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To: pat mudge who wrote (12428)	7/29/1999 7:20:00 AM
From: jeff greene	Respond to of 18016

FOCUS-D.Telekom H1 hit, acquisition talk mounts Jump to first matched term (Recasts with analyst quotes and background) By Neal Boudette, European Telecommunications Correspondent FRANKFURT, July 29 (Reuters) - Deutsche Telekom AG said on Thursday domestic price competition had cut into first half results, reporting that net profit fell 4.5 percent to 950 million euros ($1.02 billion). The figure was slightly below some expectations and highlighted the need for the company to get going with its international acquisition plans as rivals eat into its home market, analysts said. "The pressure to do something is simply there," said Frank Wellendorf at WestLB Panmure in Duesseldorf. Market rumours about imminent takeovers and alliances have swirled around the German phone company in the last few months ever since it tried to merge with Telecom Italia SpA and then raised 12 billion euros from a June share offering. On Thursday the Wall Street Journal Europe reported Deutsche Telekom had offered 7.5 billion pounds ($12 billion) for UK mobile group One2One and could clinch the deal within a week. The paper also said Telekom was in talks to acquire France Telecom's 10 percent stake in Sprint Corp as part of the unwinding of their French-German alliance. Deutsche Telekom also owns 10 percent of Sprint and all three groups are members of the struggling Global One venture. The French-German partnership came unglued after Deutsche Telekom attempted the Telecom Italia merger. Deutsche Telekom declined to comment on the stories. Recent reports have also linked the company with Spain's Telefonica SA and Cable & Wireless Plc . Chief Executive Ron Sommer has made it clear he intends to use acqusitions to give Deutsche Telekom the mass to compete with giants from the United States like AT&T Corp and MCI Worldcom Inc. . The company is desperate to buy its way into international businesses because its domestic operations, accounting for more than 90 percent of sales, are being eroded by low-priced competitors. "They are suffering in the domestic market," said Michael Schatzschneider at BHF Bank in Frankfurt. "If they want to be a global player they have to make some acquisitions." At the end of June, Deutsche Telekom had 65 percent of Germany's 88 billion mark ($48 billion) long-distance market. It owned all of the market until competition started at the beginning of 1998. Aggressive price cutting this year has helped Telekom stem the market share losses but is hurting growth. "The substantial price cuts introduced to stabilise market share in Germany resulted in a decrease in revenue from fixed-network communications," the company said in a statement. "This decrease could not be compensated by the continued boom in mobile communications, ISDN lines and the online business," it said. Telekom, which did not detail second quarter results, said first half sales to June 30 fell five percent to 16.7 billion euros. Based on its first quarter total of 8.26 billion euros, that implies second quarter sales of 8.44 billion euros. Implied second quarter net profit was 415 million euros, compared to 535 million euros in the first quarter.($1=.9337 Euro) ($1=.6250 Pound) ($1=1.825 Mark)