Deutsche Telekom 'in Sprint talks'

Deutsche Telekom is reported to have held preliminary merger talks with US telecoms operator Sprint.

The Financial Times report follows moves to block a $130bn bid by MCI WorldCom for Sprint last week.

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US and European regulators said the merger would violate internet and long-distance anti-trust rules.

Germany's Welt am Sonntag newspaper also reported at the weekend that Deutsche Telekom and Sprint were in talks.

The two sides were said to be discussing a share swap similar to the merger that created DaimlerChrysler.

It said Deutsche Telekom could be ready to pay some $117.5bn (£77.5bn) for the US group.

The German firm declined to comment on the reports.

Opposition

However, there have also been reports that a deal with Sprint could face opposition from the US Senate.

The Wall Street Journal reported that US Senate leaders had signalled their opposition to such a takeover on the grounds that it was against US law and a potential threat to competition.

The Journal cited a letter by senators to Federal Communications Commission (FCC) Chairman William Kennard, noting that US law bars transfer of FCC licenses to companies that are more than 25% owned by a foreign government.

The German government retains a majority stake in Deutsche Telekom.

Deutsche Telekom is eager to use its brimming coffers to position itself as a global telecoms player.

It already has a 10% stake in Sprint with which it held merger talks last year when it was beaten to a deal by WorldCom.

Buying Sprint, with its national US mobile phone network, would add to its international holdings which also include the UK's One2One mobile phone operator.

Revised proposals

The planned merger of Sprint and WorldCom would have created the largest long-distance carrier in the US, and a major player in mobile phones with one of the few nationwide networks in the US.

The two firms maintained that the opposition did not mean the death of the merger, saying they still hoped for a successful conclusion.

They may submit revised proposals more acceptable to the authorities in Washington and Brussels.

According to the Washington Post, the two companies have been considering carving up Sprint to woo regulators.

WorldCom would get Sprint's wireless division, but both its long-distance and internet divisions would be sold.

But it remains unclear whether these plans would be acceptable to regulators since both EU and US authorities seem radically opposed to the merger.

Sprint recently sold its stake in the Global One alliance with France Telecom and Deutsche Telekom, acknowledging the concerns of the competition watchdogs.