Deutsche Telekom: Time for a Stock Price Rebound

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  Wolfgang Hagl
  Redaktor

Earlier this week, the first German Investment Summit opened at the former Berlin-Mitte cogeneration plant. Around 500 guests accepted the German government’s invitation to the historic building. Jensen Huang was the undisputed “headliner” of the opening event. The CEO of Nvidia, the world’s largest chipmaker, took part in a panel discussion with Federal Chancellor Friedrich Merz. According to Huang, Germany is well-positioned for the use of artificial intelligence (AI). As examples, he cited excellent technical expertise and a valuable treasure trove of industrial data. “This industrial revolution is so massive that you won’t get a second chance,” Huang warned.

Off the Stock Market

Tim Höttges must have listened spellbound to the top executive and multi-billionaire. As CEO of Deutsche Telekom, he sees great growth opportunities in AI – and is already teaming up with Nvidia. In Munich, the two companies have launched an industrial AI cloud. To this end, a data center in the Bavarian metropolis was renovated and equipped with super-fast semiconductor systems from Nvidia. With the help of this infrastructure, large corporations, small and medium-sized businesses, and startups will be able to develop, train, and deploy their AI solutions.

On the stock market, Deutsche Telekom does not seem to be benefiting at the moment from either this push or the luster of its U.S. partner. The industry giant’s stock has fallen behind. This is where another prominent, billion-dollar player in the AI boom comes into the picture: Elon Musk. His space company, SpaceX, recently secured a portfolio of mobile radio frequencies in the U.S. This would allow the company to offer satellite-based voice and internet connections via smartphone. Leading mobile carriers, including Telekom’s U.S. subsidiary, T-Mobile US, are thus facing new competition. Against this backdrop, stocks in the sector came under pressure.

European Alliance

It remains to be seen whether – and, if so, when – SpaceX will actually pose a threat to the industry leaders. In Europe, Deutsche Telekom is laying the groundwork and working with Spain’s Telefónica, the U.K.’s Vodafone, and France’s Orange to form an alliance for satellite telephony. Together, the partners plan to apply for radio frequencies for mobile satellite services. The corresponding letter of intent was signed on Monday. While this project is still a long way off, investors will learn in just over two weeks how Deutsche Telekom’s business has been performing recently. On November 5, the Bonn-based company will publish its interim report for the third quarter of 2026.

With this date in mind, the focus should shift to the fundamentals of this DAX-listed stock. From April through June, Deutsche Telekom posted solid growth in both revenue and earnings. At the same time, it generated free cash flow of more than EUR 5 billion. Management is using this substantial cash inflow to accelerate its share buyback program. By the end of the year, approximately EUR 5 billion is expected to be allocated to the purchase of the company’s own shares. When dividends are factored in, total distributions could reach up to EUR 10 billion by 2026.

It will be interesting to see whether Tim Höttges will follow up on this point, especially given the weak stock performance. In any case, AI is likely to be a key topic when the company reports its earnings. Earlier this month, the company hosted an investor day dedicated specifically to artificial intelligence. During the event, the CEO announced significant cost savings and tremendous growth driven by this technology.

Investment Solution

Taken together, this outlook – combined with stable business performance, a favorable valuation, and an impressive dividend yield – points to a comeback for Telekom stock. In a stock market environment that has become more turbulent, these defensive quality characteristics should once again attract more attention. With the call warrant WDTAZT allows for an aggressive positioning. Leonteq has set the strike price at EUR 25, so the warrant is trading slightly in the money. The warrant, which matures next March, offers a leverage of 10.8 on rising Deutsche Telekom share prices. Caution: If the large-cap stock cannot break out of its downtrend, significant losses are to be expected.