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Deutsche Telekom eying possible Sprint buy
2008-05-03
Deutsche Telekom (DTEGn.DE) is looking at a possible purchase of U.S. wireless company Sprint Nextel (S.N), a German magazine said on Saturday. Managers at Deutsche Telekom were studying different options such as a takeover or a merger, Der Spiegel reported without quoting sources. It said a decision had not been made. A Deutsche Telekom spokesman declined to comment on the report. In March, a research report by Merrill Lynch fuelled speculation that Deutsche Telekom may consider a takeover of the third-biggest U.S. wireless carrier. Deutsche Telekom's T-Mobile USA is the fourth-biggest operator in the country. The investment bank pegged the German company as a potential buyer because it would allow it to triple its subscribers and catapult T-Mobile USA to the number one spot. In the note Merrill Lynch said Sprint's operational problems would cause it to cut prices in an effort to keep and attract customers, potentially starting a price war among operators, but an acquisition would avert such a development. It also said considering the low value of Sprint's stock as well as the high value of the euro, a deal would be attractive. However, analysts have said an acquisition of Sprint may be a difficult operation because it has been running two networks which are different from T-Mobile's GSM infrastructure and its new UMTS systems are expected to launch by mid-year. Analysts have also expressed doubt whether a foreign operator would get the green light to own so much of the wireless infrastructure in the United States. It may also be questionable whether the German government, which still owns around a third of the former state-owned company, would agree to Deutsche Telekom essentially becoming a U.S. company, analysts have said. Deutsche Telekom in September acquired SunCom Wireless for $1.6 billion in cash and bought U.S. wireless company VoiceStream in 2000 for $35 billion. (Reporting by Nicola Leske)
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