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European Telecom Deal to Be Announced

April 20, 1999| From Associated Press

LONDON — Telecom Italia and Germany's Deutsche Telekom are expected to announce today that they are merging in a mega-deal that would create a new global competitor to U.S. giants such as AT&T.

The move, which pairs two former state monopolies, would be subject to intense regulatory scrutiny and would undoubtedly present the companies with political and cultural obstacles.

A Telecom Italia-Deutsche Telekom combination would dwarf its competitors in Europe and would be among the largest mergers in history.

A Telecom Italia official who spoke on condition of anonymity said the two firms' chief executives, Franco Bernabe and Ron Sommer, will outline the merger agreement today in London. The planned announcement ends days of frenzied speculation about such a move.

Telecom Italia may not be the only partner Deutsche Telecom is eyeing. Manager Magazin, a German business weekly, issued a news release Monday saying Deutsche Telekom is also negotiating a takeover of U.S. telecommunications company Sprint Corp.

According to a report to be published Friday in the magazine, Telekom chief Sommer has been negotiating a deal with Sprint Chief Executive William Esrey for several weeks.

Deutsche Telekom spokesman Stephan Althoff dismissed the story as "just speculation." Officials at Sprint did not respond to requests for comment.

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