Deutsche Telekom explores merger

STEVEN SILBER

FRANKFURT, JULY 18: Germany's Deutsche Telekom AG has been in merger talks with Spain's Telefonica for some six weeks, the magazine Der Spiegel reported, quoting a senior Telekom manager. The manager told Der Spiegel in an advance copy of an article to appear in its latest issue that "there have already been first talks." Spiegel also said outgoing European Union Industry Commissioner Martin Bangemann, a former German economics Minister who is becoming a senior Telefonica official, was aware of the talks.The Welt am Sonntag newspaper quoted Bangemann as saying Telefonica would "take on Deutsche Telekom". Bangemann said he wanted to "make Telefonica number two in Europe," supplanting British Telecom, France Telecom and Telecom Italia.

Bangemann told Welt am Sonntag that Telefonica would overtake Telecom Italia in size in just a few months, although the paper gave no details on how Telefonica would achieve its growth goals.

Deutsche Telekom is currently Europe's largest telecom player. Telefonica on Fridaydenied a report in German stockmarket newsletter Platow Brief it was in talks with Deutsche Telekom over a link-up while the German company declined to comment.

On Thursday, quoting sources in Telekom's home base of Bonn, Platow Brief said Telekom management board Chairman Ron Sommer was close to landing a deal with a major player.

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