Telekom's Capital-Return Machine Powers Ahead as Merger Ambitions Fade
Published on 08/07/2026 at 09:27 | Redaktion boerse-global.de
The arithmetic of shareholder value has rarely been laid out so plainly. Deutsche Telekom closed Thursday's session up 6.15 percent at 29.17 euros, a move that had less to do with any single headline than with the cumulative weight of a second-quarter report that beat expectations and a decision to pour billions more into buybacks. The message from Bonn: growth through acquisition is yesterday's playbook; returning cash is today's.
A beat on the top line, a lift to guidance
The group's quarterly numbers landed ahead of analyst forecasts on the key operating metric. Revenue rose 4.4 percent to 29.9 billion euros in the second quarter, with organic growth of 3.3 percent. Adjusted EBITDA after leasing climbed 7.5 percent to 11.8 billion euros, while adjusted net income attributable to shareholders advanced 11.1 percent to 2.8 billion euros. Reported net profit, however, slipped 6 percent to 2.5 billion euros, weighed down by integration costs tied to the UScellular asset acquisition — though the bottom line still came in above market consensus.
Management used the occasion to nudge up its free cash flow outlook for 2026 to roughly 20.0 billion euros, having previously guided to more than 19.8 billion euros. The full-year targets for adjusted EBITDA of about 47.5 billion euros and adjusted earnings per share of around 2.20 euros were left unchanged.
The buyback gets a second act
The more consequential development came alongside the figures. The board expanded the existing 2026 share repurchase program by up to 3 billion euros, taking the total envelope to as much as 5 billion euros. The company cited the stock's low valuation and recent elevated volatility as justification. The additional purchases are slated to run in tranches between August 10 and December 22, under the shareholder authorization granted at the annual meeting on April 9, 2025, which permits buybacks of up to 10 percent of share capital until April 8, 2030. Most of the repurchased shares will be cancelled, with a portion earmarked for employee compensation.
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The scale of the expansion is notable. Under the original 2-billion-euro program, the company had already spent about 1.2 billion euros to acquire roughly 42.1 million of its own shares as of August 5, including more than 1.3 million shares bought on Xetra during the week of July 20–24. Doubling down to 5 billion euros within a single year signals a cash-generative engine that few European telecom peers can match.
A $300 billion question quietly shelved
The week also brought a degree of clarity on a topic that has hovered over the stock for months. Speculation had circulated about a potential mega-merger involving US subsidiary T-Mobile US, with figures around 300 billion US dollars bandied about. According to a media report, the US unit's management is no longer actively backing the project. For investors who had been banking on a transformative deal, the answer from the company is now unambiguous: buybacks instead of bold combinations.
The US operation remains the group's growth anchor regardless. T-Mobile US posted service revenue of 19.0 billion US dollars in the second quarter, up 8.9 percent, with adjusted EBITDA after leasing rising 12.1 percent to 9.3 billion US dollars. Back home, the German core business added roughly one million new TV customers during the quarter, helped by exclusive FIFA World Cup coverage on MagentaTV — evidence that content is now as central to retention as network quality.
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Analysts stick with the bull case
Sell-side reaction was broadly supportive. JPMorgan's Akhil Dattani reaffirmed an "Overweight" rating with a 38.00 euro price target, pointing to the US business and the strong German segment as key value drivers. Bernstein's Ottavio Adorisio held an "Outperform" stance with a 37.00 euro target. Berenberg and Deutsche Bank also reiterated their buy recommendations, with Berenberg's Usman Ghazi noting that operating results came in slightly above market expectations.
The chart tells its own story. The stock sits nearly a quarter above its 52-week low and trades more than two percent above its 200-day moving average, suggesting the latest surge is part of a broader uptrend rather than a one-off spike. It remains about 15.43 percent below the February high, but the combination of a raised cash flow forecast, robust US growth and a significantly enlarged repurchase program has given investors fresh reason to lean in. The next checkpoint arrives on November 5, when third-quarter numbers will show whether the pattern of cash generation and capital returns can hold.
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