Deutsche Telekom Faces Activist Pressure, T-Mobile US Merger in Doubt

Shares of Deutsche Telekom AG saw a boost on Thursday, rising nearly 2% to around €29, following reports that activist investor Elliott has taken a substantial stake in the company. The investment reportedly aims to prevent a potential merger between Deutsche Telekom and its US subsidiary, T-Mobile US, and instead push for measures such as significant share buybacks.

The strategic challenges surrounding a potential merger with T-Mobile US are central to the investor’s concerns. JPMorgan analyst Akhil Dattani noted that the proposed combination is “highly complex” and faces broad opposition from investors. The analyst also stated the Deutsche Telekom stock appears “extremely cheap” despite attractive double-digit profit growth, making activist intervention understandable. Elliott has previously invested in other telecom companies, including Telecom Italia and AT&T.

Deutsche Telekom’s valuation is currently heavily reliant on its 54% stake in T-Mobile US, which accounts for roughly two-thirds of the parent company’s €140 billion market capitalization. This is down from around 80% in March 2025. The value of T-Mobile US shares has fallen by a third since reaching a high in March of the previous year, due to concerns about competition from satellite operators, increased competition in the mobile market, and challenges in the fiber optic segment. The declining value of T-Mobile US shares has, in turn, put downward pressure on Deutsche Telekom’s stock, which has fallen by a fifth from its recent high.

A 3% stake in Deutsche Telekom would require the purchase of approximately 145 million shares, valued at around €4.2 billion at the current share price. Elliott manages investments totaling approximately $80 billion. Major existing shareholders in Deutsche Telekom include the Kreditanstalt für Wiederaufbau (KfW) and the German federal government, each holding around 14%, followed by BlackRock with 5.7%. The news of a potential Elliott investment also positively impacted T-Mobile US shares, which rose almost 3% in late trading on the Nasdaq.

The filings reveal a growing investor discomfort with the complexities of integrating Deutsche Telekom and T-Mobile US. The parent company’s valuation has become increasingly dependent on the performance of its US subsidiary, while the subsidiary itself faces mounting competitive pressures and sector-specific headwinds. The intervention of an activist investor highlights the growing scrutiny on Deutsche Telekom’s strategic direction and the need for greater clarity regarding its future relationship with T-Mobile US.