Rodney Smith

Seen from outside Germany and Italy, there's something sad about the lumbering efforts of the German and Italian telecom giants' efforts to create their "merger of equals".

There is not obviously any of the dynamism and enthusiasm for the deal that you might expect from such a huge merger. Not from the companies themselves, nor the industry which knows them well. German telecoms expert Gerd Wittkemper at Booze Allen & Hamilton says the enthusiasm is there, but not altogether visible - but he's a diplomatic observer, so to speak.

There is a strong sense that these are two slow-moving behemoths stumbling around downfield, far away from the ball, not knowing how to get up among the forwards.

Their industry is moving and shifting around them at a pace they are unfamiliar with, and which they cannot fully grasp.

There are many in the telecom business who do not even understand why the two companies are merging. For size? To what end? They are not even an obvious fit.

Deutsche Telecom chief Ron Sommer has done much to reshape the German group, paring away at dead wood, saving costs and generally dragging it towards the standards being set by the faster movers in this game. Evidence for that is the continued existence of the Global One alliance with France Telecom, largely bolted together by Sprint of the US.

Deutsche Telekom's relations with France Telecom are reported to be less cordial than with the Americans, which may be connected to the German willingness to talk with the Italians.

Almost amusingly for Anglo-Saxon enthusiasts of smaller government, Telecom Italia is getting a special insight into the weaknesses of dealing with a company still largely owned by government.

The 74% state stake in Deutsche Telekom has become a chain shackling the bigger utility to the German government in a way wholly unsatisfactory to the Italians. Although partial themselves to big state monopolies, the Italians have been ahead of the curve with TI -- the government owns only a Golden Share and 3.4%.

Which is why Italian prime minister Massimo D'Alema feels comfortable instructing the Germans to divest. Which is peculiar because for all the talk of a marriage of equals, it's the Italians who are cap in hand. Little surprise then that Deutsche Telekom has already turned that idea down.

But the deep fault is that this is not a business deal. It is a political arrangement, like the unhappy tie between DT and France Telecom.

Analysts like Maeve Sullivan at Telcom say there is no obvious industrial logic to the merger. Creating size is not the issue when fleetness of foot is the missing and vital ingredient.

This deal has no place in the new telecoms world in her view, and in the view of David Cleveley at Analysis in Cambridge.

Both companies risk being left behind anyway, in Deutsche Telekom's case despite the best efforts of energetic chairman Ron Sommers.

Like British Telecom, and the traditional US operators, AT&T etc, they are all tied down by their huge infrastructures, and their extensive cable systems.

It's these that will scupper them in the end, of course, because when national telecoms regulators get around to unbundling the cable systems and allowing competition on common networks - and they will do so - not all the multi-million euro deals with one another will save the old telecoms utilities, the Deutsche Telekoms, Telecoms Italia, British Telecom.

They'll be lucky to ally themselves with some of the new boys on the block, the US titans of the future world of communication, MCI-Worldcom, Level3.com, GTS and the others.