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Sunday, July 18, 1999 Published at 15:42 GMT 16:42 UK

Business: The Company File

Deutsche Telekom tries another merger

At Deutsche Telekom's headquarters, they are drawing up new merger plans

Europe's largest telecoms company, Deutsche Telekom of Germany, is reported to be in merger talks with Telefonica of Spain.

According to a report in Der Spiegel news magazine, the two companies have been in merger talks for six weeks.

Telefonica is Europe's fifth largest telecoms company, behind British Telecom, France Telecom and Telecom Italia.

In recent years the company has expanded rapidly across Latin America.

Rumours of a German-Spanish link-up had first surfaced in the middle of last week in a German newsletter for investors. While Deutsche Telekom had declined to comment, Telefonica had denied that it was in any negotiations with its German rival.

However, Der Spiegel writes that a "high-ranking Telekom manager" has confirmed that negotiations are underway. Several managers of the German company are said to be already in Spain for talks.

Der Spiegel also said that outgoing European Union Industry Commissioner Martin Bangemann, was informed of the talks.

Mr Bangemann, who was in charge of telecoms regulation, is set to become a senior Telefonica official, a move that has been widely criticised.

Merger plans

Earlier this year, Deutsche Telekom had failed to merge with Telecom Italia.

That link-up had been agreed with Italia's management, but the deal fell through when the company's shareholders opted for a hostile bid from rival telecoms firm Olivetti instead.

Since then, the boss of Deutsche Telekom, Ron Sommer, had repeatedly said he was on the look-out for other mergers and acquisitions.

Deutsche Telekom shareholders recently approved a large bond issue to finance such expansion plans.

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