Deutsche Telekom, Telecom Italia Reached Merger
Accord
April 20, 1999
Xinhua via NewsEdge Corporation : BONN (April 19) XINHUA - One of the world's
largest telecommunications groups valued at some 200 billion U.S. dollars will be
created after the German giant Deutsche Telekom merges with Telecom Italia as
they have agreed.
The two companies will announce details of the agreement at a press conference
in London Tuesday, the DPA news agency reported Monday. Deutsche Telekom
neither confirmed nor denied the information.
The development follows days of intense speculation and reports about their
imminent merger to create a concern with a yearly turnover of around 64 billion
dollars and a work force of about 350,000 employees.
Deutsche Telekom just a week ago dismissed a Financial Times report about the
merger as "speculation," saying it would not participate in such speculation.
At the same time, however, the German company while reporting its first-quarter
results also announced plans for a second emission of shares which could
generate as much as 12 billion dollars in revenues.
The company said the share issue, to be effected by the summer, would be used
to bolster its finances and to help in making acquisitions, a point which only
further fueled the speculation about its aims towards Telecom Italia.
Over the weekend, German Finance Minister Hans Eichel and his Italian
counterpart, Carlo Azeglio Ciampi, respectively gave their blessing to the merger
at an informal European Union finance ministers meeting, and said they would
not stand against it.
The two companies Sunday formally confirmed their talks, which had been
believed to involve the two sides' top executives, Ron Sommer of Deutsche
Telekom and Franco Bernabe of Telecom Italia.
The German business daily Handelsblatt reported earlier Monday that the two
companies were intending a merger after the model of the mega-fusion last year
between Daimler and Chrysler, whereby the shares of both would be exchanged
in lieu of a single new share.
Amid the developments, France Telecom, one of Deutsche Telekom's most
important international partners, warned Monday against the merger with
Telecom Italia, saying it viewed such a merger as incompatible with Deutsche
Telekom's efforts towards a "strategic turnaround."
The French and German companies are involved together with the U.S. telephone
company Sprint in a joint venture called Global One, which has reportedly run
into problems with larger-than-anticipated losses.
[Copyright 1999, Comtex]
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