Shares of Deutsche Telekom tumbled by over 3% on Thursday following reports that the company’s chief executive is pushing to combine the German parent with its U.S. subsidiary, T-Mobile US. The move marked the steepest single-day decline for the stock since late April, when earlier discussions about a potential tie-up were reported.
T-Mobile US has grown to account for nearly two-thirds of Deutsche Telekom’s revenue, and the parent firm currently owns a majority stake in the American carrier. Those financial dynamics help explain why a full combination is being considered, but executing such a transaction faces several significant hurdles.
According to the accounts of the situation, Chief Executive Tim Höttges is leading the effort to pursue a merger. For the plan to proceed, Höttges would need to persuade T-Mobile’s minority shareholders to accept the deal. Those shareholders are reportedly wary of being exposed to Deutsche Telekom’s lower-margin international operations as part of a combined entity.
Support from the German state would also be essential. The German government holds a 28% stake in Deutsche Telekom, and its approval would be a prerequisite before any move could advance. Even with political backing, the transaction would still face a complex regulatory pathway, which could include national security reviews in both Germany and the United States.
Höttges has had to navigate political sensitivities in both markets. T-Mobile’s cultivated ties with the Trump administration and the company’s decision to withdraw from diversity, equity and inclusion commitments last year generated thousands of complaint emails from German shareholders, creating friction at home. Those tensions underscore how corporate governance and political considerations could complicate cross-border consolidation.
Reports indicate that Höttges expects to retire at the end of 2028 and is aiming to complete a potential merger and identify a suitable successor before his departure. The timeline noted for his planned retirement adds an additional element of urgency to the discussions.
Market context
- Deutsche Telekom’s stock drop was the steepest since late April, when merger discussions first surfaced.
- T-Mobile US is the dominant earnings engine for the group, providing nearly two-thirds of total revenue.
- Any deal would require buy-in from T-Mobile’s minority shareholders and the German government, and would likely face regulatory scrutiny in both countries.