of transaction risk that had been weighing on the stock, even as it raises fresh questions about what drives the equity story from here.
The market's initial reaction told the story. Reports on Monday cited resistance from T-Mobile US management and institutional minority shareholders as key factors behind the reversal, alongside regulatory hurdles in Washington, unresolved tax considerations, and the subsidiary's faster growth trajectory relative to the domestic market. Rather than punishing the stock for the abandoned deal, traders sent it higher — the shares closed Tuesday at €27.97, a 2.12 percent gain over the preceding week. That move underscores just how much anxiety the merger talk had been generating among holders concerned about the implications for the group's capital structure.
Yet the stock has not fully escaped its recent funk. At the time of the initial merger reports, the shares were trading at €27.41, down 2 percent on the day and sitting 20.20 percent below the 52-week high reached in February. Even after the relief rally, the equity remains 2.17 percent beneath its 200-day moving average — a technical marker suggesting the broader downtrend of recent months has yet to decisively reverse. Adding to the caution, chartists flagged a "hanging man" candlestick pattern on Tuesday, a formation often read as a short-term bearish signal, though one that carries limited weight in isolation.
A Buyback Backdrop
Supporting the share price in the meantime is the company's ongoing capital return program. Deutsche Telekom completed the third tranche of its 2026 buyback initiative in July, purchasing 6,363,064 shares on the open market between the 1st and the 31st. Such repurchases typically provide a floor under the stock by reducing the free float, and the continuation of the program offers a steady tailwind even as the merger story fades.
Should investors sell immediately? Or is it worth buying Deutsche Telekom?
The Earnings Test
All eyes now turn to Thursday, August 6, when the group releases its second-quarter and first-half figures alongside an investor webcast. The consensus calls for earnings per share of €0.561, a 3.89 percent improvement over the €0.540 recorded in the same period last year. Revenue is expected to climb to €29.95 billion from €28.67 billion. For the full year, analysts project EPS of €2.23 versus €1.97 in 2025, with annual sales seen reaching €122.95 billion.
Management's own guidance provides the benchmark against which these numbers will be judged. The company has forecast adjusted EBITDA AL of approximately €47.5 billion, free cash flow above €19.8 billion, and EPS of roughly €2.20 for the year. The US operation remains the primary engine: T-Mobile US recently reported adjusted core EBITDA of $9.5 billion, up 12 percent, and postpaid service revenue of $15.9 billion, a 13 percent increase. The subsidiary also raised its adjusted free cash flow outlook to a range of $18.4 billion to $18.8 billion. Back home, the German business delivered organic growth of 2.1 percent on quarterly revenue of €6.3 billion.
The stakes are straightforward. If the consolidated numbers confirm the momentum signaled by T-Mobile US, the merger retreat could quickly become a footnote. If they disappoint — particularly on margins or forward guidance — the absence of a deal as a growth catalyst will invite renewed scrutiny of how the group allocates capital without the prospect of full consolidation.
Analyst Positioning
Sell-side opinion has shifted modestly but not alarmingly. JPMorgan trimmed its price target from €40 to €38 on July 27 while maintaining an "Overweight" rating. The DZ Bank followed a day later, lowering its fair value from €37 to €35 but keeping a "Buy" recommendation. The relatively contained nature of these cuts suggests the fundamental picture remains intact in the eyes of most analysts, even as the merger premium evaporates.
A New Competitive Shadow
Complicating the outlook is a fresh competitive concern emanating from an unexpected corner. SpaceX is advancing plans to extend its Starlink satellite service into mobile telecommunications, having secured 65 megahertz of spectrum from EchoStar in 2025 for $19.6 billion. News of the initiative triggered after-hours declines of between 2.2 and 4 percent across Verizon, AT&T, and T-Mobile US shares. Analysts, however, view a genuine competitive threat as unlikely within the next five years without a partnership with an established carrier, and they regard the risk to T-Mobile US as overstated.
Deutsche Telekom at a turning point? This analysis reveals what investors need to know now.
Regulatory Ripples
There is also a political dimension to the US operations that bears watching. T-Mobile US reportedly made commitments to the US government in January related to an order against diversity programs, a pledge that drew criticism from Germany's CDU, the Greens, and the federal anti-discrimination agency. The FCC subsequently approved the subsidiary's acquisition of fiber provider Lumos, but the episode highlights the regulatory sensitivities that now accompany the group's transatlantic footprint.
Closer to home, the fiber rollout has hit a snag of its own. Deutsche Glasfaser, the group's German fiber unit, has halted expansion in the Bavarian town of Mindelheim despite numerous preliminary contracts, citing economic reasons. A proprietary Telekom build-out there is not expected before 2028 or 2029.
The Verdict Awaits
Thursday's report will provide the first genuine test of whether the operating business can carry the investment case on its own merits. The buyback program, the steady stream of "Buy" ratings, and the strong US metrics all point toward a constructive outcome. But with the stock still trading below its 200-day average and a technical warning sign flashing, the numbers need to deliver — not just on the quarter, but on the outlook that follows.
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