An activist investor has spoken out against the record-breaking M&A deal between Deutsche Telekom and T-Mobile

Elliott Investment Management, one of the best-known activist investors, has purchased a significant stake in the telecommunications company Deutsche Telekom, Bloomberg reports, citing sources. The investment firm also made it clear that the German giant should abandon a potential merger with its U.S. subsidiary, T-Mobile. This deal could have been the largest merger and acquisition (M&A) in the public market and created the largest mobile operator by market capitalization.

On the back of this news, Deutsche Telekom shares rose 1.5% during trading on September 3 in Germany, while T-Mobile shares on the Nasdaq gained 0.3% on Thursday.

Instead of merging with T-Mobile, Elliott is suggesting that Deutsche Telekom consider alternative ways to increase shareholder value, including a larger share buyback, according to Bloomberg sources.

The exact size of Elliott’s stake in Deutsche Telekom is not yet known, but the presence of this influential investor could be a key factor in determining the German company’s future strategy, according to Bloomberg. Under German securities law, investors are required to disclose information about direct holdings if their stake reaches 3% or more.

Elliott’s stance on the T-Mobile deal differs from the plans of Deutsche Telekom CEO Tim Hettges, the agency notes. He is working toward a full merger of the German company with its U.S. subsidiary, T-Mobile, to create the world’s largest telecommunications firm. Deutsche Telekom currently owns approximately 53% of the U.S. operator’s shares.

The merger plan had previously run into difficulties: in July, Semafor, citing sources, reported that T-Mobile’s management had informed Deutsche Telekom that the company’s U.S. division no longer supported the proposed merger. According to Semafor’s sources, T-Mobile attributed its position at the time to concerns raised by both shareholders and potential regulatory risks.

Representatives from Elliott, Deutsche Telekom, and T-Mobile declined to comment to Bloomberg.

In April, Bloomberg reported that Deutsche Telekom was in preliminary talks to establish a new holding company with a simplified corporate structure. It was expected that the company would oversee the operations of Deutsche Telekom and T-Mobile and be jointly owned by their current investors.

The merger could have been the largest public merger and acquisition (M&A) deal in history and created the world’s largest mobile operator by market capitalization, the agency noted. For Deutsche Telekom, it would symbolically bring things full circle: over the past 25 years, the company acquired T-Mobile, took it public, and then reacquired a stake in it.

For the deal to go through, it was necessary to take into account the interests of numerous parties, first and foremost the German government, which controls about 28% of Deutsche Telekom. In addition, political approval from Washington would likely have been required—all against the backdrop of heightened tensions between U.S. President Donald Trump and European leaders, Bloomberg reported.

Over the past 12 months, Deutsche Telekom's stock has fallen by about 7%, while T-Mobile's stock has lost more than 25%. Despite this negative trend, analysts' consensus forecasts for both companies remain positive.

The outlook for Deutsche Telekom is decidedly “bullish”: 17 out of 18 analysts covering the company recommend buying the stock (11 “Buy” ratings and six “Outperform” ratings), while one analyst advises holding the stock (“Hold”); there are no “Sell” recommendations. The consensus on T-Mobile is also firmly positive: 22 out of 28 analysts recommend buying the stock (13 “Buy” ratings and nine “Outperform” ratings). Five advise holding (Hold), one abstained from a rating, and there are no sell recommendations.

This article was AI-translated and verified by a human editor